2016 kicks off higher property taxes for many US property owners. How can homestead exemptions help lower property tax burdens? How do homestead exemptions vary between popular states like Florida and New York?
Massachusetts is seeing some property taxes decline, while Nebraska and Maryland are working on new property tax cut plans. Unfortunately New Jersey has just soon property taxes rise the most in four years, while Chicago is experiencing the largest tax hike in the city’s history. In spite of relief plans New Yorkers are also expecting to see higher property tax bills this year.
One way for homeowners to reduce their property tax liability every year is via ‘homestead’ tax protections. These are discounts or breaks that owners receive on the annual property taxes on their personal residences.
New York offers the STAR exemption. For most individuals and families this is just a few hundred dollars. Those in Southampton or Shelter Island in Suffolk County may receive a more competitive break, at just over $50,000. In Nassau County the most significant break goes to the City of Glen Cove. Note this is just the amount that is not subject to school taxes. New York also offers homestead exemption protection in bankruptcy proceedings. Creditors may lien properties, and eventually force them to be sold. This exemption aims to protect some of the owner’s equity so they aren’t completely destitute.
In contrast, Florida has a far more robust homestead exemption, which is certainly adds to the draw for the wealthy. Florida homestead properties are protected from virtually all creditors. Exceptions may be the mortgage lender for the property, homeowners associations, and federal tax liens. Property owners get a $50,000 exemptions on property taxes, regardless of county they live in, or income, versus in NY where it is location and income based. New York also has a very tight cap on the dollar amount tax payers can save, versus Florida where there is no cap on the savings, which also limits how much property taxes can go up each year.
For this reason many may find it worth making FL their homestead and ‘primary residence’. If that isn’t an option at least make sure you are challenging your annual property taxes on your NY real estate.