States with highest property taxes 2021,2022,2023. Property tax rates by state 2021,2022,2023

The cost of maintaining real estate in the US is highly dependent on the state, city, and even the county in which the house is located. But in any case, utility bills, annual taxes, insurance pull on a very decent amount. About how much you have to pay for housing and spend on living, what income you can count on, what are the features of maintenance, renting and selling a house, read our article.

image house in usa

When buying real estate in America, the owner’s country of residence does not really matter — annual taxes on real estate and rental income are calculated using the same formula. Small differences appear only when selling an expensive investment property that was not used as the main residence.

Property taxes

Each owner of real estate in the United States once a year is required to pay property tax (property tax), which averages 1-2% of the value of the object. This money goes to the maintenance of the local municipality: schools, kindergartens, libraries, fire and police stations, emergency departments. Also, thanks to this tax, roads and highways are in working condition, parks are well-groomed and green, and recreation areas are always cleaned.

image houses in the usa, Taxes
Each owner of real estate in the United States once a year is required to pay property tax (property tax), which averages 1-2% of the value of the object.

The better the infrastructure is, the higher the tax, because the rates vary not only in different states, but also in different cities and even regions.

Peculiarities

  • When choosing in which state and city to buy real estate, start not only from the rates, but also from your situation. For example, if you are moving with children, it is better to choose a place with a higher tax, but guaranteed to provide a place for the child in a public school. Savings on private education will more than cover the annual tax. If you don’t have children and you don’t plan to have them in the near future, you spend most of your time at home (for example, you are a freelancer), you can look at places with the lowest rates, since a very developed infrastructure is not so important for you.
  • The higher the tax, the more local authorities have to work to keep the area in order. Therefore, choosing places with a higher rate, you know in advance that you will move to a well-groomed, clean place with the most developed infrastructure.
  • Find out the rates ahead of time, as percentages may differ even for homes on adjacent streets, depending on how many residents and businesses in the county are paying taxes, the unit’s original cost, and other state-specific taxes.

What rates

States with the highest rates

State Tax rate, % Average home value Average tax amount
New Jersey 2,35 $315 900 $7 410
Illinois 2,30 $173 800 $3 995
New Hampshire 2,15 $237 300 $5 100
Connecticut 1,97 $270 500 $5 327
Wisconsin 1.96 $165 800 $3 248
Texas 1,90 $136 000 $2 578
Nebraska 1,85 $133 200 $2 467
Michigan 1,78 $122 400 $2 174
Vermont 1,74 $217 500 $3 795
Rhode Island 1,63 $238 000 $3 884

States with the lowest rates

State Tax rate, % Average home value Average tax amount
Hawaii 0,27 $515 300 $1 406
Alabama 0,43 $125 500 $543
Louisiana 0,49 $144 100 $707
Delaware 0,54 $231 500 $1 243
Washington DC 0,56 $475 800 $2 665
South Carolina 0,57 $139 900 $798
West Virginia 0,58 $103 800 $607
Colorado 0,60 $247 800 $1 489
Wyoming 0,61 $194 800 $1 196
Arkansas 0,62 $111 400 $693

Source: American edition of USA Today

But, as we have already said, this does not mean that this rate will apply to the entire state: each city and even county has its own percentage. To understand the difference, see, for example, real estate tax rates in different cities of Dallas.

When to pay

You must file a tax return and pay tax by April 15 of the year following the reporting year.

Peculiarities:

  • The filing and payment deadline automatically extends to June 15 if you are permanently working and living outside of the United States and Puerto Rico (as of April 15).
  • It is possible to further extend the deadline until October 15, if by April 15 (or June, if you fall into this category) fill out and send a special form.
image apartments in the usa, Taxes
You must file a tax return and pay tax by April 15 of the year following the reporting year.

How is the tax amount calculated

The appraiser determines the average market value of the property, which is reviewed every two to three years. But the owner has the right to apply annually to revise this amount. At the same time, it does not matter at what price you bought a home — what matters is how much it costs on average on the market.

Example. You bought a $450,000 home in New Jersey with a recent appraisal of $510,000.

  • Approximately one third of the appraised value is taken for calculation (in some districts this figure varies within 10-33%). That is, the starting point is $170,000.
  • Further, the coefficient of the equation is used, which is determined based on the price of the object. It can be 100% (in this case, the amount will not change), be lower (if the property in the area is very expensive) or higher (if the property has fallen in price). Suppose that in our case it will be like this: 170 thousand × 70/100 = $119 thousand.
  • Further, benefits are taken into account that are applicable to pensioners, the military, low-income persons, as well as those for whom the object is the main place of residence (homestead exemption). Let’s assume that the last case is yours and the discount is $9,000. That is, after deducting the benefit, $110,000 remains.
  • At the last stage, the amount is multiplied by the local rate. For the state of New Jersey, it is 2.35% (but it can be higher or lower in a particular county). 110,000 × 2/100 = 2,200. Thus, the property tax that you have to pay annually is $2,200.

