Property taxes are the “elephant in many retirees’ living rooms,” writes Morningstar’s Christine Benz in highlighting four strategies for handling mounting property tax for older Americans.
Because of falling home values, property tax rose just 1.2% in 2011, says Morningstar citing analysis by USA Today. But in recent history, the taxes have increased 20% since 2006. The problem: many retirees on fixed incomes have a hard time making up for the growth in payments.
Benz addresses four strategies for older Americans to combat the problem: Look into senior-specific programs; look into specialized programs; consider appealing; and stay out of the AMT zone.
The article writes:
For seniors who have paid off their mortgages and other debts with the aim of limiting their overhead in retirement, high property taxes are an unwelcome ongoing outlay, and big increases can make it difficult to stick to a budget. In fact, in a recent Discuss forum thread about downsizing to a smaller home during retirement, several Morningstar.com readers cited high property taxes on their original homes as a factor in their decisions to relocate and/or downsize during retirement. If reducing your taxes by relocating is on your radar, this interactive map enables you to see how property and other taxes levied within your state compare with those of other states.
But relocating isn’t for everyone: Although they could move somewhere cheaper, many seniors stay in large urban centers with high property taxes because that’s where their children, grandchildren, and social networks are. Such seniors need to take advantage of every measure they can to keep those tax costs as low as they can be. They also need to stay vigilant: Even if they’ve appealed their assessed valuations or obtained property tax exemptions or freezes in the past, they might need to reapply in future years.
If you’re a senior, or an adult child or grandchild who helps your elders with their finances, you have a few different levers you can pull in order to reduce the property tax load. The specifics will vary widely based on where you live, but here are some strategies to keep on your radar….
Written by Elizabeth Ecker