Tax Exemptions and Covenants

The state legislature has seen fit to offer property owners certain tax breaks to assist homeowners and to encourage specific uses for properties. The Homestead exemption is probably the best known form of assistance. At the outset the standard homestead exemption was $2000.00 off the assessed value of property (meaning the 40 percent value.) In our example above, our taxpayer would pay taxes on $38,000, rather than $40,000. This $2000 exemption, beginning in the 1930s, would have excluded many people from paying Ad Valorem taxes altogether. Over the years, this exemption has become less and less, relative to the greatly increased property values in this area.

I encourage you to check with the Tax Assessors Office (or their website) to find other exemptions for which you may be eligible. These include exemptions from school tax and/or county taxes based on age, income, disability, etc.

Another exemption comes from a taxpayers agreement to enter into a covenant with the county.  The Conservation Covenant is a 10 year long agreement to conduct a bona fide conservation use, whether it be growing timber, pasture lands, bees, etc. Failure to maintain the use subjects the taxpayer to severe penalties. However; the tax saving gained by entering the covenant can be up to 90 percent.

Basics of Land Taxes

Land taxes, or Ad Valorem Taxation, is a system of taxing property which came into existence in the 1930s.  The system taxes based on value, gave rise to the Latin name "Ad Valorem" tax. The system was developed to help fund county government and later county schools. Today, typically approximately one-quarter of all ad valorem taxes fund the county government and the rest goes to operation of schools.

Property Taxes

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Nancy Cochran Maddox

ATTORNEY AT LAW, P.C.

Tax Assessment

Taxes are based on an assessed value of property as determined by the county Tax Assessors, as governed by the Board of Tax Assessors. The assessors are required to assess properties based on fair market value. They are also required to make sure that all similar properties are assessed equally.

When the Tax Assessors decide to reassess a property, a notice must be sent to the taxpayer, indicating the change in the valuation, and the reason for the change.  The taxpayer then has a right to appeal the reevaluation to the Board of Assessors. If the Board of Assessors rejects the appeal the taxpayer can appeal to the Board of Equalization. The Board of Equalization is an independent board, appointed by the Grand Jury, charged with overseeing the work of the Board of Assessors.  The Board of Assessors must prove the basis for their evaluation, and the Taxpayer is given the opportunity to prove that other similarly situated taxpayers are receiving better treatment.

When a value is finalized, the taxpayer pays taxes based on 40 percent of the appraised value.  For example, if your property is valued at $100,000, then you will pay taxes on $40,000 (unless you have exemptions.)  The tax amount can be calculated by multiplying the mileage rate times the 40 percent value.  The millage rate is set by the county and the school board each year depending on their budgetary needs. (The typical millage rate is around 20 mils (meaning that the taxpayer will pay $20 per one thousand dollars of assessed value.) Using our example above, the taxpayer would pay $20 x 40 = $800.00.