Property Tax Rates

Taxes are the worst. But, for the most part, they’re pretty much inescapable This includes property taxes. What you might not know, however, is that property taxes do vary from state to state, and some states are significantly more reasonable in this area than others.   

Understanding Property Taxes

First, it’s important to understand how property taxes work. Typically, they are a percentage of the property’s value. Thus, the more your property is worth, the more you’re likely to pay. However, each state’s individual property tax rate also comes into play.

The States with the Lowest Property Tax Rates

If you want to buy a high-value piece of property, your best bet is to buy it in one of these states, which boast the lowest property tax rates in the country:

l  Louisiana

l  New Mexico

l  Hawaii

l  Mississippi

l  Alabama

l  Arkansas

l  Delaware

l  South Carolina

l  District of Columbia

l  West Virginia

Out of all of these low-tax states, the best bet is Louisiana, which has the country’s lowest property tax at 0.18%. The highest tax rate in this list is owed to New Mexico, at a 0.55% rate.

The States with the Highest Property Tax Rates

If you’re not lucky enough to find property in one of the above states, do your best to avoid the states at the other end of the spectrum- the ones with the highest property tax rates.

These include:

l  New Jersey

l  North Dakota

l  New Hampshire

l  Vermont

l  Texas

l  Michigan

l  Nebraska

l  Connecticut

l  Wisconsin

l  Illinois

The worst in this bunch is New Jersey, with a 1.89% tax rate, while the “best” is North Dakota, at a 1.42% tax rate- still pretty high!

Ultimately, you probably cannot realistically base your decision about where to buy property based on tax rates. But, if you do have some leeway, it’s a good idea to go with states with lower rates when possible. If you can’t do that, then work with a tax advisor to find exemptions and helpful tips where you can so that, hopefully, you don’t end up totally drowning in property taxes.

Personal Property Tax Deductions

If you’re like most people, then you probably hate paying your property taxes. However, it’s not all bad! Believe it or not, you can deduct the taxes you’ve paid as an itemized deduction when filing time comes around.  

Of course, as with anything through the IRS, there are certain eligibility requirements that your property tax or taxes must meet in order to qualify. Fortunately, though, they’re pretty basic. You can generally deduct the tax as long as:

l  It is based on the value of the property

l  The tax is imposed annually

l  The tax is imposed on personal property

This does mean, unfortunately, that you can’t deduct business property, at least not under the personal property tax deduction umbrella. There is, however, a way to deduct business property taxes and most other types of property taxes as well. The right attorney can walk you through how to deduct taxes, when possible, for a variety of different scenarios.

So, if you’re feeling confused about the personal property deduction or want to inquire about other possible deductions for which you may qualify, don’t hesitate to contact a tax professional. These people can help you find every possible deduction to save you as much money as they can, which can really make a huge difference come tax time!

How Do Your State Property Taxes Stack Up?

Did you know that property tax amounts vary greatly from state to state? That’s right! While you may be paying one amount in property taxes, friends in another state may be paying much less (or much more)!

Right now, the state with the highest property taxes of all is New Jersey, while Hawaii has the honor of having the lowest property taxes.

No matter where people live and what their property tax rates, however, the fact remains that a great many people, all across the nation, aren’t able to pay their property taxes or to pay them in full. In fact, the National Tax Lien Association reports that around $11.8 billion in property taxes go unpaid each year.

Your chances of being in the “unpaid group” are greatly reduced if you live in one of the following states with the lowest property taxes:

·         Alabama

·         Hawaii

·         Louisiana                                                                               

·         Delaware

·         D.C.

·         South Carolina

·         West Virginia

·         Arkansas

·         Colorado

·         Wyoming

If you’re not fortunate enough to live in one of those states, hopefully you’re not in any of the following states that have super high property taxes:

·         New Jersey

·         New Hampshire

·         Illinois  :(

·         Texas

·         Wisconsin

·         Nebraska

·         Connecticut

·         Vermont

·         Michigan

·         Rhode Island

No matter where you live, you should talk to your accountant about ways to potentially reduce your taxes in general so that, hopefully, none of your required tax payments will end up hitting you too hard!

Property Tax Exemptions Worth Knowing About

It’s no secret that property taxes can get pretty high, and, while you can’t escape paying them altogether, there definitely are things that you can do to cut down on your property taxes. In fact, there are quite a few credits, deductions, and exemptions that you may qualify for. We’ll cover a few of the basics here, but remember, you should always be able to go to your accountant and/or tax adviser to learn more about available discounts and how to take advantage of them.  

Veteran Assistance

First things first, are you a veteran? If so, then there are probably several different property tax related credits, deductions, and/or exemptions that you can qualify for. However, these do vary from state to state, so, where you live will play a big role in which of these you can receive. Ask your tax adviser to point you in the right direction!

Aid for Senior Citizens

Veterans aren’t the only ones who can get a break on their taxes! Senior citizens are another group that is often eligible for discounts, especially in the case of senior citizens who are over 65 and fall into a lower income bracket. Again, these discounts do vary from one state to the next, so check with your tax adviser. It’s definitely worth the effort because some discounts are so good they can keep you out of foreclosure.

A Hand for Farmers

Finally, even farmers can get a little credit...literally. Land that is deemed “agriculturally productive” qualifies for property tax breaks in most states, especially Florida, which is very liberal when it comes to handing out this credit. Other states, however, have more stringent requirements, but, no matter where you live, this credit and all the others are worth looking into. In fact, you should really ask your tax adviser to help you uncover and make the most of every possible discount you may be eligible for!