This post will provide a detailed look into property taxes by state. The differences in property taxes by state from the highest (Illinois at 2.32%) to the lowest (Hawaii 0.28%) is astounding.
Therefore, just because a state has cheaper home prices doesn’t mean you’re getting a better deal long term. States rely on property tax collection to pay for public utility works, schools, and more.
During the pandemic, a lot of people relocated to Texas from California to pay no state income taxes and buy cheaper homes. However, the property tax rate in Texas is 80% higher than the property tax rate in California.
Where you live in America can really help or hurt your finances. In a time when working from home is more feasible, many more people are trying to geoarbitrage to make their income go farther. However, if you are to buy a property in a different state, you must take into consideration the property tax rate given it is forever.
The City Loves Your Property Taxes
I used to despise my property taxes because San Francisco would raise them even when property prices were declining during the financial crisis. It was/and still is up to property owners to fill out a complicated form, find comparable homes that have dropped in price within a certain radius, make sure the comparable sales fit within a certain timeframe, and pay a $60 fee to do so with no guarantee you’ll win!
If you didn’t spend time contesting your property taxes, the city would gleefully raise them despite the obvious declines. The city counts on meek or ignorant people to fill their coffers and pay themselves handsome salaries.
It’s just like how members of Congress continued to get paid even when they shut down the government or close businesses during a global pandemic. Can you imagine losing your job in the recession and having to pay higher property taxes while knowing your neighbor sold his house for 20% less than the city’s assessment?
Fight Your Property Taxes
I fought my property taxes in 2009, 2010, 2011, and 2012 and won for a particular property I bought in the beginning of 2005. I had to fight since the value of my stock and real estate holdings were getting hit and I no longer had a job in 2012.
Since 2013, I’ve let the city tax me back to my normal purchase price plus a ~2% a year catch up increase because the economy has thankfully recovered. I don’t mind paying my fair share so long as it’s just.
After paying over $500,000 in property taxes since 2003, I’ve finally accepted the reality it’s up to those of us who saved like crazy and took the risk of owning property to pay. It is our responsibility to pay for our community’s infrastructure, education, public transportation, service men and women, and other public works. We must pay for those who cannot or will not.
What I’ve also realized is that after much debate, my fellow renters absolutely believe they are paying their fair share of property taxes, even if they aren’t cutting a separate check to the city twice a year.
With this thought in mind, I now believe it’s logical behavior for renters to keep on voting for increased government spending. After all, renters also want better and are willing to pay for it through higher rents. If they didn’t, they wouldn’t be fair since we all benefit by services from the government.