What Is Property Tax Abatement?

Terry Masters

Property tax abatement is a decrease in the amount of money owed to a governmental tax authority on a real property tax bill. In most jurisdictions, there are multiple programs that abate property taxes if a person or the property is eligible. An abatement is usually requested by property owners who feel that the tax assessment is too high, given the current value of the property or the owner’s ability to pay. The abatement proceeding pursuant to an owner’s appeal of an assessment is in the nature of an administrative hearing that either grants the requested relief or upholds the assessment.

Property taxes may be decreased through an abatement.
Property taxes may be decreased through an abatement.

Countries that allow the assessment of taxes on the private ownership of real property typically give over the right to local jurisdictions where the property is located. These local governments use property taxes to raise money for public projects and services, such as to support the police and fire departments, the public school system, or to build new roads. The amount of the tax bill is a percentage of the market value of the land and its improvements. An official government assessor makes this value determination.

In some U.S. states, senior citizens can receive a full or partial abatement on their property taxes.
In some U.S. states, senior citizens can receive a full or partial abatement on their property taxes.

The value determination is based on the market value of the property. This amount is derived by using recent comparable sales of properties. Housing market downturns can decrease the value of property drastically, but the tax assessment never decreases of its own accord to take into account properties that are selling below market. In difficult economic times, owners often proactively request a property tax abatement to bring the tax bill on their property into line with what the property is really worth.

Property tax abatement is an option in most jurisdictions, but it is often difficult to obtain. The request is heard and decided upon administratively without the benefit of the input by common folks who may know from ordinary experience how property values in the area have decreased. Local governments often allow property owners only one shot to present a case for abatement within a certain number of years, so succeeding on the first try is particularly important. Many property owners hire independent tax abatement experts to manage the process and make the case to ensure the highest probability of success.

A local government can also make tax abatements on its own initiative. Sometimes, a jurisdiction will design a public program that uses property tax abatement as a carrot to encourage certain behavior or to help a certain class of people. For instance, the economic development arm of a local government might offer abatements for businesses that locate facilities in a particularly distressed area. A local government could also design a program to keep senior citizens in their homes and might offer an abatement to individuals over a certain age.

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