What effect does an exemption have on property taxes?

An exemption has the effect of lowering the tax bill by reducing the property's assessed value. When an exemption is granted, it typically allows a specified amount to be deducted from the appraised value of the property before calculating the property tax due. For instance, if a property is assessed at $100,000 and a $25,000 exemption is applied, the taxable value becomes $75,000. Consequently, the taxes calculated are lower because they are based on this reduced value.

This mechanism is essential because it provides relief to property owners by decreasing the burden of property taxes, which can make housing more affordable and provide additional assistance to specific groups, such as seniors or disabled individuals. It addresses the economic impact of property taxes on individuals, thereby serving as a means of providing financial support to eligible property owners.

Understanding how exemptions function is vital for property owners and potential buyers, as it directly affects overall tax liability in real estate transactions.