When it comes to buying an investment property, real estate investors must carefully study all aspects of real estate investing. It’s a must to ensure the profitability of their investment decisions. One of these decisions is deciding on the location of your investment property, as well as knowing the median home value and the real estate tax rate. It’s not strange for real estate investors to resort to out-of-state real estate investing to reduce tax costs. This can be clearly noticeable as different states have different standards and formulas to calculate property taxes. In any case, the real estate investor is going to look for states with lowest property taxes to invest in.
Taxes may not be the most exciting part of real estate investing, but they should play a major role in your property investment decision. For this reason, successful real estate investors acknowledge that it’s a recurring cost for the investment that will have to be dealt with annually.
All things considered, recognizing states with lowest property taxes may not be of significance to novice real estate investors until their first property. However, their perception of property taxes can change after receiving that first tax report!
States with high property taxes have plenty of real estate investors too, but it doesn’t mean you can’t invest in states with lowest property taxes and reap the benefits of low tax rates. In other words, investing in New Jersey in a $100,000 property is going to be drastically different than investing $100,000 in Hawaiian real estate, as the difference between tax percentages is colossal.
What are the top 6 states with lowest property taxes?
Louisiana
Louisiana is an attractive investment location not only for good old shrimping boats but for real estate as well! Thanks to the historic Louisiana purchase, Louisiana is a colorful and cultural part of the United States of America! With a humble 0.26 percent property tax rate, it sure is easy to hypnotize the minds of real estate investors. As a matter of fact, with an average home value of $144,500, one can easily get hooked!
Related: The Tax Benefits of Real Estate Investments.
Hawaii
Hawaii is one of the states with lowest property taxes with a merciful 0.29 percent. Be that as it may, the real estate prices are one of the highest in the country! With a median property price of $500,000, you are guaranteed to find an investment property that you like. Keep in mind that owner-occupant properties get the royal treatment in Hawaii, but there are plenty of investment property tax deductions to benefit from.
Related: All You Need to Know About Investment Property Tax Deductions.
Alabama
Sweet home Alabama! Along with the beautiful southern accent comes the real estate tax breaks! With an average home value of $125,600, it holds its place as an attractive market for real estate investors. It’s among the states with lowest property taxes with a 0.33 percent property tax rate. As a result, homeowners and real estate investors aren’t afraid of tax reports as they know they are getting the best deals available!
Delaware
It comes off as no surprise that Delaware had the 9th largest number of millionaires per capita in the United States. While Delaware is the second smallest state, it’s established in the real estate market for its beneficial tax policies. The property tax rate sits at 0.43 percent making it among the top states with lowest property taxes.
Purchasing investment properties in Delaware is a common investment practice. Real estate investors practice out-of-state real estate investing. The key is to find the real estate investment strategy that works best with the local real estate market you’re in.
Related: Real Estate Investment Strategies That Will Help You Invest Like a Pro.
District of Columbia
The nation’s capital offers real estate investors what they need: a chance to be an investor in a very important location to the United States and great property tax rates along the way! The District of Columbia offers a 0.46 percent property tax rate. This results in making the District of Columbia among the top locations with lowest property taxes in the United States. While the District of Columbia is not considered a state, the real estate prices are continuing to climb modestly.
The District of Columbia is a top location if you’re looking for states with lowest property taxes. So, if you’re a real estate investor buying an investment property and looking for some serious tax benefits, the District of Columbia is the place you’re looking for!
West Virginia
Next on the list is the beautiful state of West Virginia with its endless attractions of natural beauty! While the state offers a slow rate of job growth of 0.3 percent, it holds a low property tax rate of 0.49 percent. This low tax rate is enough to attract out-of-state real estate investors to invest in both commercial and residential real estate.
What should you base your investment decision on along with tax breaks?
The lust of every real estate investor for financial security and freedom keeps real estate investors coming back! Knowing the deep details of every investment property is what real estate investors must do to make sure they never make unwise decisions. In any case, making one wrong decision with real estate investing can lead to major losses that can take several years to recover from.
Therefore, successful real estate investors always conduct a thorough real estate market analysis and you should too! A comprehensive market analysis is essential to find the real estate comps associated with any property. This can help you know all the incomings and outgoings for real estate investments and real estate comparables. Knowing the real estate comps can clarify the market value of any property compared to other similar investment properties in the location.
To learn more about how we will help you perform real estate market analysis quickly and easily, click here.
To conclude
The real estate investment world is full of rewards and expenses. And as it happens, property taxes are just one of those expenses. You must master the art of taxes to excel in any type of investing, including real estate. There is plenty of information available online on how to make use of tax breaks. If you have any more insights about states with lowest property taxes, please share them in the comments section.
