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How does an exemption reduce your tax liability? Once the Fair Market Value is determined, the assessed value, or taxable value is calculated by law to be 40% of the FMV. For a $100,000 home, the assessed value or taxable value is $40,000. This is the value that "ad valorem" refers to. Exemptions are then applied to the assessed value of the property. A standard homestead exemption lowers the assessed value of your property by $2000 for state and school taxes, and $6000 for the county. A $100,000 home would then have an assessed value of $38,000 for state and school taxes, and $34,000 for county taxes. With the Douglas County Homestead exemption, as your assessment rises, your homestead exemption for county taxes increases. For instance, If you have a homestead exemption on your $100,000 home, and your FMV is determined to be $120,000 next year, the assessed value would be $45,000. Your homestead exemption for county taxes would increase from $6000 to $11,000 in order to maintain the $34,000 taxable value for county taxes. There are several exemptions available to be applied for. No exemption is automatically initiated, however, some exemptions renew automatically each year. Some exemptions must be applied for each year. Exemptions may be applied for through out the year, but must be applied for by March 1 to apply to the current year. Exemptions can significantly lower your tax liability.
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