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During a recession, it’s crucial to know how to handle your property taxes. There are numerous options that you can use to reduce your property tax bill.
Circuit breakers
During this mid-recession, many states are offering property tax relief programs. These programs provide relief to homeowners and renters. The programs are usually free to the taxpayer, but they are not offset by the federal income tax.
Many states offer programs for the elderly and low-income households. These programs are also known as circuit breakers. They are a tax credit that reduces property taxes when the income level of the taxpayer exceeds a certain threshold.
Most circuit breakers are available to both homeowners and renters. However, there are only about 18 states that offer a complete set of tax relief programs. They are divided into two categories: single-threshold formulas and multiple-threshold formulas. Single-threshold formulas focus on tax relief, while multiple-threshold formulas provide incremental relief.
The most important decision a state should make when designing a circuit breaker program is the maximum income level for eligibility. The maximum income level should be indexed for inflation. This ensures that the tax relief will be meaningful in the long run.
Homestead exemption
Using a homestead exemption to your advantage is no small feat. For starters, you have to be in the know. Not to mention, you have to be on the lookout for the unwelcoming tax collectors who aren’t in the loop. Fortunately, a little know how goes a long way. The best way to go about it is to start with the basics and work your way up. Hopefully you’ll be ready for the big day. Lastly, be sure to take advantage of the tax season’s benefits by completing your paperwork on time and on the mark. Having a good tax season means fewer surprises down the road. Lastly, you’ll be able to save a tidy sum on your tax bill at the end of the year.
COVID-19 impact of property tax collection
Currently, there is a need for reliable tax revenue predictions to guide recovery plans. This study aims to provide such predictions for EU member states. It utilizes regression models based on historical data for the past twenty-five years to forecast tax revenue per capita for the next three years.
The research uses two simplified assumptions. The first is a decline in employment that is correlated with a broader recession. The second is the shift from in-person to work-from-home (WFH) activities. Some people that are having difficulty financially, are selling their homes to companies such as The Cash Buyers Network (Boynton Beach Residences Note*: I sold my Boynton Beach house for cash here: https://housefastcashfl.com/sell-my-house-fast-boynton-beach-fl/).
The decline in employment indicates a COVID-19 induced recession. While the commercial property tax market in the central city may see some decline, the effects could diminish over time. The time trend model regression model is based on data from 1995 to 2019 and is adjusted with unemployment rates.
The revenue effect is larger in Atlanta than in the other cities. The revenue drop in Atlanta results from a large decrease in property tax revenue and a projected decline in commercial property value.
Impact of property tax limits on the quality of life
During the recession, the impact of property tax limits on the quality of life has been a hot topic. However, it is difficult to determine the actual impact of property tax limits on the quality of life, because property tax payments are recorded differently in each county. Nonetheless, researchers from the Urban Institute have developed methods to analyze property records data to understand the economic impact of property tax limits. In particular, they studied the relationship between property tax and residential mobility and residential supply.
The impacts of property tax limits on the quality of life are most visible in larger cities with more diverse revenue structures. But smaller cities are more susceptible to property tax limits because they rely on property tax as their primary source of local tax revenue. In some cases, cities can offset a decline in the tax base by adjusting tax rates or adjusting the tax rate to offset the reduction in property tax revenue. However, a city’s tax rate is typically a lag time from changes in market value.
