Property tax abatement: Benefits & drawbacks for homebuyers
Property tax abatement programs can be helpful to homebuyers in several ways. While they can help you save money long-term, buying a property with a tax abatement can have potential downsides. Here are some key things about property tax abatements for buyers to consider:
How property tax abatements work
Property tax abatement programs are offered by some cities and counties to significantly reduce--or eliminate--property taxes on a home with major improvements. You can either apply for an abatement on a property you already own, or purchase a home with an abatement already established. If approved, you'll be able to pay taxes based on the value of the home before the improvements, potentially saving significant amounts of money.
What are the benefits?
The savings on your property taxes are the largest benefit to tax abatement programs. If you're planning to buy a new home, finding a property with a tax abatement means finding a great deal on a home you might not be able to afford otherwise. Higher equity from improvements and rehabilitation equals higher property taxes, but purchasing a home with an abatement allows you to pay based on the value before the changes.
What are the drawbacks?
There are some drawbacks to tax abatement programs homebuyers should be aware of. The primary downside is most qualifying homes for tax abatement are in neighborhoods with lower demand. Tax abatement programs are often used as incentives for buyers to help with urban development and revitalization.
The other major issue tax abatement can cause comes when the abatement period ends. If you live in the new home beyond the abatement deadline, your property taxes could suddenly increase. Staying aware of this deadline is crucial for avoiding unpleasant surprises on your annual tax bill.
While there are disadvantages to tax abatement, it can be an excellent opportunity for many homebuyers. Keep these factors in mind when considering your options for buying your dream home.
About the Author
Linda Cappello, Broker, GRI, ABR
Linda A. Cappello, Owner/Broker of Cappello Realty Shoreline Properties. Cappello Realty is a full service boutique Real Estate firm that specializes in 06855 - East Norwalk, and services all of Norwalk and Fairfield County, CT. Linda has been in the Real Estate business for 20+ years, spending 18 of them as a Owner/Broker. Being a Broker adds a lot responsibility to her job. She is responsible for overseeing every transaction and agent in the office. This is a challenge that she looks forward to and takes very seriously. She is constantly taking continuing education classes and attending seminars to keep abreast of the ever changing market as well as the industry standards, rules and regulations.
She is a native to East Norwalk, and has an in-depth knowledge of the city that she loves, as well as the intricacies of the many unique neighborhoods and areas that Norwalk offers. Linda offers her clients a network of professionals ranging from Attorneys, Mortgage Brokers, Home Stagers and Home Inspectors to any and all pros that you may need for a successful transaction and for the convenience of her clients.
"My job doesn't end at the closing table. It goes far beyond that, keeping in touch and staying friends who refer their family and friends. A lot of my business is referral business which is the greatest accomplishment and honor of all. Earning my clients trust."
