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Posted by Jim McClaflin, EA, NTPI Fellow, CTRC

Property Tax Explained: Understanding the Basics & Recent Changes

Property Tax Explained: Understanding the Basics & Recent Changes

Property taxes are one of the many types of taxes that property owners have to pay. These taxes are levied on real estate, including land, buildings, and other structures, and are used to fund local government services such as schools, roads, and public safety. 

In this article, we will explore the basics of property tax, including how it works, recent changes in the law, and how property owners can minimize their tax burden. 

How Property Tax Works

Property tax is calculated based on the value of the property and the tax rate set by the local government. The property's value is determined by a local assessor who considers factors such as the property's location, size, and condition. 

Once the value of the property has been determined, the local government sets a tax rate, which is expressed as a percentage of the property's value. For example, if the tax rate is 1% and the value of the property is $500,000, the property tax would be $5,000 per year. 

Property taxes are typically paid annually, although some local governments may allow for quarterly or semi-annual payments. Property owners who fail to pay their property taxes may be subject to penalties and interest charges. In extreme cases, the government may seize the property through a process known as tax foreclosure. 

Recent Changes in Property Tax Law

In recent years, several changes in property tax law have impacted property owners across the country. Here are some of the most notable changes: 

The Tax Cuts and Jobs Act (TCJA) of 2017

The TCJA made several changes to the tax code, including changes to the deductibility of property taxes. Under the new law, taxpayers can only deduct up to $10,000 in state and local taxes, including property taxes, on their federal tax return. This change has significantly impacted taxpayers in states with high property taxes, such as New York and California. 

Changes in Assessment Practices

Some local governments have changed their assessment practices in recent years, which can impact property values and property tax bills. For example, in some areas, assessors have started using more sophisticated methods to determine property values, which can lead to higher assessments and higher property tax bills. 

Changes in Tax Rates

Local governments can change their tax rates from year to year, which can impact property tax bills. In some cases, tax rates have been raised to fund specific projects or to address budget shortfalls. 

COVID-19 Relief

In response to the economic impacts of the COVID-19 pandemic, some local governments have offered property tax relief to homeowners. For example, some jurisdictions have delayed property tax payments or offered payment plans to help homeowners who are struggling to make ends meet. 

Minimizing Your Property Tax Burden

While property taxes are a necessary part of homeownership, there are steps that property owners can take to minimize their tax burden. Here are some strategies to consider: 

Review Your Assessment

Property owners should review their yearly property assessments to ensure that they are accurate. If you believe that your assessment is too high, you can appeal it and have it lowered. This can result in lower property tax bills. 

Take Advantage of Exemptions

Many jurisdictions offer exemptions to certain types of property owners, such as seniors, veterans, and low-income homeowners. These exemptions can significantly reduce property tax bills, so it's worth checking to see if you qualify for any.

Consider Refinancing

If you have a mortgage, you can lower your property tax bill by refinancing your loan. When you refinance, your mortgage lender may re-assess the value of your property, which could result in a lower assessment and a lower property tax bill.

Invest in Energy-Efficient Upgrades

Some jurisdictions offer tax incentives for homeowners who make energy-efficient upgrades to their homes. These upgrades can include installing solar panels, upgrading insulation, and replacing windows and doors. By making these upgrades, homeowners can reduce their energy bills and lower their property tax bills.

Be Prepared for Changes in the Law

As we've seen, property tax laws can change from year to year, which can impact property owners. It's important to stay informed about any changes in the law and how they may affect your property tax bill. By staying informed, you can be better prepared to take action to minimize your tax burden.


Property tax is a necessary part of homeownership, but it doesn't have to be a burden. By understanding how property tax works, staying informed about changes in the law, and taking advantage of tax-saving strategies, property owners can minimize their tax burden and keep more money in their pockets. If you have questions about property tax or need help minimizing your tax bill, consult a qualified tax professional.



Jim McClaflin, EA, NTPI Fellow, CTRC
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