Property taxes represent a major expense for most homeowners, typically amounting to 1% to 3% of the home’s value each year. This recurring expense doesn’t go away when you pay off the mortgage. It’s a perpetual cost of home ownership. Some cities offer what’s known as property tax abatement or real estate tax abatement. These programs can bring consumers significant savings, allow them to buy more home for the same price or make it possible to qualify for a mortgage when they otherwise wouldn’t by putting a home’s total monthly payment within reach. As an added bonus, property tax abatement can improve a home’s resale value as long as the abatement is in effect. In this article, we’ll take a closer look at property tax abatement programs, how you can find one when you’re home shopping and whether they have any drawbacks.

To get a better understanding on what determines your property tax amount, read How Property Taxes Are Calculated .

What Is Property Tax Abatement?

Some cities have property tax abatement programs that eliminate or significantly reduce property tax payments on a home for years or even decades. The purpose of these programs is to attract buyers to locations with lower demand, such as areas of the inner city that are in the midst of revitalization efforts. Some cities offer tax abatements citywide, while others only offer them in designated areas. Some cities limit these programs to low-to-middle-income property owners, but many programs have no income restrictions.

You can buy a property that already has an abatement, or you can purchase an eligible property, make the required improvements, and apply for the abatement yourself. The former option is considerably easier because it means someone else has endured the headaches of construction and bureaucracy and all you have to do is move in.

Here are just some examples of actual property tax abatement programs in the United States. There are, however, many other tax deductibles for homeowners .

City of Cleveland

Newly constructed single-family homes receive a tax abatement of 100% of the increase in real estate property tax for 15 years. In other words, owners only pay property tax on what the land was worth before it was improved with the new construction. Residential projects must meet Cleveland Green Building Standards.

City of St. Louis

New construction on vacant land or a gut rehabilitation of an existing building is eligible for a property tax abatement lasting five to 10 years. During this period, the property tax rate is frozen at the value of the property before the improvements.