Property Tax Avoidance and Evasion Methods
Real property taxes are the largest source of revenue for local and state governments. Tax evasion in regards to the ad valorem tax is very difficult and can lead to felony charges. Tax avoidance techniques tend not work for property taxes; an individual who refuses to pay their property taxes will have their land stripped by the government.
Owning land is similar to living in an apartment, where the government acts as the landlord, and the property taxes are the rent. Property taxes enforce an individual to pay for the right to live on a piece of land. Tax avoidance techniques are nonexistent for property taxes, but there are numerous steps an individual can take to decrease the amount he or she pays.
The most obvious step taken to decrease the amount one owns, is simply to purchase less land or make little improvements on the land. Granted these methods are undesirable, but property taxes can greatly increase through substantial improvements. Like in real estate, location is everything when it comes to property taxes. Areas with strong public schools or a wealthy demographic tend to levy higher property taxes than working class or marginal locations.
A small home in a wealthy community will undoubtedly have a higher property tax rate than a larger home in a more desolate or undeveloped area. Owning land in a specific area is an individuals right, if they wish to live somewhere with high property taxes they are free to do so. That being said, there are techniques to lower one’s property taxes, but no practical strategy to take part in tax evasion.
Techniques to lower property taxes:
When your property is being assessed look for errors in the description of your physical property. In the official assessment your property will be examined fully, square footage, boundaries, the condition of the physical property the number of bedrooms in your home; all of these factors strongly effect the amount of property taxes you will pay. Errors happen during the assessment process, correcting mistakes is not a form of tax evasion, but instead a wise move to lower your property taxes.
When your property value is assessed compare it with other pieces of property in your area. If your assessment is considerably higher than your neighbors, a case questioning the assessment may be justified. Property’s often get marked up, or deemed more valuable than they actually are. If homes which are similar in terms of size and marketability, are appraised at lower levels take your assessment to your local property tax assessor and have it reviewed. A detailed examination of all components is necessary when comparing assessments. What are the similarities and differences of your property vs. your neighbors? Are their differences in location, traffic, floor plans, materials used to build the home? Again, this is not tax avoidance, but a common maneuver taken by astute homeowners.
Photograph your property and other property’s in your area. Photographs offer physical evidence that can detail evidence or similarities between your property and others with lower assessed values. Look at the physical conditions of the exterior and foundations of the home, as well as the surrounding areas. Physical differences in these characteristics will yield varying property values. Tax evasion is not permissible for property taxes, but offering photographs to your property tax assessor can lower your assessed value.
Tax evasion is a fruitless effort in regards to property taxes. There is no way to avoid them. The government relies on such funds for public funding, schooling, and services. The steps listed above can help decrease your assessed value and thus lower the amount paid. When the evidence is compiled, and the investigation is concluded present the case to your local property tax assessor or your local governments review board for determining taxes.
Similar properties, in theory, should have equal or fair assessments. Do not attempt to commit tax avoidance or tax evasion, but instead, follow the above steps to lower your property tax payments.