Homestead exemption laws allow homeowners who meet certain criteria to reduce property taxes. Individual states establish their own homestead exemption legislation. Thus, the exemption amount and criteria vary. Some states offer a graduated exemption according to income and/or property value. In other states, school taxes are included in the exemption in whole or in part. Calculating property taxes after the exemption requires knowing the current value of your property and understanding how to apply the exemption. A tax or real estate finance professional is a valuable resource relative to your state's homestead exemption details.
1. Find the assessed value of your property. A current valuation is essential. You should be able to find this value at your city or county tax assessor's office.
2. Find out the exemption laws for your state. The amount of the exemption varies by state. For example, in Florida, it starts at $25,000 as of publication; an additional $25,000 applies to the assessed value between $50,000 and $75,000. Ohio's exemption can climb to $25,000, depending on income and property value. Texas homeowners may be eligible for as much as $25,000 in exemptions; age is among the eligibility factors.
3. Find out to whom to apply for the exemption. You may need to submit the application to a county or local office. Your state department of taxation is the primary source for this information.
4. Apply for the exemption to discover which exemption amount applies to your property. Application deadlines are published by the applicable county or local office.
5. Look for mail or email notification of your exemption amount from the applicable county or local office.
6. Deduct the exemption figure from the property value. For example, if your property is assessed at $125,000 and you are eligible for a $25,000 exemption, subtract $25,000 from $125,000 to arrive at $100,000.
7. Multiply the current property tax rate by the resulting figure. Continuing with the example, if the property tax rate is 6 percent, multiply $100,000 times 0.06 to get $6,000 in property taxes after the exemption.
- In some states, the exemption does not apply to school taxes. In such an instance, calculate the school taxes based on the full value of your property. Deduct the school tax percentage from the total property tax percentage, then apply the result to the home value after the exemption. For example, if your property tax rate is 6 percent and the school tax rate is 1 percent, calculate the school tax by multiplying $125,000 times 0.01 to get $1,250. Deduct 1 percent from 6 percent to arrive at 5 percent. then multiply $100,000 times 0.05 to get $5,000. Add $1,250 to $5,000 to arrive at the total property tax amount for the year.
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