Real estate investment and property tax rates
In the United States, property tax is assessed by local governments at the municipal or county level. The assessment of property tax is based on two values - the value of the land and the value of the building. Since property tax is calculated at the local level – and as changes occur often – it is difficult to determine the exact places where the property tax is the lowest. However, the following information should help you find areas with high prices and low property taxes.
Which countries have the lowest rates of property tax?
County tax rates often focus on one figure, and this number is used to compare property taxes between countries. Surprisingly, Wyoming has the lowest rates of property tax. Unfortunately, the value of real estate in Wyoming tend to be rather depressing, due to the low population inflow and lack of jobs. Also, Wyoming is not highly ranked when it comes to rates of appreciation for residential and commercial real estate. Just because the area has low property taxes does not mean that it will be the best investment area (or relocation in).
What to look for when investing
Look for an area that has a consistent real estate valuation rate combined with pretty low property taxes. Often, local tax rates on property are low, because the percentage of real estate in the area is low – so you need to be careful. Cities adjacent to universities and areas where businesses relocate are usually great places to buy real estate. Paying attention to population growth can help you to see real estate trends and make wise investments.
Medium-size cities with the lowest rate of property tax
According to data collected by the Financial Director's Office in Washington, the following cities have the lowest rates of property tax in 2006, based on an annual income of $ 75,000. Assuming you earn $ 75,000 a year, here are the amounts of property tax that you would pay in each city …
Birmingham AL – $ 988
Cheyenne WY – $ 1,108
Phoenix AZ – $ 1,248
Wichita KS – $ 1,309
Denver CO – $ 1,362
Charleston WV – $ 1,395
Oklahoma City OK – $ 1,538
Kansas City, MO – $ 1,595
Little Rock AR – $ 1,648
Louisville, KY – $ 1,713
Jacksonville FL – $ 1,744
Honolulu HI – $ 1,781
Billings MT – $ 1,864
Salt Lake City, UT – $ 1,904
Virginia Beach VA – $ 1,918
Jackson MS – $ 1,971
Charlotte, NC – $ 2,021
Boise, ID – $ 2,176
Columbia SC – $ 2,214
Las Vegas NV – $ 2,225
Sioux Falls SD – $ 2,228
New Orleans, LA – $ 2,231
Wilmington – $ 2,416
Memphis TN – $ 2,501
Albuquerque NM – $ 2,517
Houston TX – $ 2,861
The link between state income taxes and property tax rates
Countries that do not have income tax (see the list below) usually have high property tax rates in their respective counties (the state must get its income somewhere!). However, the compromise is that you will have a zero tax on all earned income. This can be a great advantage. Instead of paying the state 7 to 15 percent (or more) of income, you can keep your hard-earned money and return it to real estate or other investments. At the moment, there are nine states that do not tax income at the state level.
Countries without income tax
New Hampshire *
* New Hampshire and Tennessee do not taxed earned income, but they tax capital gains (division and interest income).
How to find the best from both worlds: low property tax and income tax
If you are looking for the best of both worlds (low property tax and income tax), you may want to consider the following cities:
Sioux Falls, SD
Las Vegas, Nevada
You can also explore lesser-known cities in nine states that do not have a tax on income. Smaller cities generally offer the benefits of "quality of life", while increasing prices and growth from an average.
Now you know which states do not tax income and which areas have the lowest rates of property tax. Armed with this knowledge, you can focus on finding the best place for your next home or real estate investment.