Alabama Property Tax

Understanding the complexities of Alabama property tax, from discerning your property's classification to calculating millage rates, can herald significant financial savings.

Any individual who owns real property in Alabama is required to pay a state tax based on the value of their land or buildings. However, the intricacies of Alabama Property Tax system can make it difficult to pinpoint exactly how much is owed. By understanding what factors determine the property tax calculation, individuals can avoid paying more than their fair share of property taxes.

The property tax is one of the largest annual expenses for most homeowners. It is important to take steps to understand and reduce your Alabama property taxes. The State of Alabama determines your property tax rate based on the classification of your land and millage rates. The state also allows for certain exemptions to help offset the property tax. For example, if you are 65 years or older or permanently and totally disabled, you may qualify for the regular homestead exemption. This exemption exempts $2,000 of your assessed value from state and county taxes.

How to Calculate Alabama Property Tax?

Alabama’s property tax system relies on the thorough and judicious assessments of elected assessors. They provide a compass for residents, aligning the valuation of their assets with their real-world worth in the marketplace.

Once the assessed value of your property is determined, you must multiply it by your property classification and the millage rate, which is set by county commissions and other taxing authorities (Assessed Value x Property Classification x Millage Rate = Unadjusted Tax Bill). Your county will also consider any improvements you have made, such as a pool or gazebo, extensive repairs, or remodeling work.

If a person acquires property through a deed, divorce decree or other vesting document during the tax year, he is responsible for reporting that property to the Revenue Commissioner’s office. He should also claim any exemptions for which he is eligible. Failure to pay taxes results in a tax lien sale for the property. 

Alabama Property Tax Exemptions
Alabama Property Tax 1

Alabama Property Tax Exemptions

Property owners can claim homestead exemptions that freeze their property taxes once they have been claimed. The homestead exemption is available for citizens who own and occupy single-family residences, including mobile homes, as their primary home and use the property for no other purposes. The maximum amount of the exemption is $4,000 for the state portion and $2,000 for the county portion.

Owners can also qualify for the historic rehabilitation tax credit, which is a 25% refundable credit for income-producing properties listed in or eligible for the National Register of Historic Places either individually or as contributing resources in a district. This credit can be used for rehabilitation expenses such as repair, renovation, re-roofing and painting.

Alabama Property Tax Due Dates

Property tax bills are sent out every October 1st and must be paid by December 31st. Unpaid taxes are considered delinquent and are subject to fees and interest per month beginning in January.

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