Understanding Your Property Tax Abatement

Dallas commercial building owners are always on the lookout for ways to reduce the annual amount they have to pay to the county in property taxes. One of the most efficient ways we’ve discussed in the past is a property tax appeal.

However, not everyone has the time it takes to dedicate an appeal and some just want to be exempt for an extended amount of time so they can raise the funds needed to comfortably handle current and future taxes. Fortunately, for companies looking for this solution, there is a golden ticket called a property tax abatement.

What is a Property Tax Abatement?

Tax abatements are primarily seen during the purchasing of residential and commercial property. An abatement is a financial incentive that can eliminate or reduce the amount of property taxes paid to the taxing entity.

This is a great way for city governments and federal governments to make a harder to sell property appealing and allows buyers to save a little money upon the sale of the property.

The bigger picture is tax abatements give the local economy a boost and encourage business owners and homeowners to buy in specific cities, counties, and states.

Neighborhood improvements are always a good thing, and tax abatements are a simple way for governing entities to help push progress along through commercial real estate and residential upgrades. Once an abated property is purchased, a buyer is now responsible for necessary improvements of the building, or else the abatement can be nullified.

Abatement Structure

The length of time of an abatement depends on your local governing agencies and the negotiated deal on the property. Real estate property tax can see abatements that last a few months to even decades in rare instances.

Before saying yes to the address, it’s always a good idea to seek financial advice from your property tax consultant to ensure that this type of investment is really worth its face value.

How Can You Get One?

If you’d like to purchase a property with a tax abatement attached to it, you have to first qualify for the specific factors involved with the real estate deal.

Some properties are listed with abatements attached, but others require an application and approval for the abatement program. Qualifications for buying a property with an attached tax abatement can include:

  • Making less than a target amount of money each year
  • Owning a commercial building in an area where tax abatement programs function
  • Being able to move in on a specific time frame

Are There Any Cons?

As with all property tax reductions, there is some sense of caution that should be taken when entering into a sale with a tax abatement. Many neighborhoods that offer these deals are in less than family-friendly areas with crime rates that could be higher than in neighboring areas.

Also, abatements don’t last forever. You’re not getting free money, just the chance to revitalize a property in an area that needs it. Be prepared to eventually pay higher taxes in the event the abatement expires or the taxing authority rescinds the abatement on their own free will.

Need Help With Your Property Tax Abatement? Let The Hegwood Group Take Control

If you are interested in purchasing a property in an area that offers tax abatements, don’t go into a deal blind. Let The Hegwood Group help! Our property tax consultants can give you the advice you need in order to make the most educated decision for your financial future. Contact us today to schedule your consultation.

Protest your property tax and win