|
Getting your Trinity Audio player ready...
|
Being a landlord has many perks, but paying property taxes is not one of them. All states impose property taxes, but the amount collected varies greatly from state to state. While a few tenths of a percentage may not seem like much, it makes a huge difference when comparing taxable values in the hundreds of thousands.
To get an idea of what is at stake, compare Louisiana and Connecticut. Louisiana has one of the lowest state property tax rates in the United States at 0.18%. Conversely, Connecticut has a higher property tax rate of 1.63%. Not a huge difference, right? Think again. For a median home worth around $200,000, Connecticut landlords will pay $3,260 in real estate taxes each year, while Louisiana landlords will pay a lean $340.
Another way to consider it is by comparing a landlord who lives in a low-tax state and pays $2,000 in property taxes for a $1,000,000, 8-unit property, compared to a landlord in a high-tax state who pays $2,000 in taxes on a $150,000 single family property. The landlord in State A is paying a mere 0.2% of their property value in taxes, while the landlord in State B is paying 1.33% of their property value in taxes. And the state tax rate is just the beginning – landlords and homeowners must also pay county/municipality property taxes.
The Best States for Property Taxes
To locate the states with the highest and lowest property taxes, the nonprofit Tax Foundation has used Census data over a three year period using property taxes along with the percentage of property value paid in property taxes. The top ten best states for property taxes are as follows:
1. Louisiana – 0.18%
2. Hawaii – 0.26%
3. Alabama – 0.33%
4. Delaware – 0.43%
5. West Virginia – 0.49%
6. South Carolina – 0.50%
7. Arkansas – 0.52%
8. Mississippi – 0.52%
9. New Mexico – 0.55%
10. Wyoming – 0.58%
The Worst States for Property Taxes
The Tax Foundation found that property owners in the following states paid the most in property taxes compared to property value. The percentages represent the percentage of property value that are paid in taxes:
1. New Jersey – 1.89%
2. New Hampshire – 1.86%
3. Texas – 1.81%
4. Wisconsin – 1.76%
5. Nebraska – 1.70%
6. Illinois – 1.73%
7. Connecticut – 1.63%
8. Michigan – 1.62%
9. Vermont – 1.59%
10. North Dakota – 1.42%
