Property Tax In The US: A Homebuyer Guide

Homebuyer tips

Written by

Eduardo Albuquerque

Published date:

Updated: Feb 26, 2024 by

Property Tax in the US a homebuyers guideDo you know how they say that the only two certainties in life are death and taxes? So, of course, there had to be real estate taxes, right?

Yes. Property tax is a way for the government to collect money off the benefit of being a homeowner on its land. Like all government taxes, the proceeds from property tax are, then, applied to the budget to give back to taxpayers - usually funding local public services like the public school system, local law enforcement and water and sewer treatment. And, since property tax incurs every time you buy a property, build on a piece of land or buy a home/make home improvements… it’s proven that; not only taxes are a certainty but they are constant.

With that in mind, we have decided to make a homeowner’s guide to the real estate taxes known as property taxes. We will analyze the stats of both poles of the property tax spectrum: the places with the most tax and the places with the least tax, and how much of the property tax you pay takes part of that state’s revenue. This way we will contemplate both the homeowner who’s looking for places to invest in building his fortune and the homeowner who’s looking for places to invest in his quality of life via the services the local governments provide through that tax funding.

First, taking a look at the overall picture in America: the median annual property tax charge for homeowners is something around $180 a month. And that amounts to a little more than 30% of the total state and local tax revenue. But that’s the average; when you stop to analyze that homeowners in places like San Francisco, Seattle, and New Jersey can pay over $800 a month(!) in real estate taxes, while homeowners in other cities can pay less than $20 a month, it becomes obvious how real estate taxes should be of your concern when planning to relocate someplace else.

So, let’s go from the macro to the micro now:

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Lowest Property Taxes

So, you’re not really worried about the services the government can provide you; you just want to have low taxes so you can retain more of your real estate investment or live cheaply. That’s fine.

You must remind yourself that we had already talked about the Top 5 favorable states for property taxes, but we’ve decided to get a little bit more detailed with this post and elect a pick.

Going to the hard data route, straight to the places where you’ll spend less, Louisiana Real Estate Agents will boast that more than 10 counties will have less than $20 a month worth of property taxes. But Louisiana Real Estate Agents will also have the competition of Choctaw County in Alabama and Oglala County in South Dakota, also with less than $20. We are being vague because the Census data omits the exact value when it’s under 20 and over 10,000, so it may be from 0 to 20. But, come on: you are the new Uncle Scrooge if you don’t feel that below 20 is all the same.

However, although it has so many counties with a low property tax, Louisiana is not the state with the overall lowest tax property rate. Proud Louisiana Real Estate Agents will say that the rate is still pretty low at 0.48 – and they’re right – but Hawaii is by far the lowest, with a measly 0.28. And even Alabama looks better with 0.38. Sure, if you search for a real estate in Honolulu County, you’ll pay as much as $1,646 or $137 a month. But it’s the state that offers the lowest across the board real estate taxes. Sorry, Louisiana and Alabama. Now, here’s something funny: though South Dakota has one of the most inexpensive counties regarding tax; inequality is big there, as its tax property rate is 1.19.

With all things considered, you know what, Louisiana Real Estate Agents? We’ll give you the win. Yes, we’ll consider you the best of those states with the lowest property taxes. And here’s why:

Do you trail Hawaii as a whole? Yes. But lots of parts of Hawaii are challenging to build on, right? There’s a lot of volcanoes and natural preservation guidelines and, ultimately, it’s an island! So, if you’re planning to relocate to a place and profit off of it, we’re going to call Louisiana the winner here. It’s as much as a tourist spot (because of New Orleans) as Hawaii is, and even if you’re not thinking about the 10 counties with the lowest tax property, its most expensive one (St. Tammany County aka St. Tammany Parish with $1,635 annually) is less expensive than Hawaii’s (Honolulu County with $1,646). So, there Bayou State.

Highest Property Taxes

Now, say you don’t mind paying more if you feel your money is returning via public services. That’s fine too. We got you covered. Here are the states and counties with the highest property taxes.

The highest tax property rate in America is found in the State of New Jersey: 2.13. And they really rely on it, as it amounts to 47.5% of the state’s whole tax revenue. So, if you’re planning on relocating to New Jersey, you’ll notice how New Jersey Real Estate Agents will caution you about the high cost of taxes, but also explain that its a big part of what makes The Garden State so great.

Interestingly, close by, New York has some of the counties with the highest real estate taxes. Living in Westchester, Rockland, and Nassau counties, you will pay more than $10,000 in taxes annually! But overall it’s a more balanced ratio, and the tax property rate is 1.38, comprising of 30.7% of the total tax revenue.

Also on the east. New Hampshire has the second highest property tax with 1.99 and is, by far, the state that relies the most on it: 66.1% of its tax revenue comes from this specific real estate tax! Wow.

So, celebrate New Jersey Real Estate Agents! We choose New Jersey as the best place for the highest property taxes. Why? Because (i) New Hampshire depends a lot on property taxes; if the housing market slows down, does it altogether crumble the quality of the local services paid by the real estate taxes?, and (ii) New York is too mainstream; and we’re big Springsteen fans, so… there you have it. New Jersey. Completely unbiased and technical decision.

We hope this has helped you figure out a little more about the most affordable places to live in America and also the place where, hopefully, your hard-earned money will be well spent.

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