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Homeowners across the country are grappling with rising property tax bills. As home values have gone up, so have tax assessments, and alongside them, many localities have raised rates in conjunction. The result is property tax bills that many can’t afford.
In Montana, it has inspired a complete overhaul of the tax code, putting more burden on second-home owners and commercial properties. In Ohio, it’s even spurred calls to abolish the property tax outright.
But the secret to lower taxes might be simpler: Never move.
Thanks to a patchwork of exemptions and assessment caps, long-term homeowners often pay significantly less than their newer neighbors—sometimes despite having nearly identical homes.
These policies were originally designed to help people stay in their houses, and in many cases, they’ve worked. But they’ve also created a system where newer homeowners carry a disproportionate share of the tax load.
What are property tax exemptions?
Property tax exemptions reduce the amount of your home’s value that can be taxed, similar to how income tax deductions lower your taxable income. These exemptions are one of the most effective tools for lowering your annual property tax bill, and most primary homeowners qualify for at least one.
Common exemptions include the following:
- Homestead exemptions for primary residences
- Senior exemptions for older homeowners, often tied to income limits
- Veteran and disability exemptions for qualifying individuals and their spouses
- Agricultural exemptions for land used for farming or ranching
- Disaster exemptions after damage from wildfires, floods, or storms
- Energy efficiency exemptions are available in some areas for solar panels, water reclamation, or green upgrades
But these exemptions vary from state to state and sometimes even county to county. The rules, amounts, and eligibility criteria are set at the local level. This means two homeowners living just a few miles apart might qualify for different levels of relief.
The process for getting and keeping these exemptions is just as local. Some states automatically apply exemptions once you’re eligible. In others, you need to file paperwork—and sometimes reapply annually—to keep your savings intact. If you don’t, you could lose the exemption and get stuck paying hundreds or even thousands more than necessary.
The power of assessment caps
While exemptions reduce the portion of your home’s value that’s taxed, assessment caps limit how much your home’s taxable value can increase each year, even if the market value skyrockets.
Where these caps exist, a home might gain 15% in market value (as many homes did during the peak of the COVID-19 pandemic housing market), but the taxable value can rise only by a small, fixed percentage.
Two notable examples are California’s Proposition 13 and Florida’s Save Our Homes Act. Prop. 13 caps assessed value increases at 2% per year, no matter how much the home’s market value rises. In Florida, increases in assessed value for primary residences are limited to 3%, or the rate of inflation, whichever is lower.
Assessment caps create powerful incentives to stay put. The longer you own your home and the more appreciation outpaces the caps, the more you benefit. But if you move—or make major renovations—your assessment resets to current market value, and your tax bill can jump dramatically.
That was the case for two Florida homeowners Realtor.com® interviewed earlier this year. After adding a second story onto their home, Walter and Debbie’s property tax bill jumped from $15,000 to $91,000 per year, highlighting just how much the combination of assessment caps and exemptions can help keep tax bills low.
Where the gaps are the largest
The divide between what long-term and new homeowners pay in property taxes is most extreme in areas where assessment caps, generous exemptions, and years of rapid home appreciation intersect.
Nowhere is this more apparent than in California.
“If you purchased your home in the 1980s in San Francisco, the value of that home has ripped and is incredibly valuable,” says Colton Pace, CEO and founder of Ownwell. “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.”
Santa Monica, CA, is another striking example of how savvy homeowners have found inventive ways to keep their lower tax rates.
“The insides of properties are really nice and redone, and the outsides are not,” Pace says. “Basically, if the remodel happens and you can’t tell that it happened, you won’t get reassessed.”
In these cases, owners can enjoy updated interiors while maintaining artificially low tax bills.
Other regions with major disparities include Cook County, IL, where classification systems and complex assessments have long led to tax imbalances. In Georgia, some counties have implemented caps while others have not.
The hidden burden on new buyers
Local governments don’t tax at random—they tax to meet a budget. Whether it’s paying teachers, paving roads, or funding emergency services, the money has to come from somewhere.
That’s the principle behind Truth-in-Taxation laws: Jurisdictions determine how much revenue they need, then set tax rates to reach that amount. But when some property owners pay less, others are left to make up the difference.
And that “someone else” is often new buyers.
Because their homes are reassessed at full market value when purchased, new owners can end up paying more than their longtime neighbors, effectively subsidizing those who’ve held on longer or found ways to lower their own bills.
“When you reduce your tax burden, someone else has to pay,” says Pace. “The school district still needs to pay teachers.”
Over time, this dynamic shifts the tax load onto new buyers and contributes to a locked-in effect. Even longtime homeowners who want to sell—either to downsize, move closer to family, or even tap their equity—don’t sell because they can’t afford to lose their favorable rate.
How homeowners can lower their bill
Even longtime homeowners aren’t immune to overpaying. Nearly half of all U.S. homeowners might be paying more than they should, according to research from Realtor.com.
“Everybody should file their exemptions,” says Pace. “Everybody should make sure they’re not paying any more than they have to from a fair and equitable standpoint.”
The good news: Tools are available to help. Ownwell offers ongoing assessment monitoring, appeal support, and exemption tracking services. And now, Realtor.com has introduced a free property tax comparison tool, which allows homeowners to see how their home’s assessed value stacks up against similar properties nearby. If your valuation looks inflated, the tool generates a list of comparable homes you can use as evidence in a formal appeal.
Filing an appeal is easier than many homeowners realize. Most jurisdictions allow you to challenge your assessment at little or no cost. And by keeping an eye on your property’s assessed value year over year, you can catch mistakes early before they inflate your tax bill.