Hello homeowners! Ever wonder how you may be able to pay less in real estate taxes each year? Well let me help you out…
How Property Taxes Work
Before we get to the potential savings, let’s discuss how property taxes are calculated briefly. As a homeowner, you have probably seen a variety of values for your home such as the appraised value, the market value, the replacement cost, and the assessed value. The assessed value is the figure your municipality assigns for tax purposes. For example, your home may be worth $450,000 in market value but assesses for $350,000 for property tax purposes.
Your town then calculates your property tax liability using a Mill Rate. The Mill Rate is the amount of tax per $1,000 of value – the Latin “millesimum” meaning thousandth. Continuing with our example, if your Mill rate is $18.00 and your assessed value is $350,000, you will owe $6,300 a year in property taxes.
Let’s get to the Savings
Now as you can imagine, either a lower Mill Rate or a lower assessed value of your home will end up lowering your property tax liability. In Maine, qualified homeowners can lower the amount of their home’s assessed value that is taxed by up to $25,000 a year using the Homestead Exemption.
To qualify for the Homestead Exemption, you must check three boxes (figuratively and literally):
- You must be a permanent resident of Maine.
- You must have owned the house for the 12-month period ending April 1st.
- The property must be your permanent address.
The form with these check boxes can be found HERE and must be submitted by April 1 to your town’s assessor’s office to qualify for the current year. Back to our example, this would save you $450 a year ($25,000 / $1,000 x $18.00 = $450).
A Couple of Additional Notes
If you submit and are approved for the exemption, you won’t need to reapply if you remain in the home and a permanent resident.
You may find your exemption is less than $25,000 and that may be by design! The exemption is adjusted by your town’s local certified ratio. If your town’s local certified ratio is 80%, then your exemption will be limited to $20,000. You should check with your municipality if this will apply to you when you hand in your application.
Wonder if you already have the exemption? Check a recent tax bill or call your town’s assessor’s office to find out!