Property taxes are a commonly overlooked expense for new homebuyers. Property taxes must be highly considered as they are an extra, mandatory expense. In addition to the mortgage on the home, property taxes are the second-highest bill that new homeowners will find themselves paying – and they can change what you initially thought your mortgage payment would be tremendously.
How property taxes are determined
To find the annual rate for property taxes, the following factors are considered:
- The household income (combined or sole) of the homeowner
- Assessment cost of the property as well as the assessor rate (based on location)
- Property type (residential or commercial)
If the homeowner is eligible for any tax abatements or exemptions, those amounts will be deducted from the overall tax amount. The final sum will be the property taxes due.
Bronx, New York City
Bronx, New York City, has the highest property tax rate in the city at 0.83 percent (this includes only the five boroughs, not Westchester, Long Island or their surrounding counties; tax rates there are much higher). The state of New York has an average property tax rate of 0.72 percent.
Below is a comparison of Bronx current property tax rates versus those of other major, booming cities in the United States. The United States average property tax rate is 1.15 percent, so Bronx property taxes are lower than the national average.
Newark, New Jersey
Close to New York City in proximity, Newark and its surrounding Essex county areas have a current property tax rate of 2.5 percent. It is the fourth highest in the nation.
Tax rates in Atlanta vary by county, ranging from 0.78 percent to upwards of 1.15 percent.
Like Atlanta, there are various counties in Dallas, and the property taxes are determined by county. Current property tax rates range from 1.62 percent to just about 2.2 percent.
You may be surprised to learn that Chicago doubles – and then some – the national average property tax rate. Property taxes in counties in Chicago range from 3.9 percent to more than 6.5 percent!
Los Angeles, California
While homes in Los Angeles can be very expensive, California property tax laws work differently as a whole. Proposition 13 – a bill that was put in place to maintain property tax rates – froze a portion of the tax rate overall; as a result, California is on hold for property owners to pay a flat initial property tax rate of 1 percent. Other factors (based on county, value of the home, etc.) are then factored in, but Los Angeles tax rates vary between 1.1 and 1.6 percent. The state of California has an average property tax rate of 1.25 percent.
When calculating your property taxes, bear in mind that the initial calculations are most often based on estimates for the current year and will not include additional fees or assessments. Homebuyers usually have property tax amounts placed in escrow to be paid over the years as part of their mortgage payments. Once the mortgage is paid in full, however, property owners will become responsible for paying property taxes directly to their local county tax collector.