What is Property Tax?
Property taxes represent a major expense for most homeowners, typically amounting to 1% to 3% of the home’s value each year.1 This recurring expense doesn’t go away when you pay off the mortgage. It’s a perpetual cost of home ownership. Some cities offer what’s known as property tax abatement or real estate tax abatement.
These programs can bring consumers significant savings, allow them to buy more home for the same price, or improve their chances of qualifying for a mortgage by putting a home’s total monthly payment within reach. As an added bonus, property tax abatement can improve a home’s resale value for as long as the abatement is in effect. In this article, we’ll take a closer look at property tax abatement programs, how you can find one when you’re home shopping and whether they have any drawbacks.
- Tax abatement programs reduce or eliminate the amount of property tax homeowners pay on new construction, rehabilitation and/or major improvements.
- The abatements won’t completely eliminate your property tax bill—you’ll still have to pay taxes on the value of the property before it was improved.
- You can buy a property that already has an abatement, or you can purchase an eligible property, make the required improvements, and apply for the abatement yourself.
- The purpose of these programs is to attract buyers to locations with lower demand, such as city neighborhoods being revitalized.
- Despite the savings, abatement programs can have drawbacks: The neighborhoods that qualify may be less desirable; after the abatement ends, your housing expense will jump significantly; and if you fall behind on your property tax, the abatement is likely to be cancelled.
What Is a Property Tax Abatement?
Some cities have property tax abatement programs that eliminate or significantly reduce property tax payments on a home for years or even decades. The purpose of these programs is to attract buyers to locations with lower demand, such as city neighborhoods that are in the midst of revitalization efforts. Some cities offer tax abatements citywide, while others only offer them in designated areas. Some cities limit these programs to low-to-middle-income property owners, but many programs have no income restrictions.
You can buy a property that already has an abatement, or you can purchase an eligible property, make the required improvements, and apply for the abatement yourself. The first option is considerably easier because it means someone else has endured the headaches of construction and bureaucracy and all you have to do is move in.
Search Residential Tax Abatements in Cincinnati