Which states have the lowest property taxes? And the highest?
No matter where you live, if you own a home you will have to pay property taxes. But the amount you have to pay varies across the United States.
Property taxes are used to fund essential government services like the fire and police departments, water systems and schools, among other things. So, no matter where you live, if you own a home you will have to pay property taxes.
However, property taxes are calculated differently depending on where you live with home values and rates being set at the local level. Both of these factors can drastically change how much you have to pay the tax collector.
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How are property taxes calculated?
On a periodic basis, depending on the state and local statues, a tax assessor will come around to estimate the perceived value of your home and property. Assessors use different methods to make their calculation of a property’s assessed value.
They may use an individual method or a combination of formulas to reach their determination. After the market value of your property has been determined for tax purposes you’ll be sent the assessment and a property tax bill. Market value for tax purposes is not the same as fair market value, which is the price someone would be willing to buy the property.
If you feel that the assessment is significantly higher than what it should be, you can appeal, and many property owners do. Between 20 and 40 percent win their appeal to get a lower assessment and thus a lower property tax bill.
Common methods look at cost and sales comparison
Assessors that use the cost method, will look at how much the expense would be to the owner to replace a property in the event it were rebuilt from scratch. The structure’s depreciation in value and value of the land it is on are taken into account.
In a sales comparison, the assessor will judge your property’s value by comparing it to similar properties that have recently sold in the same area. Variables that could affect the value making the house more of less valuable than another will be used to adjust the assessment.
For commercial and business properties the tax assessor may use the income method. This estimate is based on how much income the property would bring the owner were it rented. Current market rental rates and operating expenses among other things are factored in.
Tax Rates.org provides an online property tax calculator that can give a ballpark idea of the tax bill that you can expect to hit with.
States with the highest and lowest property taxes
Property taxes can range from a fraction of a percent to over two percent. Depending on the value of your property this can mean a tax bill of a few hundred dollars to thousands of dollars. The average American homeowner in pays about $2,400 in property taxes, according to Business Insider.
Here’s a look at the ten states with the lowest property taxes:
- Louisiana (0.18 percent)
- Hawaii (0.26 percent)
- Alabama (0.33 percent)
- Delaware (0.43 percent)
- District of Columbia (0.46 percent)
- West Virginia (0.49 percent)
- South Carolina (0.5 percent)
- Arkansas (0.52 percent)
- Mississippi (0.52 percent)
- New Mexico (0.55 percent)
Here’s a look at the ten states with the highest property taxes according to Yahoo News using data from the Tax Foundation, GOBankingRates:
- New Jersey (2.13 percent)
- Illinois (1.97 percent)
- New Hampshire (1.89 percent)
- Vermont (1.76 percent)
- Connecticut (1.73 percent)
- Texas (1.60 percent)
- Nebraska (1.54 percent)
- Wisconsin (1.53 percent)
- Ohio (1.52 percent)
- Pennsylvania (1.43 percent)