Different states have different rules and programs that may exempt a portion of property taxes. You probably won't get a question on an exam about specific exemptions in your state, but you nevertheless need to check them out just in case.
A partial exemption may work in one of several ways: It can apply to the taxes directly by reducing the amount owed, it can apply to the assessment by reducing the assessment for an individual, or it can apply by reducing the assessment for a particular class or type of property. Here are a few examples:
^ Partial relief of total taxes that have to be paid may be granted. This partial exemption usually is a percentage of the taxes that may be offered to senior citizens or the disabled. Income qualifications may also be attached to the exemption. So a person may have to be 65 years old and making less than a certain amount of money to qualify for an exemption.
^ Another type of partial tax exemption is a reduction in the assessment on the property. This type of exemption typically is offered to veterans. The exemption may be either a fixed dollar amount or a percentage of the assessment and may vary according to whether the veteran was in combat and/or is disabled. Special programs may also provide relief in the form of reduced assessments from various specific taxes such as for schools.
^ Some states also provide different assessment ratios for different types of properties. I discuss assessment ratios in "Oh so valuable: Assessing property for taxes" earlier in this chapter. For example, commercial properties may be assessed at higher assessment ratios than residential properties. What that means is that if you have a residential and a commercial property that have the same market value, the commercial property pays a higher amount of property taxes than the residential property of equal value.
Remember, when you're an agent selling a property, you need to find out the taxes on the property as if no exemptions were applicable. Your buyer may not qualify for the same exemptions as the seller. You can find out the taxes on the property by consulting the municipal or county assessor to get the assessment information and the receiver of taxes (treasurer or department of finance) to get the tax rate. Then using the methods from the earlier "Doing the decimal diddle: Calculating the taxes due," you can figure out the taxes.
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If you are getting ready to purchase your first home or if you think you can't afford to purchase your first home, don't make another move until you have read this important information! Every year, Federal, State and Local government and community development programs help thousands of people obtain there first home.