The new tax law changes included an unwelcome surprise for some homeowners: a $10,000 cap on the state and local tax (SALT) deduction. The cap could cause financial pain for residents of NY where even middle-class houses can sometimes exceed that threshold. Given the new cap, is it worth trying to lower your property tax bill?
Experts say the effort can pay off, but be prepared to invest some legwork and even some money in the pursuit of a lower tax bill. The first step is to figure out if you are likely to be affected by the $10,000 limit on SALT deductions. Homeowners whose property tax bills are close to that amount are likely to feel the financial pain, given that your total SALT taxes could get pushed above the new cap once state income taxes are included. Next, you'll want to determine if you're likely to itemize your deductions in 2018. The Tax Cuts and Jobs Act almost doubled the standard deduction to $12,000 for single filers and $24,000 for married filers, a change that is effective for the current tax year.
Even without the pain of the SALT cap, property taxes across the country are on the rise. Homeowners paid $18.4 billion in property taxes during 2016, or 4.6% more than in the previous year, according to the U.S. Census.
Property taxes can change when a municipality increases its tax rate or when it changes the assessed value on your home. While you can't challenge the former, you have the right to appeal your home's assessed value. Do a reality check about your home's value. Compare your property's value against similar properties in your area. If your home seems to be assessed at a higher amount than those comparable ones, that data will help you build your case.
Your property tax bill should include information about how to appeal your assessment. Every municipality has its own process, with some allowing an appeal at any time while others only allowing it once a year. Remember to document everything, including photographs, your independent appraisal and comparable home information. Some homeowners, such as seniors and veterans, may be able to take advantage of waivers or property tax relief programs offered by their municipalities or states. Those residents may be able to get a lower tax bill without challenging their assessments. Give it a shot, you never know!