There is some good news to be found in the real estate market these days. While home prices aren’t generally on the rise, neither are real estate taxes.
In 2013, the median U.S. real estate tax bill was $2,132. That’s according to a Zillow analysis that used the most recent data available. That number is down nearly 25% from the prior year when the median U.S. real estate tax bill was $2,800.
How high do real estate taxes reach across the country? The top 10 most expensive counties, as determined by Zillow, for real estate taxes are as follows:
- Westchester, NY $13,842
- Rockland, NY $10,550
- Bergen, NJ $9,546
- Essex, NJ $9,288
- Nassau, NY $9,091
- Passaic, NJ $8,978
- Union, NJ $8,926
- Morris, NJ $8,549
- Hudson, NJ $8,407
- Hunterdon, NJ $8,392
Seven of ten of those counties are in the Garden State and the remaining three in New York State. In the top (Westchester), the average real estate tax bill works out to $1,153.50 per month – more than many folks paid on their mortgage.
By comparison, with the exception of my own home state of Pennsylvania, most of the least expensive counties for real estate taxes are spread across the South. They are:
- Tunica, MS $216
- Bibb, AL $228
- Walker, AL $244
- Blount, AL $344
- Amelia, VA $358
- Butler, PA $397
- Lincoln, OK $402
- Fayette, TN $410
- Meriwether, GA $457
- Saint Clair, AL $470
These tax figures are based on the median amount paid for single-family homes. The analysis was limited to counties in the largest 50 metro areas where Zillow had sufficient sample sizes.
If you’re in one of those top dollar counties, the good news is that real estate taxes are deductible as an itemized deduction on your Schedule A. You can deduct qualifying state, local or foreign taxes that you paid on real estate you own: remember that to be qualifying, those taxes must be assessed at a uniform rate on all real property throughout the community. You can’t deduct the cost of itemized charges (such as for trash collection) even if those are imposed by a state, local or foreign government.
And be careful: if your mortgage payments include your real estate taxes (you’ll see those on your form 1098), you can deduct only the amount the mortgage company actually paid to the taxing authority.
So how do those real estate tax numbers factor into home prices? Statistically, the typical American homeowner pays out approximately 1.4% of their home’s fair market value in the way of real estate taxes. That’s why higher home prices tend to (though not always) trigger higher real estate tax bills.
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That said, real estate taxes can vary significantly from one community to the next – and the reasons are not always dependent on price: tax rates and methods of assessment factor into your real estate tax bill, too. How often properties are assessed can affect your tax bill, too. In some areas, re-assessments may not be conducted every year – they may only be assessed every five years or so. Depending on your situation, you might want to request a re-assessment sooner than scheduled. Check your tax bill for details.
