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How to Lower Your Property Taxes in 6 Simple Steps

Investors have several expenses to worry about while owning real estate. One of the most frustrating costs to account for is property taxes. Not only do they increase over time, but they never go away. The amount you owe depends on several factors, but there are ways to lower your property taxes if they’re too high. Read along as we discuss some strategies to reduce your property taxes while owning rentals. 

Contents of This Article:

What is Property Tax?

Understanding property tax is vital for investors and rental property management in Washington, DC. Property tax is an annual cost on real estate owned by individuals, businesses, or other entities. That said, property tax is generally an ad valorem tax, which depends on the property’s value rather than income. 

Additionally, property tax rates depend on where you live since they’re set on a state and local level. For instance, some areas factor in your personal property while establishing taxes, while other locations may include any land you own in your taxes. Since state and local laws differ, it’s essential to research tax laws before buying a rental property. 

Why Are Your Taxes Higher Than Your Neighbor’s?

You may notice that your property taxes are higher than your neighbor’s or other homes near yours. There may be a few reasons for this, but it ultimately comes down to the value of your property. After all, taxes are determined by looking at the tax rate in your area and multiplying it by your home’s value. 


For instance, Maryland’s average property tax rate is around 0.87%. So, if you have a rental property worth $200,000, you’ll pay around $1,740 annually. However, if your neighbor’s property is worth less than $200,000, they’ll pay less in property tax. 

A tax assessor will look at your home to determine its value. They’ll look at the square footage, amenities, comparable properties, and more to assign you a property tax. Generally, they’ll reevaluate properties each year, which may indicate changes in your property taxes or differences between your taxes and your neighbor’s.

6 Steps to Lower Your Property Taxes

If you feel that you’re paying too much in property taxes, or you’re not sure why tax rates have increased recently, there are a few steps you can take. First, you’ll want to understand property tax laws in your state and local area. Then, you can take the following steps to potentially lower your property taxes. 

  1. Ask for Your Property Tax Card
  2. Compare Neighboring Home Values
  3. Challenge Your Home Assessment
  4. Avoid Repairs and Remodeling
  5. Get a Second Opinion
  6. See If You Qualify for Tax Exemptions

Ask for Your Property Tax Card

Sometimes, errors or problems pop up in a property tax evaluation. For instance, something could be incorrectly noted in your property record, resulting in discrepancies. That said, one of the simplest ways to determine any errors in your tax evaluation is by requesting your property tax card at the local assessor’s office. 

Your property tax card includes information about the size of your lot, the square footage of the home and each room, and the types of fixtures within the home. 

Compare Neighboring Home Values

Just as you can ask for your property tax information, you can also request other property assessments in your location. You can generally get this information at your local town hall. So, if you’re wondering how your home compares to others in the neighborhood, you can request this information to learn more.

You may find that you have a similar property but find that they’re valued differently. As such, you can use other tax evaluations to determine inconsistencies and potentially lower your property taxes. 


Challenge Your Home Assessment

If you notice discrepancies between your property value and similar properties in the area, you can challenge your assessment. Unfortunately, you can’t change your tax rate, which the government sets. However, you could intervene if your home is valued incorrectly. 

Tax assessors look at comparable properties to establish your home’s value. However, this could lead to inconsistencies regarding the value of your property. Ultimately, you can appeal your assessment if you think your property is overestimated. 

Avoid Updating and Remodeling

Updating or remodeling your home can raise your property taxes, as they raise the property’s value. However, when it’s assessed after a remodel, any upgrades will be considered while determining the value that taxes are based on. 

While upgrades are generally good for homes and rentals, they can raise your tax bill. Many homeowners wait to make significant changes to the property until after a tax assessor evaluates the property. 

Get a Second Opinion

If you disagree with the value of your property determined by a tax assessor, you can hire an independent appraiser. Although it’ll cost you money to get a second opinion, it could be worth it to potentially lower your tax bill

Remember that getting a second opinion won’t automatically lower your property taxes. However, it can help if you plan to dispute the value of your home determined by a tax assessor. 

See If You Qualify for Tax Exemptions


One of the easiest ways to lower your property taxes is by seeing if you qualify for any tax exemptions. Many state and local governments give tax exemptions for several reasons. For instance, many seniors, veterans, or people with disabilities qualify for tax discounts. 

To determine what exemptions you qualify for, look up your local tax laws. If you don’t qualify for any of the above discounts, others may be applicable. 

What May Affect Your Property Taxes?

Several things can affect your property taxes, including your home’s value, the city’s tax rate, and local laws. Let’s go over some of the main factors that affect your property taxes

  • Moving to a New Area- Tax rates vary by state, county, and city. So your taxes will likely differ even if you move to a comparable property in another location. 
  • Adding Onto Your Home- Adding to your home or making significant improvements increases the value of your property, increasing your taxes. 
  • Increase in Home Sales Near You- Property taxes may increase with more neighborhood sales. More sales indicate that the neighborhood and properties are more desirable, which generally calls for higher taxes. 
  • Neighborhood Improvements- Making a neighborhood more desirable can increase home values, increasing property taxes in turn. 
  • Government Policies- Property taxes help fund several local initiatives, including schools, police and fire departments, and more. So when more funds are needed to maintain them, taxes increase. 

How Can Property Management Help?

The first step to potentially lowering your property taxes is educating yourself on how they’re determined. Then, you can take the necessary steps to reevaluate your home or appeal your tax bill. 


If you want to stay up on your property income and expenses, property management can help. While you search for ways to lower your property taxes, we’re right by your side to help with documentation and record-keeping for each of your properties. 

Bay Property Management Group offers comprehensive rental management services to landlords near Baltimore, Philadelphia, Northern Virginia, and Washington, DC. Contact BMG today to learn more about our management services and how we can help your rental business.