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Property Taxes and How They Can Influence Your Property Development Decisions

January 03, 2011 | Comments: 0 | Views: 86

If you are considering purchasing a property to develop you may want to take a closer look at property taxes. Every city will have different property taxes and, obviously, if you need to buy in a specific city or state because of work or other factors then property taxes may not be a factor in where you will purchase your property. But, for others who may be making the decision to purchase a vacation home or who may be purchasing income properties, knowing more about the tax levels in various areas can be very important.

Why are property tax levels important?

It is important to know how much you can expect to pay for property taxes because this can significantly affect which homes you will be able to afford. Property tax payments are added on top of any mortgage payments you will be expected to pay. If the tax levels are high enough this may push the monthly or quarterly costs for your home above the level that your budget will allow.

Non-payment of taxes can also be an issue. If your taxes go into arrears, meaning that you have not paid them for an extended period of time a municipality can seize your property. This is one reason why some property owners have been forced to give up their residences and income properties and why some homes may be available for sale from municipalities for very reasonable prices.

Which areas pay the most in taxes?

Residents in some US states are paying as much as ten times what residents in other states are paying for their properties. States that are located in the northeastern portion of the United States tend to have rates that are much larger than states located in the Southern United States. The following three states have the highest median or average real estate taxation rates:

  • New Jersey. Residents paid average taxes of $6,579 in 2009
  • Connecticut. Residents there paid an average of $4,738 in property taxes in 2009
  • New Hampshire. Here, residents paid an average of $4,636 in taxes in 2009

Keep in mind that this is just a guideline. A city or town may have tax rates that are much higher or much lower than the state average due to a combination of different factors.

Which areas pay the least in taxes?

As previously stated, the Southern states tend, in general, to pay much lower tax rates than states in the Northeast. Here is a list of the three states that paid the least in taxes on average during the 2009 taxation year. They are:

  • Louisiana. Residents paid a mere $243 in taxes during the 2009 taxation period.
  • Alabama. Here, residents paid $398 in property taxes in 2009
  • West Virginia. Residents of this state paid an average of $464 in property taxes in 2009.

If you are interested in a specific property it is possible to find out what the taxation rates were for that area and that property. You can speak to the realtor who is handling the listing and some municipalities will also have a website where you may be able to go and look up this information.

Justin Trapp is a Licenced Property Broker who writes about topics concerning Property Investment and development in the USA. To find out more about him visit his website

Source: EzineArticles
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