| |
Property taxes trip up naive homebuyers |
|
|
A tax credit or rebate occurs when a state or other taxing authority refunds a portion of the property tax to
property owners, perhaps through an income tax credit. This type of relief has been on the rise in recent years as higher tax
bills have resulted from the run-up in home values, Waisanen says.
A tax deferral allows the homeowner to postpone payment of all or part of the property tax until a later time,
such as when the home is sold.
Another form of relief is a so-called "tax swap," which replaces a portion of property tax revenues with an
increase in the state sales tax. The tax swap is "a mini-trend" that a few states, notably Idaho and South Carolina, have
implemented and others "are looking at to see whether they can reduce the overall reliance on the property tax," Waisanen says.
 |
| Deferrals typically are targeted to: |
|
|
| • |
Seniors. |
| • |
Low-income households. |
| • |
Seniors of modest means. |
|
Yet Sepp warns that tax swaps don't necessarily mean lower taxes overall. This distinction is an important point
for job-seekers or retirees who wish to relocate across state lines because a lighter property tax could be outweighed by
other heavier taxes.
"Hawaii is a prime example," Sepp says, "Hawaii has by far the lowest property tax burden, but the income tax
burden there is horrendous. So overall, you might be paying more in taxes there than you would in New Hampshire, for example,
where the situation is exactly the opposite."
The Tax Foundation, a nonpartisan tax research group
in Washington, D.C., has published a county-by-county chart
of property taxes on owner-occupied homes based on 2006 U.S. Census
Data. Certain counties in New York and New Jersey have the highest
median property taxes in the nation, according to this data.
Property taxes are unpopular, Waisanen admits, but
they're also necessary -- they account for 70 percent, or more than
two-thirds, of local governments' revenues across the country. Homeowners
may feel unfairly targeted by this particular tax burden, but the
bottom line is that property taxes, in most places, pay for schools,
libraries, fire departments, police officers, street lights and
many other public benefits.
|