Communal payments

The amount of «communal» also varies not only in different states, but also in different cities. This is especially true for electricity rates, the cost of parking and various subsidies from the state. However, in each state, several companies are involved in the supply of resources, so there are plenty to choose from.

Maintaining even the most modest apartment will cost at least $150 per month, excluding insurance, parking, management company fees and property taxes (if your home is yours). In states where the minimum wage is higher than the national average (for example, in California, the District of Columbia, Massachusetts), this amount is higher.

How to pay. The client independently informs the company about the indicators of the meters, after which the supplier sends an invoice. Payment is mainly online, through personal banking or the site of the management company, the last option is mail. Meeting at the bank a long queue of pensioners who want to pay bills is almost impossible.

Interesting Some companies also list «expenditure» along with your score, such as your neighbors (anonymously) or the state average. Thus, you can understand how economically you use resources — the policy of the state is aimed precisely at this. For the same purpose, utility companies offer different service packages and tariffs (for example, nightly or designed for “unpopular” hours).

Electricity

One of the biggest expense items. There are several supplier companies, therefore there is no single tariff scale. The average rate per kilowatt-hour is $0.13, but this figure can vary greatly depending on the state. According to the website of independent statistics and analysis of the US energy, in October 2020, the rates were as follows.

  • Connecticut — $0.22
  • New Hampshire — $0.19
  • New York — $0.19
  • Pennsylvania — $0.14
  • Indiana — $0.14
  • Minnesota — $0.14
  • Nebraska — $0.11
  • Florida — $0.11
  • Texas — $0.12
  • California — $0.21
  • Washington — $0.10
  • Hawaii — $0.29

Based on the calculation of 150 kWh per person per month, then for a family of two it will take from $30 to $87, depending on the state. This does not include air conditioning, so in summer and sometimes in winter the amount can increase significantly. For example, living in Arizona, you will have to “cool off” all the time, so get ready to pay about $120 for electricity in the hottest months. The same can be said about New York, but in winter, as it is cold there and people often turn on the air conditioner in heating mode.

It is not uncommon for Americans buying private homes to install small wind turbines on property. The generated energy is enough for a family, and you don’t have to pay for electricity at all.

Gas and heating

With natural gas, the situation is similar, but the payment for it will depend on the presence or absence of central heating, as well as the specific state. For example, in the central states you will pay much less than in the northern ones. In houses where there is central heating, the amount for the consumption is fixed, does not depend on the meters and is included in the rent. If a boiler is installed in the house, then on average you will pay $ 80–100 for heating per month.

In many homes in the southern states, heating is not provided at all, therefore, for heating during the cold periods of the year, split systems are most often used, which are more expensive than boilers.

image houses with gas in usa, Taxes
In houses where there is central heating, the amount for the consumption is fixed, does not depend on the meters and is included in the rent.

Gas is also used for cooking and heating water. If we limit ourselves to only these two points, $ 8-15 will come out per month. Plus, you have to pay a monthly fee of about $10.

Water and sewerage

Water costs are very low, even though rates vary by region. The average cost of a cubic meter of water is $0.6. Thus, a family of two spends $10–12 per month. You will have to pay extra $15-30 per month for sewerage.

TV, phone, internet

This item draws on a fairly large sum. The average cost of a package is $100–150 per month. In New York, the amount reaches $180–200. Moreover, Americans watch TV all the time, and use their home phone much more often than mobile phones. Often there are situations when the Internet is divided into several apartments.

Garbage removal

Depending on the house, state and the number of people in the apartment — $ 17-35 per month.

Insurance

Real estate insurance in the United States is a common service, although it is not mandatory. Almost every American has fire insurance; often houses are insured against earthquakes, floods, natural disasters. Additionally, they include air conditioners, electrical wiring, and plumbing in the policy. The annual cost of insurance is 1-5% of the cost of housing (depending on the included services).

Owners Association

If you bought an apartment in a residential complex, the homeowner’s association (HOA), or, more simply, the HOA, will most likely be responsible for the improvement of the adjacent territory. The organization is responsible for the repair and maintenance of the common space. Depending on what is included in their package of services, the monthly fee will vary from $50 to $4 thousand. Sometimes the monthly fee already includes garbage collection, fire insurance, water and sewer fees, parking, so separately for all you won’t need to pay.

