Real Estate Taxes, Exemptions, and Incentives

REAL ESTATE TAXES

The HUD regulations limit the amount of money a lender may require the borrower to hold in an escrow account.

Property taxes are generally charged in relation to the assessed value of the property. Taxable value is the assessed value of property minus the amount of any tax exemptions. The tax due is calculated by multiplying the taxable value by the tax rate. The tax rate — stated in mills — is set by the taxing authority for the governmental unit within which the property is located. A mill is one dollar per thousand dollars. For example, a tax rate of eight mills is a tax of eight dollars for each one thousand dollars of taxable value of the property.

The proposed tax bill is mailed to the taxpayer, usually in August or September. If you don’t agree with the tax assessment you may file an appeal against this notice with the appropriate assessment appeals board. The actual tax bill is mailed to the taxpayer, usually by November 1. There are discounts for early payment and penalties for delinquency.

PROPERTY TAX EXEMPTIONS

Special tax incentives are available on property that meets certain criteria.

HOMESTEAD EXEMPTION

Every person who has legal or equitable title to real property and who resides on the property is eligible for a homestead exemption.

HOMESTEAD IMPROVEMENT

Homeowners who have made improvements to properties used exclusively for residential purposes may qualify for the homestead improvement exemption.

PLATTED AND SUBDIVIDED LAND

In counties with less tan two million inhabitants, the improvement of certain platted and subdivided land may qualify for a preferential assessment.

ENVIRONMENTAL INCENTIVES

For example, when a solar energy system has been installed as an improvement on any real property, the owner may claim an alternate assessment.
Other possible exemptions include: Disabled Veterans Homestead Exemption, Senior Citizen Homestead Exemption, Special Incentives for Historic Property, Widow’s and Widower’s Exemption.

PREPAYMENT OF PROPERTY TAXES

Discounts are available to taxpayers who want to prepay property taxes on the installment plan.

TAX DEFERRAL

You may elect to defer payment of part of the ad-valorem (property) taxes. For additional information as to the number of years, total amounts that may be deferred, and interest on deferred taxes, contact the local tax collector.

Please refer to your local taxing authority for detailed information concerning eligibility and the necessary documents and forms required to apply for tax exemptions.

FLOOD CERTIFICATION

Some homes require flood certification fees, amounting up to $30. It verifies that the property is not in a flood zone. If the property is located within a defined zone the lender will require a flood insurance policy. There are several types of insurance that need to be purchased in conjunction with home loan.