Property Tax Relief Programs May Put Money Back in Your Pocket

Whether you pay your property taxes as part of your mortgage payment or directly to your county assessor’s office, this annual expense can make up a significant part of your household expenses.

You may be surprised to learn that many states offer some sort of property tax relief program, where homeowners receive money back on their property taxes in the form of tax credits and refunds.

AARP Foundation, in fact, estimates more than 9.3 million older adults living on a limited income may be eligible for money-saving property tax relief — but only 8 percent apply to their state’s relief programs.

Read on to learn more about property taxes, relief programs, and how you may be able to qualify for money back on your home.

Property Taxes 101

Unlike sales tax, which is paid once when you purchase an item, property taxes are due every year. Homeowners pay either annually, quarterly, or bi-annually, depending on local laws.

While tax rates — what percentage you pay in taxes — vary by state and county, property tax is always based on the value of your home.

To determine the value, local governments make property tax assessments — a professional estimation of the market value of the property, including the dwelling and land on which the property is located. If the assessed value of your home goes up, what you owe in taxes typically increases as well.

What Is Property Tax Relief?

Local governments offer “tax relief” through property tax assistance programs to help homeowners pay fair property taxes based on qualifying situations, such as earning a low income. Nearly every state, including the District of Columbia, has programs that offer relief from property tax bills. Most programs are for homeowners, but some renters can qualify for relief, too.

As you might expect, every state offers its own unique programs, each with different eligibility requirements. Assistance is typically given to older adults, people earning a limited income, veterans, or people with disabilities.

Here are a few of the ways property tax relief works:

• Homestead Exemptions
  Removes a portion of the assessed home’s value so less tax is owed on the property.
• Property Tax Credits
  Offers a tax credit that reduces the amount of property tax owed.
• Circuit Breakers
  Provides households with a tax refund based on their income.

How To Apply For Property Tax Relief

For help finding, understanding, and applying for tax relief in all 50 states, visit the AARP Foundation Property Tax-Aide website. You can also find additional information on your state’s Department of Revenue website or through a local county office.

What You’ll Need To Apply

If you meet the eligibility requirements — you’re over age 65 and earn under a certain amount, for example — you can complete and submit an application.

Applications can sometimes seem complicated, and it’s important to use the correct application form for the tax year in which you are applying for property tax relief. In general, the forms include questions related to a person’s eligibility criteria, such as age, household size, income, and property location.

For many property tax programs, homeowners must provide documentation to show they meet all of the program’s criteria, and may be asked to provide:

• Valid identification that shows a person’s age, disability, or veteran status
• Proof of total income and source of income
• Proof of property ownership or rent paid
• Past property tax payment documentation

In addition, homeowners need to submit their completed applications with the required documentation by the application deadline. Deadlines can be tricky. States sometimes have more than one program, each with different deadlines.

Finally, state agencies may update the application forms and program criterias for the new year, with new application forms becoming available then — or at different times throughout the year. So check back to stay on top of your state’s latest property tax relief updates.