Find out in advance where your future apartment is located — in a cooperative or in an ordinary house. Shares in a co-op are two to three times cheaper, but the list of required monthly expenses will usually include a hefty HOA fee. In general, the more elite the complex where your apartment is located, the higher the subscription fees will be.

Peculiarity. Please note that the US property owners association is a body that is not subject to regulation at the municipal level. That is, each association sets its own rules. For example, a home association may decide that tenants are not allowed to have pets or decorate windows for the holidays. Such nuances should be known in advance, because for violation of the rules — a substantial fine.

Examples of tax and utility costs for different types of housing (per year)

Payment types One bedroom apartment in New York, 45 sq. m, one person Two bedroom apartment in Northern California, 60 sq. m, two people Two-story frame house in Nebraska, 175 sq. m, three people
Property tax

$7 250

$1 820

$2 470

Electricity

$350

$620

$900

Gas and heating

$750

$470

$700

Water

$430

$800

Garbage removal

$240

Internet, TV, phone $2 160 $1,140 (without phone)

$1 440

Insurance

$3 200

$4 300

HOA

$3 000

Total

$11 180

$10 250

$10 610

In a rented apartment, the tenant usually does not pay property tax and does not cover insurance.

Car parking and insurance.

If you have a car and live in an apartment complex, in some states you will have to pay extra for on-site parking. For example, in Los Angeles and San Francisco, this expense item is usually included in the rent of the HOA, but in New York, the owner pays extra for parking. The monthly rate per parking space starts at $40 for open areas and $100 for indoor parking lots.

The cost of car insurance depends on the state in which you live, the company providing the service, the type of insurance policy, the number of accidents in the region. Car insurance costs an average of $90 per month in Northern California and $200 in New York.

Renting out housing

Yield and rates. Rental prices vary by state and city. For example, a one-bedroom apartment that you rent in New York for $2,000 can easily be rented in Oklahoma City for $500. Accordingly, the profitability of long-term rental housing varies significantly. The general rule: in large cities, due to the high price per square meter, the return on rent is usually lower than in small ones, but the demand and liquidity of objects are higher.

Tax. If you rent out a property, you are required to pay a tax of 30% of the income received (the rate specified in the lease agreement). The amount can be significantly reduced — US law provides for payment only from net income, minus real estate maintenance costs: payments to the association of owners, depreciation of the property for the last 15 years, repair costs, mortgage interest, property tax, repair costs, » communal», insurance, etc.

If you rent out the main housing for a period of less than 14 days, you can not report income to the inspection: in this case, you do not need to pay tax.

Management companies. If you are renting a second home located, for example, in another state, or if you spend most of your time outside the United States, it is reasonable to use the services of a management company. The competition in this market is high, and finding a reliable organization is not difficult.

Employees of the company make utility payments and taxes in your absence, control the timely transfer of rent by the tenant, help find tenants, fix minor problems in housing, control the condition of the house or apartment. The range of services can be much wider, but the fee will be higher.

Management companies charge 10-15% of the rental rate for their services. At the conclusion of the contract, the owner also makes a one-time payment of half the cost of the monthly rent.

Cost of living in the country

Income. Minimum and median income rates in the US vary by state. The average minimum wage in the country is $7.25 per hour (the rate has not changed since 2009), but, for example, in Los Angeles and New York, this amount is much higher — $10-11. The highest rates are in the District of Columbia ($14), Massachusetts ($13.5), Washington ($12.75) and New York ($11.8). For more information on rates, see the US Department of Labor website.

The legislation provides for several categories of workers for whom the «minimum wage» is not guaranteed. This list includes student part-timers, nannies and carers, fishermen, couriers, federal investigators, sailors, telephone operators, agricultural workers, and employees of seasonal entertainment establishments. The lowest rates in the field of restaurant service. At the moment, more than 20 million Americans receive income at the level of the minimum rate.

According to the Bureau of Labor Statistics, the official average salary in the US is $957 per week, or $4,150 per month, before taxes. This amount varies by state and city. For example, in New York, the average salary is about $5.5 thousand per month, and the lowest salaries are in Mississippi and Arkansas. The highest hourly rates are for surgeons ($122.7), dentists ($86.82), and the lowest for cashiers ($11.19), janitors ($13.5), bus drivers ($17.44), and construction laborers ($18). ,eight).

The US income tax rate is 10-37%. But families with children and those with low income receive benefits from the state and tax credits.

Rental of property. As with everything else, the cost of living in America varies greatly by city. We will focus on New York. To rent a one-bedroom apartment in Manhattan, you need at least $3,000 per month. Similar housing in Brooklyn (Brighton Beach) will cost $1,000. The rate strongly depends on the location and quality of the house. In Brooklyn, you can rent a room for $1.5 thousand, but the complex will be new, you will have to pay extra only for electricity, the rent will include a washing machine, parking, a gym, and everything you need for everyday life will be nearby.

