Many homeowners go to great lengths to lower their property tax bills — from setting up trusts to exploiting niche legal loopholes. While these strategies can certainly be effective, they’re often complex and costly.
Fortunately, there’s a much simpler way to reduce your property tax burden — stay in your home longer. In many areas, long-term homeowners can benefit from exemptions and assessment caps that limit how quickly their property taxes can increase, even as their home values rise.
If you’re comfortable staying put, this strategy could turn your long-term commitment into serious tax savings.
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Property tax exemptions
Property taxes are deeply unpopular. In 2023, the National Council of State Legislatures (NCSL) cited survey data labeling it the “most hated tax” in the country. So it’s no surprise that a growing number of homeowners are pushing back, according to MarketWatch.
To ease the burden, many states and localities offer exemptions that reduce property tax liability for certain residents. In fact, homeowners in 48 states and Washington, D.C. can access some form of targeted property tax, according to the NCSL.
However, the most generous exemptions are often reserved for specific groups — such as seniors, long-term homeowners, or people with disabilities.
For example, Colorado exempts 50% of the first $200,000 in home value from taxation for homeowners over 65 who have lived in the home for at least 10 consecutive years. In Cook County, Illinois, residents may qualify for both a Senior Citizen Exemption and a Longtime Homeowner Exemption.
Across the country, a patchwork of exemptions, deductions, and credits creates strong incentives to stay put — especially for older homeowners. In some states, long-term residency is rewarded not through exemptions, but through assessment caps.
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Assessment caps
An exemption lowers the taxable portion of your home upfront. However, an assessment cap limits how much your home’s taxable value can increase each year — regardless of how much its market value rises.
For example, your home’s market value might jump 15% in a single year, but an assessment cap could limit the increase in taxable value to a much smaller amount. In California, Proposition 13 caps annual increases in assessed value at 2%. Florida’s Save Our Homes Act sets a 3% cap — or less if inflation is lower.
Over time, the gap between what your home’s market value and its taxable value can grow significantly. This effectively reduces your long-term tax burden and creates a strong financial incentive to stay in your home.
Who benefits most?
Although property tax incentives differ by state, they tend to benefit long-term homeowners — particularly older Americans who have remained in their homes for decades and seen significant appreciation in property value.
“If you purchased your home in the 1980s in San Francisco, the value of that home has ripped and is incredibly valuable,” Colton Pace, CEO and founder of Ownwell, told Realtor.com. “But you’re taxed as if your home just went up 3% every year. So you may have this gap — sometimes a million dollars for some of these homes in certain areas — that, if you sold the property, the new owner would have to pay.”
This system can shift more of the property tax burden onto newer homeowners, who are often younger and earlier in their careers. For example, someone buying a home in San Francisco today could face a much higher property tax bill than a retired neighbor in an identical home.
If you believe your property tax bill is too high, consider filing an appeal to challenge the assessed value. Also, check for any exemptions you may qualify for — even if you haven’t lived in your home for very enough. But it’s not just about how long you’ve owned your property. Many states offer exemptions based on a variety of factors such as age, disability, income level, or veteran status.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.