Posted by: John S Kiernan

Depending on where you live, property taxes can be a small inconvenience or a major burden. The average American household spends $2,197 on property taxes for their homes each year, according to the U.S. Census Bureau, and residents of the 27 states with vehicle property taxes shell out another $436. Considering these figures and the rising amount of debt in America, it should come as no surprise that more than $14 billion in property taxes go unpaid each year, the National Tax Lien Association has found.

And though property taxes might appear to be a non-issue for the 37 percent of renter households, that couldn’t be further from the truth. We all pay property taxes, whether directly or indirectly, as they impact the rent we pay as well as the finances of state and local governments.

But which states have the largest property tax load, and what should residents keep in mind when it comes to meeting and minimizing their tax obligations? In search of answers, we analyzed the 50 states and the District of Columbia in terms of real-estate and vehicle property taxes. We also asked a panel of property-tax experts for practical and political insight. Read on for our findings and a full description of our methodology.

1. Real-Estate Tax Ranking
2. Vehicle Property Tax Ranking
3. Ask the Experts
4. Methodology

Real-Estate Tax Ranking

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/11585/property-geochart1.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2ovKWNC>  

Real-Estate Property Taxes by State

Rank	State	Effective Real-Estate Tax Rate	Annual Taxes on $179K Home*	State Median Home Value	Annual Taxes on Home Priced at State Median Value
50	Illinois	2.30%	$4,105	$173,800	$3,995
51	New Jersey	2.35%	$4,189	$315,900	$7,410

*$178,600 is the median home value in the U.S. as of 2015, the year of the most recent available data.  

Changes to Real Estate Tax Rates Over Time

Embed on your website<a href="http://ift.tt/1Tc9EwD"> <img src="//d2e70e9yced57e.cloudfront.net/wallethub/posts/33027/rankings-2010-2015-real-estate-tax_-states.gif" width="" height="" alt="Rankings-2010---2015-Real-Estate-Tax_-States" /> </a> <div style="width:px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2ovKWNC>  

Red vs. Blue States

 

Vehicle Property Tax Ranking

Embed on your website<iframe src="//d2e70e9yced57e.cloudfront.net/wallethub/embed/11585/property-geochart2.html" width="556" height="347" frameBorder="0" scrolling="no"></iframe> <div style="width:556px;font-size:12px;color:#888;">Source: <a href="http://ift.tt/2ovKWNC>  

Vehicle Property Taxes by State

Rank	State	Effective Vehicle Tax Rate	Annual Taxes on $23K Car*
50	Virginia	4.19%	$966
51	Rhode Island	4.77%	$1,100

*$23,070 is the value of a 2016 Toyota Camry LE four-door sedan, the highest-selling car of 2016.  

Ask the Experts

Property taxes are an extremely important issue since they impact all of our lives. But how should we incorporate them into our financial decision making? And how should policy makers across the U.S. approach them as well? For answers to those questions and more, we consulted a panel of tax and public-policy experts. You can check out their bios and responses to key questions below.

1. Do people consider property taxes when deciding where to move? Should they?
2. Should nonprofits pay property taxes?
3. Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?
4. Should more types of property be subject to property taxes? If yes, what types?
5. Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

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• Mark Andrews Chairman and President of KE Andrews & Company
• Stephen J. Lusch Assistant Professor of Accounting in the Neeley School of Business at Texas Christian University
• Deborah Meyer CEO & CCO of WorthyNest
• Tiffany B. Ballard Wealth Manager at Bergland Wealth Management
• Todd Minear Financial Advisor and President of Open Road Wealth Management
• Kathleen Longo President & Founder of Flourish Wealth Management
• Kenneth J. Eaton Managing Principal of Stepp & Rothwell
• Jon Ripans Property Tax Attorney, Commercial Real Estate Appraiser, Arbitrator and General Mediator at Valuation Matters LLC and The Ripans Law Firm LLC & Property Tax Affiliate Member of the Institute for Professionals in Taxation
• Tod Buckvar Vice President at Buck Realty
• Joe Pitzl Managing Partner at Pitzl Financial

Mark Andrews Chairman and President of KE Andrews & Company

Do people consider property taxes when deciding where to move? Should they?

Yes, and yes

Should nonprofits pay property taxes?

No.

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

No -- any additional types of taxation would provide the opportunity or vehicle to increase taxes.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

Yes, servicemen and women should receive certain benefits based on their service. In Texas, handicapped and 65-and-older homeowners are capped, which is good. The problem with these types of opportunities is the potential for abuse and lack of oversight.

Stephen J. Lusch Assistant Professor of Accounting in the Neeley School of Business at Texas Christian University

Do people consider property taxes when deciding where to move? Should they?

Tax is one of many variables that people consider when deciding where to move; however, it is seldom a first-order determinant. Generally, I would expect that individuals consider factors such as job opportunities, crime rates, schools, and commute times, before they typically consider property taxation in their moving decisions. In states where property taxes are high, such as my home state of Texas, the location of your property can make a big difference though. There are areas of the Dallas/Fort Worth metroplex where if you purchase a house a block or two over, you may pay a few thousand dollars less in property taxes per year, because the property falls into a different county/city/school district, etc.

