Property Tax Abatements. What a mouth full. But don’t let that legal title scare you. When broken down, these three little words can be music to your ears. We know, we know. It’s the middle word you’re afraid of: Tax. But taxes aren’t all bad. In fact, when paired with abatements, they’re actually quite good. And LandCentral’s here to explain it all. So keep reading for A Beginner’s Guide to Property Tax Abatements:
The Gist
An abatement is the removal or reduction of something. A tax abatement is the removal or reduction of taxes, usually on real estate. See? We told you they could be good.
Why They Exist?
Besides being awesome, tax abatements actually have a pretty important purpose. Cities looking to attract buyers to locations with lower demand will offer these programs to significantly reduce or eliminate property tax payments for years, sometimes even decades. This revitalizes an area, puts more money into the pocket of homeowners, encourages modern construction and creates more valuable pieces of property. Talk about a ripple effect of awesomeness.
Who’s Eligible?
It’s not so much a who, as it is a where. While some cities will limit programs to low or middle income property owners, some don’t. Instead, tax abatements are only found on qualifying areas or homes. This can be new and renovated homes, or commercial buildings. Since the purpose of abatements is to help move people and businesses in, it’s all about location, location, location. Each city and county will have its own guidelines for abatement eligibility. To find out yours, check out the property tax records on your existing or future property. Did you know they’re public record?
The Pros
As if saving money wasn’t pro enough, but wait, there’s more. Certain abatements are for one-time home improvements that will increase the value of a property like installing environmentally friendly additions. There are even federal tax abatements for preserving and restoring homes designated to have historic value.
The Cons
Yes, even saving money on taxes has its cons. One of the biggest cons of property tax abatements is the effect they have on the local school districts. Since school districts rely primarily on local property taxes for their funding, having a large area eligible for tax abatements may impact the quality of education in that region. But there are reforms in the works to minimize effects on local schools. So there’s hope.
So to sum up, property tax abatements are usually pretty awesome. They reduce the cost of living, help boost the local economy, and can put a substantial amount of savings in your pocket. Enough savings in fact, that you may find yourself itching to buy another piece of property. Did we mention we sell land?