Pay less in Property Taxes! Apply for Homestead Exemption Today (US applicable)

TL;DR Please don't pay more than you need to in property taxes. Look up your county tax website and apply for Homestead Exemption if you qualify. Deadline is often in the first half of the year for it to be applied to this years property taxes.

As a millenial, now in my 30s, myself and many of my peers are joining the r/FirstTimeHomeBuyer club. Most juristictions in the US offer a Homestead Exemption; this allows homeowners to reduce the amount of property taxes they owe on their primary residence. I was lucky to know about about the homestead exemption but several of my peers who have bought homes did not and have missed out on this option in their early years of ownership.

Your property taxes are a percentage (often called millage) of your home's "Assessed value". Often this assessed value is a flat percentage (40% in my state) of the "Fair Market Value - FMV" as calculated by the local tax office (typically the county assessor or county tax office). Side note: you also can contest the FMV if you believe it inaccurate.

To calculate your tax owed, the assessed value is multipled by your tax rate (there maybe multiple taxes with different rates: Operating, Schools, etc.). However if you are granted homestead exemption a further reduction is applied to the assessed value prior to any tax being calculated.

I'll use my city taxes in this example for simplicity but note that not all cities have a property tax. My city's millage rate for this year 15.019 'mills'. If a homeowner's FMV is $400,000 then their assessed value at 40% would be $160,000. Without any reduction their tax would be 160,000 * 0.015019 or $2,403. However, my city offers a generous $40,000 reduction through homestead exemption. Thus the homeowner's tax then would only be $120,000 * 0.015019 or $1,802.

My county and city both offer generous homestead exemptions. By calculating the difference I would have paid without it, I find that we saved $900 this year. Your mileage will be highly variable based on local rates and exemptions.

However, many homestead exemptions also protect against surges in market value by capping the annual increase at a set maximum percentage. My state just passed a measure to implement a state wide homestead exemption to limit increases in assessed value. This is a HUGE plus and could save you thousands if market values surge.

So please research your local options for homestead exemption. Even if in your locale it doesn't seem like much... every little bit helps.

Disclaimer: I am not a certified anything related to this topic. I don't pretend this to be an infallable source of information. Rules vary by juristiction. Consult a professional if needed.