House Hacking: How To Minimize Property Taxes
Friday, November 20, 2015
Property taxes take a huge bite out of home buying power and personal finances each month. How can home buyers and owners minimize those taxes, get more home for their money, and enjoy more property in their pockets?
The Property Tax Burden
Do not underestimate the impact of property taxes. Smart investors prioritize taxes when they invest in real estate, and buy prime property. That should be a lesson for all of us, that taxes may be the most important element in our finances.
This definitely applies to buying all types of property from business real estate to rental homes, and certainly personal residences. High property taxes, of which the 99% bear most of the burden, and a far higher percentage of their income compared to the wealthy 1%, keep most individuals trapped from moving up, or at least ensure they don’t have as much disposable cash.
Using the following property tax ‘hacks’ individuals and families can get ahead of the game to ensure lower taxes from the get go, and keep them low.
Before You Buy a Property
After You Buy a Property
- Compare property tax rates on different homes for sale to see which offers the best deal
- Keep the purchase price down by avoiding financing extra items like upgrades and closing costs
- Stay alert to which neighborhoods are going to see the largest leaps in tax rates ahead
Keep Your Taxes Low
- Appeal high property taxes
- Vote for those that will help keep property taxes down
- Claim all of the property tax exemptions you are eligible for
- Look for home modifications to make and avoid to keep assessed values down
Bonus Savings for Real Estate Investors
- Appeal your annual bill with the help of Property Tax Adjusters, Ltd.
- File a grievance when the market drops or the property is damaged
- Claim all of the available real estate related deductions on your annual income tax returns
- Explore investing through a Real Estate IRA
- Take advantage of 1031 exchanges when trading properties
- Try to ride out the 2 year rule on your personal residence to avoid capital gains tax