Who is paying the highest property taxes in America?
Do you know where property tax rates are the highest? What about the lowest? Why does it matter so much when buying homes and investing in real estate today?
Property taxes play a huge role in the real estate market. Part of the reason they are such a big deal is because they vary between states and counties across the United States. In fact, you can live across the street from your neighbor and pay a drastically different property tax. It all depends on which side of the county line your property is.
Knowing how much property taxes are and what they are is integral to buying a home, flipping houses and investing in real estate in general.
When it comes to a personal residence, you need to know how much this is going to add to your closing costs and monthly housing payment. You also need to know how much your taxes are likely to go up.
For example; tax rates are likely to shoot up dramatically if a property has benefited from exemptions. This can be a big factor in timing sales and listing personal properties.
Property taxes are a big factor for those flipping houses too. Most neglect them because they might not plan to hold onto the property, but it can alter the numbers at closing on the front and back end.
Those planning to hold properties for a while need to know these numbers to accurately determine cash flow, but also need to be aware of their impact on future value and reselling implications. Affordability will soon be an issue again and high tax rates can make all the difference. Future price growth may be capped and the desirability of the entire area can be dampened.
CNN Money recently published a new map showing the tax rates of every county in the United States. The interactive map gives a quick guide to high and low areas that investors and home buyers may find useful.
Looking at the heat map, the Northeast is a hot zone for sky high property taxes. The Illinois – Wisconsin border area is another which should be watched. The California coastline obviously has its own higher tax zones, but that certainly comes hand in hand with the stunning waterfront properties it boasts. Some interesting patterns show that destinations with “Washington” or “King” in the title consistently suffer from high property taxes.
The lowest taxes were in Louisiana, Alabama, Oklahoma, South Carolina and West Virginia.
Looking at property taxes as a percentage of home price alters the perception. From this perspective, California property taxes become negligible and on par with Idaho, Nevada, Arizona, Colorado and Wyoming. The Northeast is still a sizzling hot spot for taxes. This includes: Illinois, Wisconsin, Texas, Kansas, Nebraska and the Dakotas.
Of course, there are many other factors to consider when analyzing property taxes. Other taxes, who is living there, jobs, wage growth, and over all appeal should be taken into consideration.