The average cost of a “communal apartment”, provided that there is no HOA in the house, and the tenant does not pay insurance and property tax, is $ 320 per month for a single tenant.

Please note that most rental apartments in New York are unfurnished. Furnished option — a rarity.

Food. If you eat at home, you will spend about $50-70 on food per week. A liter of milk costs about $1.5–2.0, a kilo of chicken fillet $8–10, bread $2.5, 12 eggs $2.6, a kilo of rice $3, a kilo of apples $3.5, and tomatoes $1.5 .

You can have a hearty lunch in a budget Asian cafe for $10, and a bite to eat in fast food for $6–7. But for a good dinner for two with alcohol, you will have to pay at least $ 100.

image apartment buildings in the usa Taxes
You can have a hearty lunch in a budget Asian cafe for $10, and a bite to eat in fast food for $6–7.

Transport. An unlimited metro pass costs $120 per month. A ticket for one trip by metro, bus — about $ 3. An annual bike rental subscription is also $120. Taxi is not a cheap pleasure: a trip lasting half an hour will cost an average of $35-40.

Mobile connection. The monthly cost with unlimited internet is $35–40 if the family tariff is on, and $70 if the regular one. Companies often give bonuses, such as a free subscription to Netflix.

The medicine. The employer pays part of the insurance premiums for the employee. On average, per person, regular and dental public insurance costs $ 210–240 per month. But depending on the conditions, the cost of the policy may be higher. If we talk about individual services, a doctor’s visit costs $30, and a filling costs $50.

Interesting The American financial company GoBankingRates ranked the US states by cost of living in 2020. It turned out that the cheapest place to live in Mississippi: taking into account the cost of food, rent, «communal», transport, medicine and entertainment, you need about $51,743 per year. Hawaii turned out to be the most expensive: for a comfortable life, you need to spend about $123,244 per year. Even in New York, this amount is noticeably lower — $ 82,652.

Property For Sale

Market trends. According to realtor.com economists, high activity in the US housing market will lead to a 5.7% increase in prices by the end of 2021. Including because the stock of housing in the country is rapidly declining. In addition, because of the pandemic, consumer preferences have changed: people are increasingly striving to leave large cities and move to quieter and cheaper places. Therefore, housing prices in the center of America are growing faster than on the coast.

Taxes

Capital gain tax. It is charged from the net profit from the sale if the property has been owned for more than a year. All home improvement expenses during the tenure, taxes, insurance costs, etc. can be deducted from the income received. Moreover, if the property being sold is used as the main one (own at least two years and live at least two of the last five years) and initially cost less $250,000, no capital gains tax.

That is, for a house bought three years ago for $200,000, in which you lived for at least two years and sold for $600,000, you can not pay capital gains tax.

If you do not fall into this category, then the percentage paid on profits depends on your annual income:

  • 0%: up to $39,375 for one person or up to $78,750 for a married couple or if the seller is the breadwinner of the family;
  • 15%: $39,376-434,550 (single), $78,751-488,850 (married couple), $52,751-461,700 (breadwinner);
  • 20% if income exceeds the limits specified in the previous paragraph.

Additionally, you must pay state federal tax, which can range from 0% (Florida, New York, Tennessee) to 10% or more (California, Virgin Islands).

If you are a non-US resident, the federal tax will in any case be 10% of the profit on the sale. But you can not pay it, provided that the initial value of the property is up to $ 250 thousand, and the new owner signs a document stating that he intends to permanently reside in the house for the next two years (at least six months each year). In addition, if you rented out housing, you can deduct the amount of taxes paid on income from the net income.

Net Investment Income Tax (NIIT). Calculated at a rate of 3.8% and is applicable in situations where the net profit from the sale (after deducting all expenses) exceeds:

  • $250,000 if a married couple files a tax return;
  • $125,000 if spouses submit separate declarations;
  • $200 thousand in all other cases.

Other expenses. In addition to taxes, the following costs are borne by the seller.

  • Realtor services. On average, they are 5-6% of the value of the object. This amount is divided between the brokers of the seller and the buyer.
  • Lawyer. The services of a lawyer for the execution of the transaction vary in different states and can be $ 500-1000.
  • title insurance. A kind of guarantee for future owners in case something goes wrong with the property from a legal point of view. For example, «heirs» will suddenly appear. The amount of such insurance is an average of 0.5% of the value of the object.
  • transfer stamps. Local sales tax, the amount of which depends on the specific municipality. On average, the rate is $1.0-1.5 for every thousand dollars of the value of the object.
  • Move out fee. HOA fee for departure. May not be charged at all or up to $600.
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