The Original Property Tax Hack: Avoiding The ‘Window Tax’

Windows can provide stunning views, great sightlines to your backyard, and even boost mental health during the darkest days of the year.

Why did some people in history brick them up, and what do windows have to do with your property tax bill?

The Direct Tax of 1798 taxed houses worth more than $100. Because those homes often featured costly glass windows, tax assessors began using window counts in their assessments, earning the law’s nickname, the “Window Tax.”

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The Window Tax led some Americans to lower their property tax assessments by boarding up windows — a practice copied from England for the same reason.

While this might sound dated and outlandish, it’s anything but.

We still have a de facto "window tax" in the U.S. today. If you’re impacted by that tax, there are ways you can challenge your property assessment or reduce property taxes on your family home.

The secret tax that can drive up your property tax bill

When the United States Congress enacted the first federal property tax in 1798, there was immediate public outcry. The prevailing suspicion was that the new law wouldn’t be a one-off tax, according to a historical society in Pennsylvania.

Citizens also disapproved of how the tax burden particularly affected those who were “house rich but cash poor” — namely, farmers. The spirited backlash eventually led to The Fries Rebellion, and the law was repealed in 1800.

However, a form of window tax still influences home values today, and, indirectly, property taxes. How? Here are a few examples:

• Number of windows. A greater number of windows allows more natural light to enter a home, often enhancing its appeal to buyers. The increased visual aesthetic can drive up your home’s market value, which is one factor that tax assessors use to determine your property tax assessment and overall tax burden.
• Size of windows. Installing large or unique windows often requires a permit and, consequently, a property reassessment. For instance, bay windows add square footage to your home’s footprint, which can drive up a property tax bill.
• Condition of windows. New or energy-efficient windows can increase your home value, also impacting your property tax bill (depending on the jurisdiction).

But you don’t need to start a rebellion to avoid the modern-day window tax. If you receive a notice in the mail about your annual assessment rising due to a home improvement, you can challenge that assessment directly.

Here’s how to appeal your property tax assessment

Below are a few general steps to take to appeal your annual property tax assessment (but you should follow the process on your property tax statement you receive in the mail):

1. Look at your property tax appeal deadline. Every local government has one, typically ranging from a few weeks to a couple of months.
2. Ensure any applicable property tax breaks are on the assessment. Most states offer some form of homestead exemption that reduces your home’s tax assessment. These are different from tax breaks you claim when filing your state income return (more on that later).
3. Review your property’s record card. This essential document outlines key features of your home, such as the number of bathrooms and bedrooms. By reviewing the property card online or through your local tax assessor’s office, you can spot errors that could erroneously drive up your home’s value.
4. Compare your home’s record card with your neighbor’s. Property cards are public information. This means you can check your neighbors’ to make sure your property tax assessment is in line with theirs (note: look at homes of a similar age with comparable square footage).

Just as the Window Tax failed to measure true wealth, today’s property tax often fails to align with a person’s actual ability to pay. This contributes to the “house rich, cash poor” situation of the late 1700s, in which income is limited but your home value is high. Still, there are other ways to reduce your property tax bill even if you can’t lower your tax assessment.

Three ways you can reduce your property taxes

The modern-day equivalent of “bricking up a window” can be found in claiming targeted property tax relief. Below are a few examples of ways to reduce your property tax bill.

• Apply for applicable state and local property tax breaks. Many states provide property tax deductions or credits, which can help save on property taxes come tax filing season.
• Look for property tax relief programs (though watch out for scammers). For instance, AARP offers Property Tax-Aide to help older adults find legitimate programs for relief.
• Move to a state with lower property tax bills. While perhaps the least feasible on this list, if you are considering a move, try searching in states with lower property taxes.

Ultimately, there is no universal method for avoiding higher property taxes, as every home is as distinct as the family living inside. Consult with a qualified tax professional when necessary.

Remember: While the Window Tax might not be a thing of the past, your household could have a bright future.

Read More

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