If you make one of the following four common mistakes, chances are you’re paying more in property taxes than you should:

1. Not properly “homesteading” your property with the local tax authorities. “Homesteading” is basically the process of letting the county know that the property is your primary residence. You do that because in many states it allows you to take a partial tax exemption on your home. In Florida, for example, the “homestead tax exemption” reduces the taxable value of your primary residence by $25,000. With tax rates ranging up to $20 per thousand in assessed value, that can save you as much as $500 a year.

Other states — such as Mississippi, Texas, and Georgia — have different types of mandatory homestead tax-exemption programs. Meanwhile, in New York and Pennsylvania, though homestead exemptions are not required by the state, they are permitted as a local option. New York has another statewide tax exemption for primary residences: STAR (which stands for School Tax Relief), which effectively exempts the first $30,000 to $50,000 of a property’s value from school-related property taxes.

2. Not taking special tax breaks that you’re entitled to. In addition to the standard homestead exemptions, you may be eligible for additional partial exemptions if you’re a widow or widower, if you’re a veteran, or if you have a physical disability. There are also special tax breaks available in some localities if you live in a historic district and are restoring your home. To find out about all the local tax-exemption programs for your area, visit the office or website of your county’s tax assessor.

3. Not keeping an eye on tax-increase caps. There is often a cap on the maximum amount that property taxes on primary residences may be increased — but it’s up to you to make sure you’re being protected by it. For example, California’s constitution mandates (see “Word to the Wise,” below) that property taxes on primary residences cannot exceed 1% of the property’s market value and that the assessed taxable value of a property cannot go up by more than 2% a year unless the property is sold — regardless of how much the property may increase in value in market terms.

Many other states and counties have similar provisions. They have grown very popular in recent years, since they can save property owners thousands of dollars in taxes every year in a fast-rising market. Inquire about your state’s property-tax cap and make sure your taxes have not risen past it. If they have, you should be entitled to a refund and have your tax liability lowered for current and future years.

4. Not checking to make sure your property is worth what they say it’s worth. Even if you’ve taken advantage of all the possible tax-saving programs, there is one more thing you can do to potentially save you thousands: Check to see if your property is being assessed at a much higher value than comparable properties in the same area. To do this, visit the office or website of your local property appraiser or tax assessor and look up the properties within a one-block radius of yours. Note the size of the buildings and the average assessed value per square foot.

If, for instance, you find that the average taxable assessed value in your area is $200,000 and that the average square footage is 2,000, that means homes in your area are being assessed, on the average, at about $100 per square foot for tax purposes ($200,000 divided by 2,000 = $100). If, at the same time, you find that your home is being assessed at $150 per square foot, it is very likely that you will be able to get your taxes reduced. When valuing a property, there are considerations other than square footage, including quality of construction and, most notably, amenities. Amenities are such things as swimming pools, screened enclosures, patios, etc.

So make note of these, too, when comparing your property with others in the neighborhood. If you find that, on the average, your property does not have greater amenities — and that you are, nonetheless, being taxed at a much higher rate per square foot — chances are good that you will be able to lower your property-tax bill by appealing to your local value-adjustment board.

So, visit your local tax assessor’s website or office. Check for local tax-exemption programs, check to see if your state has an annual “tax-increase cap” — and don’t forget to compare your taxes with those of comparable properties in your neighborhood. By taking these simple steps, you ultimately might be able to save thousands of dollars.


Justin Ford is an active investor in real estate and global stock markets. He is also a veteran financial writer. He has published, edited and written for over a dozen international investment newsletters, including launching the US version of the Fleet Street Letter, the oldest continuously published newsletter in the English Language. He is the author of Seeds of Wealth, a program for getting children to adopt good money habits from an early age. He is the editor of the Seeds of Wealth Quarterly Investment Update Bulletin. He is a contributing editor and author to a number of books on personal finance, including Michael Masterson's Automatic Wealth and Dr. Van Tharp's Safe Strategies for Financial Freedom.