Property tax rates should be among the major determinants of your real estate investing decision. When looking at the lowest property tax rates by state and comparing them to the highest property tax rate states, you can cut your property taxes in half just by going for out-of-state real estate investing. Keep in mind that most successful real estate investors look for creative methods to cut costs and expenses to enjoy a larger ROI.
What are the lowest property tax rates by state?
Of course, the property tax rate percentage is calculated in relevance to the property’s value. Meanwhile, each state calculates property taxes with its own unique formula. Here are the lowest property tax rates by state:
Louisiana
Louisiana holds the lowest property tax rates in the US housing market. With a 0.18 percent tax rate percentage, it opens its doors for real estate investors of all financial backgrounds. Additionally, the Louisiana real estate market is absorbing more and more out-of-state real estate investing as investors are discovering the opportunities that come along.
Hawaii
Hawaii takes second place when comparing property tax rates by state. It offers a 0.26 percent tax rate. This can help real estate investors save up a hefty amount of cash when comparing such property taxes to other states. Keep in mind that Hawaii’s real estate market is witnessing a rapid increase in real estate prices and such low taxes can be an additional attractive factor.
Delaware
Delaware may not be your go-to option for a tropical holiday. However, it makes for the best real estate investments as an investor can cut his/her real estate tax costs by a significant portion. With a 0.43 percent property tax rate, you’re bound to save money on your tax bill.
Alabama
It really is sweet home Alabama when comparing property tax rates by state. The property tax rate sits at 0.33 percent. Buying an investment property in the state of Alabama has been a lucrative option for real estate investors for many years. Additionally, many real estate investors are choosing Alabama for their Airbnb rental properties.
If you want more insights on where to invest in Airbnb rentals, read this blog post: The Most Profitable Airbnb Locations in the Summer of 2018.
West Virginia
West Virginia is another low property tax rate state! You can buy an investment property and give no worry to your taxes as it sits at 0.49 percent. This is an effective strategy taken by the state of West Virginia to encourage home ownership.
What are the highest property tax rates by state?
After clarifying the lowest property tax rate states, let’s take a look at the highest property tax rates. In any case, this is meant to be as an informative content to help grow your real estate investment portfolio. Even states with high property tax rates can be a sustainable investment opportunity for real estate investors. Here are a few of our top picks:
New Jersey
New Jersey tops our list when comparing property tax rates by state. With a whopping 1.89 percent property tax, its property tax rates are more than 10 times higher than Louisiana. If you’re looking at New Jersey real estate properties as an investment, take this property tax rate into consideration for your investment.
If you’re considering New Jersey as a base for your real estate investments, read this blog post: Is Investing in Multi Family Homes in New Jersey a Smart Investment Decision in 2018?
New Hampshire
The New Hampshire real estate market is as stable as it gets! On the other hand, property owners are going to need every penny when they pay their property tax bill. Of course, New Hampshire is a desirable destination for real estate investors but holds a property tax rate of 1.86 percent. It’s a high number compared to other states.
Texas
Along with the Texan charm comes the high property tax rates. It sits at 1.81 percent, but real estate investors still find Texas to be a lucrative real estate market that can fit any real estate investment strategy you decide on. With many industrial and commercial rental properties, real estate investors sure can find a place in the rising economy of Texas.
For more information on the Texas housing market, read this blog post: Where to Invest in Real Estate in the Texas Housing Market 2018.
Illinois
Illinois is everything you’d expect from a comfortable-living state. Well, except when looking at property tax bills. It holds its rank among high property tax rates by state at a steady 1.73 percent tax rate. Nonetheless, making money in real estate in the Illinois real estate market is made possible despite high tax rates.
Rhode Island
In addition to being famous for manufacturing silverware and top-of-the-line jewelry, high property tax rates take the list as well. With a 1.35 percent property tax rate, Rhode Island real estate still thrives despite that.
Should you base your investment decision on property taxes?
While you should not base your real estate investment decision on property tax rates by state, you should take it as a part of a pros and cons list with each real estate property. The best way to do that is through a comparative market analysis conducted by a well-established investment property calculator. The comparative market analysis conducted by Mashvisor, for example, can tell you a whole lot about your possible investment property, which includes the capitalization rate, cash on cash return, property expenses, and even tax history. Click here to make use of the 14-day free trial offered by Mashvisor and enjoy a reliable investment decision for years to come.
Final words
You may ask yourself about the importance of knowing property tax rates by state. It’s important to keep in mind that gathering information and bettering one’s knowledge of the surrounding real estate market can help you in making money in real estate and identifying lucrative untapped markets.
If you have any more information on property tax rates by state, feel free to share them with us in the comments section.
