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January 21, 2019

How to Save Money on Property Taxes

property taxes

The General Definition of Property Taxes

Property taxes are a kind of ad valorem taxes and are imposed on the estate. The person who owns the property is the one who has to pay these taxes. The authorities who are governing the area, the house is situated on, are in charge of levying the taxes. A certain house might get taxed by multiple jurisdictions. The tax helps the authorities to make necessary improvements for the locals.

Property Taxes in the United Kingdom

In the UK, the property taxes are calculated a bit differently. In the United Kingdom, Council Tax is levied on the residents of a property. Under the HRMC guidelines, the council taxes are only levied on domestic properties and deduction will be allowed only in cases where additional property related expenses are being deducted.

The land, on which the property stands, and the owners of the property are let off from being taxed in the United Kingdom. The owners will only have to pay the tax only when their property remains vacant. Even then, the owners are liable to get a discount on the tax or might be exempted from paying it, altogether.

The Valuation of the Tax

property taxes

The tax, itself, is a somewhere between personal tax and property tax. A property has to have at least two or more than two residents to pay the full tax. For a single person, residing in the property will have to pay 75% of the tax. A vacant property is charged 50% of the tax if the authority in charge of the billing does not decide otherwise.

Changes in the Law

In the budget session, of2015/16 certain changes were made to the property law. The revision saw changes in the mortgage relief; elimination of the allowance for wear & tear and rates for the maintenance of the CGT (capital gain tax) has been raised. After these revisions, the landlords in the UK are paying more tax than what they used to pay previously.

Calculation of the Tax

Valuation Office Agency that comes under the HMRC (Her Majesty’s Revenue and Customs) is in charge of carrying out the valuation process. The worth of a certain property decides how much Council Tax has to be paid for it. The calculation is more complex than it sounds. The property is generally allocated to one of the 9 Council Tax band in England. For Scotland and Wales, the number is 8.

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Saving money on property taxes

There are a few ways that someone can use to save their money on the property taxes. There are a few simple procedures that they can follow to get tax credits. One can take the help of online accounting companies in London to create the bill, get useful tips for saving their money and also submitting their return directly to the HMRC.

  1. Checking the Correct Band

The first thing that a person needs to check is whether their property is listed in the correct council tax band. So it is essential that they find out which band their property fall under and can pay much less tax for them.

  1. Consult with the Neighbor

A person can also take the help of their neighbor to find out whether they are paying the right amount of tax for their property. If they find out that they are listed in the wrong band, they can appeal to change to the right tax band so that they do not have to pay more money as their property tax.

  1. Register as a single person to claim discount

A single person living on a property does not have to pay the full amount for the taxes. Their tax bill will get reduced and they will be eligible for paying 25% less. A person will also be counted as a single person if they are living with a student, with people who are mentally impaired, with an apprentice, with nuns and so on. A person needs to clearly state their living status so that they can save some money on their property taxes.

  1. Putting property up for Rent

A landlord can put his property up for rent to avoid paying property tax for the property that he owns. For an empty property, an owner has to pay tax. If they put their property for rent, they will not have to pay any money as property tax. They can let out their place to one or more than one person and avoid paying for taxes.

  1. Pay money for over 12 months

One can pay their property taxes for a period of 12 months instead of 10. If they are paying their taxes over a period of 10 months, they can make an application to the local council and change it.

People can use the services of online accounting companies in London and choose the easier way to file for their property taxes.

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