Think Your Property Taxes Are High? See the Most—and Least—Expensive States
Think Your Property Taxes Are High? See the Most—and Least—Expensive States
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If your property tax bill is mind-blowingly high, just be thankful you don’t live in New Jersey. And if you do, well, that’s got to hurt your bank account.
For the third year in a row, New Jersey is the state with the highest property taxes in the nation, according to a recent WalletHub report, with an effective real estate tax rate of 2.35%. This totals about $7,410 annually on a nearly $316,000 home, the median price in the state.
WalletHub analyzed U.S. Census Bureau data to figure out the real estate tax rates by dividing the median annual property tax payment for the state by the state’s median home price. Property taxes are typically levied at the county level, and go toward things like local schools, police and fire services, and parks.
“Real-estate taxes should play an important part when deciding to buy a new home, especially when factoring the services in the surrounding area,” Jill Gonzalez, WalletHub’s senior analyst, said in an email. “A new family might be willing to invest more in property if the taxes pay for a better environment for their children. On the other hand, a retiree living on a fixed income might opt for low property taxes.”
New Jersey Realtor® Kyung Hae Park says the high taxes don’t discourage would-be homeowners who will pay a pretty penny to be in the most desirable neighborhoods.
“Buyers are willing to pay the higher property taxes because of the good school systems,” says Park, of Realty 7 in Fort Lee, NJ. “They want to their child to be in the best town.”
They also prioritize parks and low crime rates, she says.
The next highest property taxes are in Illinois, followed by New Hampshire, Connecticut, and Wisconsin. The rest of the top 10 most expensive states are Texas, Nebraska, Michigan, Vermont, and Rhode Island.
However, there are more than a few states where homeowners don’t need to hock their watches or designer bags to pay their property taxes.
Hawaii has the lowest median property tax rate on the list, at just 0.27%. But since home prices on the Polynesian islands are so high, annual taxes on a median-price home at $515,300 come to about $1,406 a year.
“In Hawaii, every dollar matters,” says Realtor Marilyn Griffin of Coldwell Banker Island Properties in central Maui. “The cost of living, the price of electricity, gas, food, everything is so high here. To offset a little bit here and there, anything helps.”
The lower taxes are also a hit with out-of-state buyers, she says.
“At showings, they’ll ask about the [annual] property taxes. You’ll tell them, and they’ll ask if that’s what’s due every quarter.”
But there are dangers that may come along with lower property taxes in many towns and cities. And we mean actual dangers.
“Lower property taxes are often correlated with higher crime rates, fewer parks, and subpar school systems,” WalletHub’s Gonzalez says.
The other states with the lowest property taxes are Alabama, Louisiana, Delaware, the District of Columbia, South Carolina, West Virginia, Colorado, Wyoming, and Arkansas.
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Source: Real Estate News and Advice – realtor.com » Real Estate News