Property tax exemptions: Seniors, veterans and others who qualify

There’s no getting out of paying property taxes for many homeowners even after you’ve fully paid off your mortgage. Your cost could go up as years go on when your home value goes up. If you qualify, however, you may be able to benefit from property tax exceptions.

How do property taxes work?

Property taxes are assessed based on the taxable value of your property. The amount of tax levied differs based on how your local government calculates real property taxes. Your tax payment is typically split into monthly portions as part of your mortgage payment. The funds are held in an escrow account until the taxes are due.

Depending on how your property taxes are calculated, the taxable value of your home may not be the entire home value. For example, if your home value is $560,000 and your local government deems $500,000 of it as the taxable value, here’s how much you could pay:

What is a property tax exemption?

Property tax exemptions lower your assessed property value for tax purposes, which will eliminate or reduce the property tax you owe. Exemptions are usually given to homeowners who qualify based on factors like their homeownership status, age, disability, or financial situation. Local governments assess and administer these exemptions.

Who is exempt from paying property taxes?

Several types of properties like ones from qualifying nonprofit and religious organizations may be exempt. Others include veterans and senior citizens. Some types of properties are exempt from real estate taxes, including qualifying nonprofit, religious, and government properties. Senior citizens, veterans, low-income individuals, and those eligible for STAR (the School Tax Relief program) may also qualify.

Senior property tax exemption

States often provide tax exemptions for senior citizens who have reached a certain age, while some areas base eligibility on Social Security status. The details of the senior exemption vary by state.

Often, states implement residency and income restrictions. Some of the statutes defer the taxes until the property is sold. For details, contact your local department of revenue.

Veteran property tax exemption

Members of the armed forces and veterans can claim exemptions from various taxes, including property taxes. The details for property tax exemptions for military personnel and veterans vary widely from state to state, but any potential veteran exemption programs are definitely worth checking out.

Depending on your situation, you can exempt a certain amount of your property’s value or even get a complete waiver from property taxes. There may also be tax benefits available for qualifying surviving spouses who have not remarried. In either case, a veteran property tax exemption could potentially save you thousands.

Disability exemptions

If you’re a person with a disability, you may be able to get relief from some portion of your property taxes. In this case, there’s a wide variation in local policies. Be aware that you might have to prove, or sign an affidavit attesting to, your disability.

Disabled persons may also qualify for tax deductions, income exclusions, and credits in addition to property tax relief. For example, home modifications such as wheelchair ramp access, wider doorways, and lower countertops could be deductible on your taxes as medical expenses.

Homestead exemptions

Most states have a homestead property tax exemption that allows you to protect a certain amount of your primary property’s value from taxes. You can structure the exemption to exclude either a flat amount or a percentage of your taxable value. This limits the maximum amount you have to pay in real estate taxes.

Depending on your state, you may be able to protect $5,000 – $500,000 of your principal residence's value. A handful of states, including New Jersey, don’t offer any homestead exemption.

Some states will offer an even larger homestead exemption for married couples and joint owners to save even more on property taxes.

What’s the difference between a property tax exemption and a deduction?

A tax deduction lowers your taxable income, which can lower the amount of income taxes you owe. Some of these tax deductions may apply to homeowners, like for those who operate a business in their home or mortgage interest if you itemize deductions. You may also be able to deduct property taxes that you’ve already paid from your return if you itemize.

An exemption is different because it helps you lower or eliminate property taxes, not lower your taxable income you’ll need to pay the tax on.

How to claim a property tax exemption

If there is a property tax exemption you think you may qualify for, here are a few ways you can claim them.

• Confirm your eligibility. The first step is to check and confirm with your state and local tax authorities that you meet all the qualifications. If you’re a veteran, you’ll also want to confirm with the Department of Veterans Affairs (VA) office.
• Gather your documents. Once you’ve confirmed your eligibility, collect and organize all the required paperwork before you apply. This typically includes a general application form, proof of ownership, proof of income, and, if applicable, proof of disability.
• Submit your application. Now that you have all the paperwork, visit your state or local tax collector or department of revenue’s website to ensure you apply before the deadline. You don’t want to miss out on potentially saving thousands of dollars.

Claiming multiple property tax exemptions

Depending on where you live, you could claim multiple property tax exemptions. Although different states have different rules, many will allow you to claim more than one exemption.

Visit your state’s revenue website or consult with your local tax collector’s office to learn more about the exemptions available in your state. You could also discuss your situation with a tax professional.

FAQ about property tax exemptions

Below are a few of the most common questions regarding property tax exemptions.

Are disabled veterans exempt from property taxes?

Yes, many states offer disabled veterans the property tax exemption. You will need to check with your local or state government office to see what’s available.

What types of properties are exempt from property taxes?

Aside from primary residences, local governments may grant property tax exemptions to qualifying property types like ones for religious organizations and nonprofit groups.

How do I know if I qualify for a property tax exemption?

You can check by looking at your state or local government’s website, working with a reputable tax professional, or by calling your local tax collector’s office.

Is tax exemption a good thing?

Tax exemptions can lower the amount of property taxes you owe. You can use the savings for other expenses related to homeownership. It can also benefit your community by helping those who may not have the means to pay property taxes.

Is it better to claim exemptions or not?

Claiming tax deductions helps you to lower the amount you pay in taxes, but you may need to itemize your returns. Taking the time to see whether itemized deductions surpass the standard deduction. Speaking with a tax professional may help you with a more educated decision.

The bottom line: Speak with your local tax assessor about exemptions

Property tax exemptions can help you directly lower the amount of property taxes you pay.¹ If you qualify, contact your local tax office and file any necessary paperwork as soon as possible. Doing so could save you thousands of dollars.

If you’re looking for other ways to save money on housing costs, use the Rocket Mortgage mortgage payoff calculator to see if refinancing your home loan could lower your monthly costs.²

¹ This article is for informational purposes only and is not intended to provide financial, investment, or tax advice. You should consult a qualified financial or tax professional before making decisions regarding your retirement funds or mortgage.

² Refinancing may increase finance charges over the life of the loan.

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