Every industry has its own vocabulary, and real estate is no exception. If you are newly in the home-buying market, you may find yourself stumped by the lingo, acronyms, abbreviations and jargon commonly used in real estate sales materials, online listings, contracts and the like. We do not want you to be confused, so in this series of posts, we will define several terms for you in everyday language. Abatement is one real estate term or expression with which to become familiar.
In general legal terms, the word abatement means removal or diminishing of something. In residential real estate, the term most refers to property tax in the form of a property tax abatement. Since property taxes are ongoing annual homeowner expenses even after you completely pay off a mortgage, having access to a property tax abatement or real estate abatement is a valuable savings when buying a home. For example, if a city, county, state or other property-tax entity offers a tax abatement, it could reduce the monthly housing costs by up to 3% during the abatement period.
Property tax abatement programs make it easier to qualify for a mortgage by reducing your income/debt to housing cost ratio. In addition, as long as the abatement continues in effect, it adds to the attractiveness of your home when you decide to sell.
Certain abatements are for one-time improvements to an existing property can vary widely depending on the area. They can be as for upgrades or enhancements as different as:
- Installing a green roof or other environmentally friendly additions
- Renovation that increase the property value
- Conversion of non-residential buildings to residential use
Improvements must conform to the abatement requirements, building codes and permitting processes, so if you are planning to purchase a home that you intend to renovate, make sure that we know so that we can advise you on the abatements in effect for the properties that we show you.
In addition to state and local abatements, there are even some federal tax incentives for restoring and preserving homes designated as historic of historical civic value. Other abatements are for qualified newly constructed homes.
Some cities have property tax abatements in effect for years. These most often are set in place to attract buyers to neighborhoods or areas that are under redevelopment, in the process of revitalization, or have lower demand. The specific qualification requirements for abatements differ from area to area, so be sure to talk with us about access to potential abatements when you are house hunting.
Asbestos and Lead-Paint Abatement
Other uses of the word abatement relating to real estate include certain expenses associate with buying older property, or property being repurposed from commercial to residential. For example, when purchasing a home built before 1978, any renovations or improvements to a home might need to conform to lead paint abatement requirements. Another potential abatement cost is asbestos removal. Prior to the 1970’s, asbestos was used as insulation in ducts and pipes, as vermiculite attic insulation, in wall and ceiling acoustical tiles, concrete exterior siding, floor tiles and other common home materials contained asbestos. The Environmental Protection Agency regulates asbestos or lead paint removal grant.
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If you’d like to learn more about Long Beach real estate or are thinking about buying or selling a home or condo, please contact me.