Financing a home requires a great deal of knowledge and patience, as it takes time to determine which method is right to fit your budget and needs. Often, buying a home produces a large amount of financial stress and uncertainty, but homeowners can utilize a few hidden opportunities to save some cash.
Unknown to many, certain tax exemptions provide a way for homeowner-hopefuls to save thousands on their dream homes. These exemptions are put in place by both state and federal governments, and they are meant to reward and protect certain classes of homeowners. These exemptions work by reducing the amount of taxes paid on the home — as a result, homeowners are freed from potentially paying thousands of dollars.
Homeowner’s Exemption:
In certain areas, one way to obtain savings on a new home is through a homeowner’s exemption. A homeowner’s exemption provides owners with property tax savings by reducing the value of an eligible property. Because of this reduction, property taxes will be lowered because the owners will be paying interest on a lesser amount. Once a homeowner is approved for this exemption on a property, they don’t need to worry about applying again — it renews automatically on an annual basis.
Requirements:
To qualify, a property must fall into one of the following categories:
- A 1 to 4 unit single-family home
- A condo
- A townhome
- A planned unit development (PUD)
- An apartment building (up to six units)
- A housing cooperative
Additionally, homeowners must have occupied the property from January 1 on during the tax year in question. If they meet the stated requirements, they will be eligible to apply for the exemption by January 1 of the next tax year.
Applying:
To obtain this exemption, applicants complete a fairly straightforward process. Homeowners must obtain an exemption form (often found through an Assessor's Office or the local township assessor) and file an initial application. Documents typically required for this process include proof of identification, proof of occupancy within the current year, and proof of property tax liability.
After the form has been filed with the proper proof and documentation, the applicant’s exemption savings will be calculated by an assessor and communicated to them.
Other Exemptions:
If a homeowner doesn't qualify for this exemption, there are plenty of other exemptions to take advantage of for tax relief. Exemptions based on things such as age or veteran status are also available, as listed below:
- Longtime Homeowner Exemption: Made specifically for Cook County residents, IL, this exemption applies to those who have lived in a residence from January 1, 2006, to January 1, 2016, and have a total household income of under $100,000. The applicant must also show that their property has faced an assessment increase that now exceeds the maximum accounts set by the state legislator, and then they will qualify.
- Home Improvement Exemption: This is for recently renovated homes (not including maintenance or regular upkeep). This exemption can increase your property value for up to $75,000 worth of improvements without increasing your home’s taxable market value for the next four years.
- Senior Citizen Homestead Exemption: This exemption is for those who are 65 or older (beginning January 1 of the tax year being applied for). Unlike the standard Homeowner’s Exemption, this is not automatically renewed, so it must be reapplied to each year.
To better understand the types of exemptions you may qualify for, it is best to research and educate yourself on property taxes within your area and become familiar with the requirements of specific exemptions. It may also be helpful to speak to a professional, as ultimately, these exemptions can annually start to save you and other homeowners thousands. For help understanding what exemptions may be available to you, contact experienced agents Theo Jordan and Katie Cassman by emailing
[email protected] or calling 847-624-6236.
