Real Estate Law


They say there are two certainties in life: Death and taxes. It used to be three certainties, until the Chicago Cubs spoiled things by winning the World Series. Death is a no brainer, unless you believe like Shirley MacLaine that you’re coming back to Earth as the next Pope. On the other hand, taxes aren’t as much a certainty anymore, as a wide variety of tax breaks allow some Americans to slip through the fingers of Uncle Sam. Property taxes are one form of taxation that includes several ways to reduce your tax obligation.

Overview of Property Taxes

Municipal governments use property taxes to fund several government programs, including the up keep of roads and parks, and the operation of public school systems. Property taxes also defray or eliminate the cost of sewer system maintenance, fire and law enforcement protection, and the treatment of a local water supply. The taxation on land and buildings represents one of the first forms of taxation to materialize within the United States. Although property taxes generate revenue mostly from land and building appraisals, the tax also applies to other property, such as vehicles and commercial equipment. Even intangible property like bank accounts and corporate stocks can be taxed as property, although many municipal governments have moved away from the practice of taxing intangible assets.

Factors that Influence How Much You Owe

Property taxes vary depending on which part of the country you live. In densely populated urban areas that require the operation of numerous public services, property taxes run on the high end. Conversely, residents of rural communities typically pay less in property taxes. Many home expenses that include mortgage interest and environmentally friendly home upgrades reduce your property tax burden. In fact, cities such as Seattle and San Francisco offer generous property tax deductions for homeowners and commercial building owners that move from using fossil fuel energy to more sustainable energy sources, such as the sun and wind. A licensed real estate attorney helps guide you through the multiple deductions that lower your .property tax bill.

Three Methods for Property Tax Assessment

Property appraisers use one of three primary methods for assessing the value of real property.

Cost Method-Calculated by estimating how much it costs to replace a home or building under a property tax assessment. The estimate includes labor and material costs for properties that assessors cannot compare to similar structures.

Market Method-As the most frequently used method for assessing real property, the market method compares a property under assessment to other similarly designed properties. Assessors then adjust for minor physical differences. The market works well for assessing the value of the same vehicle makes and models.

Income Method-The income method estimates an increase in property value to commercial activity. Warehouses, shopping centers, and apartment complexes typically receive property value assessments from assessors that use the income method.

Take Advantage of Property Tax Exemptions

Many property owners confuse property tax deductions and exemption. A property tax deduction lowers the value of a property under assessment. State and local governments allow property tax exemptions to prevent eligible properties from receiving assessments. For example, property owners that live in historically significant neighborhoods often receive property tax exemptions for restoring property and redeveloping land.

Here are some other possible property tax exemptions:

  • Veterans
  • Municipal levies
  • Government property
  • Property used by school system
  • People at least 65 years old

A licensed real estate attorney that specializes in property tax law can help you navigate through the confusing set of rules that apply to paying taxes on real and intangible property. Highly skilled litigators can even help you successfully challenge the valuation of your property. Contact a real estate attorney today to make sure the local government assessed your property accurately.

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