5 Tips for Keeping Property Taxes Down

Property taxes in many areas of the country are a significant expense. Real estate owners or investors need to understand the system in the area where their property is located so they can do what is necessary to keep this expense low.

Here are five things to consider when looking to lower your property taxes.

1. Find out exemption limits

Most areas have exemptions for certain uses of property or characteristics of owners that can lower your bill. Here in my home state of Texas, for example, all property owners are eligible for an exemption to reduce the tax value of their real estate if it is their homestead.

Additionally, homeowners 65 years old, or disabled by Social Security standards, are allowed a freeze on any increases in school property taxes for life. Disabled veterans get various levels of exemptions depending on their level of disability.

2. Search for special property use breaks

Texas homeowners also can file an annual form that offers an exclusion from property taxes on the value of solar and wind devices attached to the property. 

Some areas allow a deduction if your property is involved in providing housing to those considered low income.

3. Explore property reclassification

A special valuation classifying land for agricultural use can mean big savings. This shifts the valuation from the fair market value to "In Texas," which can lead to significant reductions in property taxes.

Some of the qualifying activities are:

  • Cultivating the soil
  • Production of crops for human consumption, animal feed, or production of fibers
  • Cultivation of ornamentals and flowering plants
  • Cultivation of grapes
  • Cultivation of fruits, vegetables, flowers, herbs, and other plants
  • Raising livestock such as meat or dairy cattle, horses, goats, swine, poultry, and sheep
  • Raising exotic game for commercial use
  • Land participating in a government program and normal crop rotation. Land left idle to participate in a government program is used for agriculture. Land left idle for crop rotation qualifies until left idle for longer than the typical period.
  • Wildlife management

Your taxing district will have details on all the exemptions, property use and real estate classifications that might help you reduce your property taxes.

4. Protest your property appraisal

The determination of the values of properties by tax districts is a very inexact science with many variables. In all likelihood, there will be a time that you believe your property has been overvalued. In that case, protest the valuation.

The process for protesting varies by jurisdiction, but some common grounds for protests include:

  • Value is over market value
  • Value is unequal compared to other similar properties
  • Property is being taxed by the wrong district which has higher tax rates than the proper one
  • Proper exemptions were not applied to the property
  • Property description is incorrect
  • List of improvements is incorrect
  • List of uses is incorrect

In the case of appraisal protest, a property owner is in the interesting situation of finding all the possible negatives about the parcel. Also note that most appraisal districts require you to lay out your reasons for protest BEFORE going to a hearing. If you do NOT list an area in your original notice, you will NOT be allowed to bring it up in the hearing. So put everything possible on the initial protest form.

5. Get help

If you want to protest an appraisal, but don't feel comfortable doing so or don't have time, consider hiring a property valuation protest firm. These companies specialize in evaluating your property, the market and comparable properties and completing the necessary protest paperwork on your behalf. Protest firm representatives will even attend the hearing on your behalf.

The pricing models can vary, but an attractive one is where the protest firm will take 30 percent of any tax savings it creates. If the company saves you nothing, you pay nothing. Since property taxes are an annual occurrence, savings in valuation can carry forward through the years.