Property Tax Strategies
Lower your property tax by appealing your assessment and claiming exemptions, and deduct rental costs.
TL;DR
- Appeal your
assessedValuewhen comparable sales support a lower number. - Claim every
exemptionyou qualify for to cut taxable value. - Deduct rental costs and
depreciationto shrink taxable rental income.
How Property Tax Works
Assessed ValueYour local assessor sets the taxable value.
May differ from market valueTimes the RateThe local rate applied to value sets your bill.
Assessed value x local rateSALT CapOn a personal home, it counts toward the SALT limit.
$40,400 cap on Schedule ARentals UncappedLandlords deduct property tax as a business cost.
Schedule E, no SALT capCut Your Assessment
Check for ErrorsWrong square footage or bedroom count inflates value.
Review the assessment noticeGather CompsRecent sales of similar homes support a lower value.
Comparable nearby salesFile on TimeSubmit an appeal before your jurisdiction's deadline.
Deadlines vary by countyTry Informal FirstMany assessors offer a free informal review.
Informal review before hearingClaim Exemptions
HomesteadA break for your primary residence.
Cuts taxable valueSeniorExtra reduction or a freeze for older owners.
Often age 65+Veteran and DisabilityPartial or full exemptions in many states.
Check your state's rulesYou Must ApplyMost exemptions are not granted automatically.
File the paperwork yourselfInvestment Property
Deduct Operating CostsInterest, taxes, insurance, repairs, and management.
Offset rental incomeDepreciationWrite off the building over 27.5 years.
Building value / 27.5Recapture at SalePast depreciation is taxed back when you sell.
Up to 25%Defer With a 1031Roll gains into a new property to postpone tax.
45-day and 180-day clocksTips
- File
exemptionapplications before your jurisdiction's deadline, since missing it by a day often means waiting a whole year for the break. - Gather recent comparable sales before you file an
appeal, since solid evidence is what actually wins a lower assessment.
Warnings
- Personal property tax counts toward the
SALTcap of $40,400 on Schedule A, but rental owners deduct it uncapped on Schedule E. - Selling a rental triggers
depreciationRecapturetaxed up to 25%, which can create a large, unexpected bill.
In Practice
See how a successful assessment appeal saves money every year it holds.
Your home is assessed at $400,000, comparable sales support $360,000, and your local rate is 1.5%.
- Current tax: $400,000 x 1.5% = $6,000.
- You appeal with comps supporting $360,000.
- New tax: $360,000 x 1.5% = $5,400.
- Savings: $6,000 - $5,400 = $600 a year.
A successful appeal saves $600 every year the value holds.
An appeal is a one-time effort that pays off year after year.
FAQ
Two main ways: reduce your assessed value or claim exemptions. Check your assessment notice for errors, gather comparable sales that support a lower value, and file an appeal before the deadline. Then make sure you have claimed every exemption you qualify for, since most are not applied automatically.
If you itemize, yes, but state, local, and property taxes together are capped at $40,400 for 2026 on Schedule A. Rental property is different: owners deduct property tax as a business expense on Schedule E, with no SALT cap, because it offsets rental income directly.
Common ones include the homestead exemption for your primary residence, plus senior, veteran, disability, and agricultural exemptions. Each lowers your taxable value or freezes it, and the savings repeat every year. Most require you to apply, so check your county assessor's rules and deadlines.
A 1031, or like-kind, exchange lets a real estate investor defer capital gains tax by rolling the sale proceeds into another investment property. You must identify the replacement within 45 days and close within 180, using a qualified intermediary to hold the funds. It defers the gain, and the depreciation recapture, not erases it.