If you bury someone on your property, do you have to pay taxes?
With Halloween decorations adding a spooky factor to our neighborhoods, here’s a question to ponder: If you bury someone on your property, can you reduce your property taxes? The answer, as is often the case with tax law, is complicated and depends on your state.
Property tax exemptions are murky territory, especially when it comes to burials on private property.
However, while a tax loophole may be an appealing proposition, there is no need to go as far as internment. Other common exemptions can reduce tax burdens and present a far less scary surprise for visitors.
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Texas and California: The At-Home Burial Exemptions
Before planning a backyard graveyard as a means to avoid property taxes, it’s important to understand state-specific laws regarding at-home burials.
In Texas, the Texas tax code states: “A person is entitled to an exemption from taxation of the property he owns and uses exclusively for human burial and does not hold for profit.”
This means if the land is solely used as a burial site and not for profit, it could qualify for a property tax exemption. However, if you’re hoping that burying one relative in the backyard will significantly reduce your taxes, think again. The exemption applies only to properties used exclusively for graveyards—meaning no dual-purpose homesteads or recreational spaces allowed.
By contrast, California’s rules are slightly different. The state stipulates that: “A property that is discovered to have six or more human bodies buried on it is not eligible for the exemption unless it is used or held exclusively for burial purposes as described in Property Tax Rule 132(a).”
Like Texas, in California, even if a property has six or more bodies buried on it, you’ll lose out on the exemption unless the land serves no other purpose. The rule underscores the importance of exclusivity when it comes to this creepy property tax break.
And these are just two states. With laws that change from state to state, qualifying for this specialized exception could be a difficult proposition should you ever decide to move. Not to mention, haunted houses are more trick than treat in the real estate market.
Common Property Tax Exemptions: A More Practical Spirit
While the thought of a backyard cemetery might be macabre, it is unlikely most people will encounter this niche tax situation. However, there are more common exemptions available to lighten the tax load for a wide variety of homeowners.
1. The Homestead Exemption
The homestead exemption is one of the most well-known tax breaks. This allows homeowners to reduce the taxable value of their primary residence, effectively lowering the amount they owe in property taxes. The exact amount of the exemption varies by state, but it’s usually a significant saving. In Texas, which has some of the nation’s highest property taxes, a qualified general residence homestead can exempt $100,000 from the appraised value of their home for school district taxes. However, a few states, like New Jersey, don’t have a homestead exemption.
But what is a homestead? In tax terms, a homestead is simply an owner-occupied primary residence, so a homestead exemption won’t apply to second homes, businesses (unless it is the same property in which one primarily lives), or rental units.
2. The Senior Citizen Exemption
Many states offer an exemption for property taxes to older residents, allowing those over a certain age (often 65) to claim additional deductions. These deductions can either freeze property taxes at a certain rate or reduce them altogether, providing a significant relief to elderly homeowners.
3. The Agricultural Exemption
In many states, land used for agricultural purposes can receive a property tax break. There are different requirements to qualify for this exemption depending on your state, but getting this tax break generally requires that a landowner engage in activities like farming, ranching, plant production, or livestock husbandry.
4. The Veteran Property Tax Exemption
Veterans may also qualify for tax exemptions, especially if they were disabled during their service. The property tax deduction and exemption for peacetime veterans is often tied to the level of disability, with some disabled veterans receiving complete waivers from property taxes.
Property Tax Basics: How Are Property Taxes Determined?
Before diving into exemptions, it’s important to understand how property taxes work. Local governments assess the value of a property and then apply a tax rate to that value, which varies depending on location. The process involves appraisals and assessments that consider the fair market value of a home or land.
Once a property’s value is assessed, the government determines who is exempt from paying property tax based on various factors, including the exemptions mentioned above. Understanding the assessment process can help homeowners advocate for fair appraisals and take advantage of any exemptions for which they may qualify.
It Pays to Have a Servicer With CoreLogic DigitalTax
Despite the array of exemptions available to homeowners in the U.S., most people still need to pay property taxes. As such, knowing that property taxes are being paid accurately and on-time is critical.
For homeowners working with servicers, peace of mind comes from knowing your taxes are being paid promptly and accurately. Equally important is being kept informed about tax payments. That’s why the nation’s top 20 residential servicers rely on CoreLogic. In fact, we’re trusted with over 48 million loans under tax service while working with 22,000 U.S. taxing agencies.
Our streamlined approach helps servicers help you. With access to near-real-time property tax data, we prevent exceptions from slipping through the cracks to ensure that payments are accurately calculated and that you know the status of your payment every step of the way.
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