Wednesday, March 3, 2010
Property taxes on land and the buildings occupying land are not imposed by state law, but by municipalities. This makes for quite a variety of applications and requirements. Property taxes are an important source of revenue for the jurisdictions in which they are applied.
The role of the state is to set a maximum standard for the application of property tax. The local tax assessor then determines what value the standard (usually a percentage) is applied against. While it is impossible to escape property tax entirely in the United States, certain parts of the country apply a lower standard than others.
Most states offer a break on property taxes to older citizens and forty states offer homestead exemptions or tax credits that limit the value of assessed property that is subject to property taxation.
Other property tax breaks may be offered, depending upon where you reside. While property taxes everywhere must, ultimately be paid, there are some states that propose deferral of taxes until a homeowner moves or dies, dependent upon that homeowner's income or age. Still, other states may give a freeze to elderly homeowners that will lock in the assessed value of their home once they reach a particular age.
People with low incomes and high housing costs, like the elderly, may be faced with property taxes too high to pay. In some states, property tax relief is geared toward those with the greatest burden. Under plans like a property tax circuit breaker, the low-income homeowner is better protected against rising property taxes that accompany rising property values.
A property tax circuit breaker prevents homeowners from getting overloaded by their property taxes. In such a program, the state sets a maximum percentage of income that a qualifying taxpayer can be expected to pay for property taxes. If the homeowner's property taxes exceed this set percentage, the state provides a refund or credit for the overage.
Twenty-five of the thirty-one states and the district of Columbia that now participate in property tax circuit breaker programs do not allow all households to participate without regard to the homeowner's age.
There are other property tax relief programs operating throughout the country. One of the most familiar involves homesteading. A state with a homestead act allows a certain amount of the homeowner's property to be exempted from taxation. In most states with a homestead act, the provision is for the property of primary residence only.
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