What are the states with highest property tax rates in the US housing market?
Real estate property taxes can be a major expense when owning a house depending on where you live. If you’re a real estate investor, then you should always consider your options when it comes to states with highest property tax rates. Investing in these states might not be a smart move if you’re trying to cut back on your expenses, especially property taxes.
According to the US Census Bureau, the average American household spends around $2,197 on real estate property taxes each year. And while this might seem like it only applies to homeowners, in reality these taxes affect renters as well. When a homeowner rents out their property, the amount of rent that they set for their property will depend heavily on the cost of the expenses that they will have to pay, including property taxes.
However, property taxes are not the only thing that real estate investors should take into consideration. For example, investing in a state where property taxes are low but property prices are extremely high, as in the case of Hawaii, can be misleading.
Hawaii is the #1 state on the list of states with lowest property tax rates, sitting at 0.27% real estate property tax rate. On the other hand, though, Hawaii is also the #1 state when it comes to the highest property prices, where the median home value is $538,400. For this reason, real estate investors have to find the balance between the amount of property tax that they want to pay vs. the median price of the property that they want to buy.
In this article, we will be listing the top 10 states with highest property tax rates in the US based on the data collected by WalletHub to help you find your next market for investing in the US housing market.
So, without further ado, here are the top 10 states with highest property tax rates in the U..
States with Highest Property Tax Rates – New Jersey
- Effective real estate tax rate: 2.40%
- Annual tax on $185K home: $4,437
- State median home value: $316,400 (5th highest)
- Annual tax on a home priced at state median value: $7,601 (highest)
- Median household income: $76,126 (3rd highest)
States with Highest Property Tax Rates – Illinois
- Effective real estate tax rate: 2.32%
- Annual tax on $185K home: $4,437
- State median home value: $174,800 (25th highest)
- Annual tax on a home priced at state median value: $4,058 (6th highest)
- Median household income: $60,960 (16th highest)
States with Highest Property Tax Rates – New Hampshire
- Effective real estate tax rate: 2.19%
- Annual tax on $185K home: $4,038
- State median home value: $239,700 (14th highest)
- Annual tax on a home priced at state median value: $5,241 (3rd highest)
- Median household income: $70,936 (7th highest)
States with Highest Property Tax Rates – Connecticut
- Effective real estate tax rate: 2.02%
- Annual tax on $185K home: $3,733
- State median home value: $269,300 (9th highest)
- Annual tax on a home priced at state median value: $5,443 (2nd highest)
- Median household income: $73,433 (6th highest)
States with Highest Property Tax Rates – Wisconsin
- Effective real estate tax rate: 1.95%
- Annual tax on $185K home: $3,602
- State median home value: $167,000 (24th lowest)
- Annual tax on a home priced at state median value: $3,257 (9th highest)
- Median household income: $56,811 (24th highest)
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States with Highest Property Tax Rates – Texas
- Effective real estate tax rate: 1.86%
- Annual tax on $185K home: $3,435
- State median home value: $142,700 (14th lowest)
- Annual tax on a home priced at state median value: $2,654 (15th highest)
- Median household income: $56,565 (25th highest)
States with Highest Property Tax Rates – Nebraska
- Effective real estate tax rate: 1.83%
- Annual tax on $185K home: $3,371
- State median home value: $137,300 (12th lowest)
- Annual tax on a home priced at state median value: $2,506 (18th highest)
- Median household income: $56,927 (22nd highest)
States with Highest Property Tax Rates – Vermont
- Effective real estate tax rate: 1.78%
- Annual tax on $185K home: $3,285
- State median home value: $218,900 (18th highest)
- Annual tax on a home priced at state median value: $3,893 (8th highest)
- Median household income: $57,677 (20th highest)
States with Highest Property Tax Rates – Michigan
- Effective real estate tax rate: 1.71%
- Annual tax on $185K home: $3,158
- State median home value: $127,800 (7th lowest)
- Annual tax on a home priced at state median value: $2,185 (21st highest)
- Median household income: $52,492 (18th lowest)
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States with Highest Property Tax Rates – New York
- Effective real estate tax rate: 1.65%
- Annual tax on $185K home: $3,057
- State median home value: $286,300 (7th highest)
- Annual tax on a home priced at state median value: $4,738 (4th highest)
- Median household income: $62,909 (14th highest)
To Sum Up
As you can notice from this list, the placement of each state varies widely when it comes to the different values. Although New Jersey has both the highest property tax rates in the US and 5th highest median home value, the real estate market in New Jersey remains one of the best performing markets in the US, which can possibly be attributed to New Jersey also having the 3rd highest income per household in the US housing market. Whichever state that you choose for buying a real estate investment property, make sure to do your research to determine the best cities and neighborhoods within that state for investing in real estate.
Also, check out our list of the top 10 states with lowest property tax rates in the U.S.
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