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What is Property Tax Relief?

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  • Written By: Brenda Scott
  • Edited By: Bronwyn Harris
  • Last Modified Date: 13 November 2016
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Property taxes are taxes charged against property owned by an individual or business. In most countries, these are administered at a local level and fall into two categories; real estate taxes and personal property taxes. Property tax relief is any program which diminishes or eliminates the burden of property taxes.

In many countries, the primary source of property tax relief comes in the form of a reduction or limitation of real estate tax charged on property owned by elderly or disabled individuals whose income falls below certain levels. Some states or provinces also have provisions for property tax limits or exemptions for a taxpayer who does not meet the age and disability requirements of the programs, but who is the surviving spouse of someone who qualified. A credit may also be available for a younger taxpayer with no disability who meets more stringent maximum income limits.

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In the US, real estate property tax is not allowed to be charged on property owned by churches or other registered non-profit organizations as long as that property is not held for the sole purpose of income production. For example, property which houses a church cannot be taxed, but a movie theater which is open to the public on a regular basis as a means of income production may be subject to property tax even if it is owned by a religious order. Historic properties listed on the National Register of Historic Places may also be exempt from property tax, depending upon the state and local laws of the region.

Some states, such as Colorado and Pennsylvania, offer property tax relief in the form of a Property Tax / Rent Credit for residents who meet certain age, disability or income limits. Many districts may also reduce real estate taxes based on age and longevity in the home, or freeze the real estate tax amount when a resident reaches a set age. Other states may eliminate real estate tax completely on the personal resident of a disabled veteran based upon the extent and cause of the disability.

Property tax is also charged on personal property such as vehicles, inventory, and works of art. These are generally ad valorem taxes, which are charged annually and based upon the value of the property. Localities may offer property tax relief on antique vehicles providing the owner pays a multi-year license fee which then becomes a lifetime license. Vehicles that have been modified with wheelchair lifts of other handicapped accommodations may also be eligible for reduced property taxes.

Property tax relief may come in the form of an income tax deduction. A deduction is an amount which is deducted from gross income prior to calculating income tax. In the US, if an individual itemizes his deductions he is able to subtract the amount paid for real estate and personal property taxes. Temporary property tax relief programs have been utilized which allowed those who did not itemize to add a portion of the real estate taxes paid that year to their standard deductions.

Personal property tax is assessed on inventory and all business property owned by businesses in some localities. A personal property tax relief provision exempting or limiting a portion of those taxes may be used to stimulate the local economy during an economic downturn. Regions may also offer a property tax relief incentive for businesses considering relocating to that area.

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