Overall, taxes, including property taxes, are real cost of location decisions, and thus should be considered in these decisions. However, the goal is to maximize the net benefits. There are benefits of certain areas, and costs of certain areas. One such cost is tax, but that needs to be considered as part of the larger puzzle. In most instances, selecting location purely based on tax will very likely not result in the optimal decision.

Should nonprofits pay property taxes?

This is a question that has valid arguments on both sides. First, the general argument for not exempting nonprofits from property taxation is that they use many of the resources that are supported by the revenues of the property tax system (e.g., infrastructure, public safety, etc.). On the other side, the argument for exempting nonprofits from property taxation is that taxes would be an added expense that would decrease the funds available for that nonprofit’s charitable mission. In addition, for nonprofit sectors that have paying “customers,” say a private university, that property tax bill would likely, at least partially, get passed on to students through higher tuition.

It is worth noting that there are nonprofits that make voluntary payments to local governments even though they are exempt from property taxation. For example, in fiscal year 2014, Brown University made over $5 million of voluntary tax payments to the city of Providence. So, there is some recognition by nonprofits that they are using government resources, and if able, should help pay for them.

Overall, I do not think that property taxes for nonprofits is a policy that is off limits. I think it is a policy that legislatures should think about. However, even if a jurisdiction decided to start collecting property taxes from nonprofits, they would likely still provide some preferences to them, relative to other types of landowners. For example, subjecting property held by nonprofits to a lower rate, still exempting certain types or sizes of nonprofits from property tax, etc.

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

One thing that is quite unique about tax policy is that a jurisdiction has a lot of autonomy in designing the tax system it believes will work best for it. Thus, we see significant variation across the country in how state and local governments design tax systems. Some states, such as Texas, have high average property tax rates; however, the trade-off is that Texans do not pay state income tax. Then, you see other states, such as Hawaii, that generally have low property tax rates, but have high state income tax rates. At the end of the day, governments need revenue, and they are going to collect that revenue from some sort of taxation.

An advantage of relying more on the property tax system relative to other taxes to collect revenues is that real property is fixed in location. That is, if you own a piece of land with a house on it, then it is very clear what taxing jurisdiction that property will be taxed in. Whereas with income taxes, there is the ability to engage in tax planning strategies to shift income from higher-taxed jurisdictions to lower-taxed jurisdictions. A drawback of relying too heavily on the property tax system is that without sufficient controls, the tax can significantly burden property owners in periods of rising property values.

There is a concept in tax system design known as the wherewithal-to-pay concept. The general premise is that the taxpayer should be paying the tax when he/she has the wherewithal to pay it. In the income tax system, this is fairly straightforward, because the taxpayer receives salary/wages/investment income throughout the year, and then files a tax return and pays the tax. In this case, the taxpayer has already received cash inflows related to the income, and thus should have the cash available to pay the tax. However, property taxes are a function of the assessed fair market value of the property, so taxpayers are being taxed on increased value in a home that they have not received any cash inflows from.

So, there are situations where a taxpayer purchases a home at a monthly payment that he/she can afford, but if that house drastically increases in value over time, then the additional property taxes can really burden them, particularly if their wages/salary have not been increasing as similar rates. However, some ways you see this addressed is that some jurisdictions have a maximum year-over-year increase in assessed value of properties. So, say the home actually increases in value by 10 percent this year, the law may cap that increase at, say, 2.5 percent for the purposes of calculating property taxes. In addition, there are jurisdictions that have property tax freezes for individuals over a certain age (e.g., over 65), so that these retirees do not get forced into the situation of leaving a home that they can no longer afford the property taxes on.

Deborah Meyer CEO & CCO of WorthyNest

Do people consider property taxes when deciding where to move? Should they?

When people move, they are often focused on the main driver behind the move (i.e., job offer, proximity to family or friends, etc.), and less concerned about the property or income tax implications of the move. However, taxes have a substantial long-term impact on a family’s financial situation and should be considered. Many states that offer low income tax rates make up for the lost tax revenue through higher property taxes. For instance, although Illinois offers a relatively low state income tax rate of 3.75%, average Illinois < a href= https://www.usatoday.com/story/money/personalfinance/2017/04/16/comparing-average-property-taxes-all-50-states-and-dc/100314754/>property taxes in 2016 ran $4,845. This represents an effective property tax rate of 2.13%, nearly one percent higher than the national average of 1.15%.

In light of the new Tax Cuts and Jobs Act of 2017, property taxes are an even bigger issue. For families who itemize deductions, state and local property and income tax deductions are now limited to $10,000 annually on individual tax returns for tax years 2018 and beyond. If you take full advantage of a 2017 property tax deduction, you may find a different situation when filing your 2018 tax return; families who previously itemized deductions may find it more advantageous to take the enhanced standard deduction.

Should nonprofits pay property taxes?

By law, a nonprofit that is granted federal tax-exempt status by the Internal Revenue Service will also be exempted from property tax. For nonprofits based in high property tax states, such as New Jersey, New York, and Texas, this exemption is incredibly valuable -- particularly if the nonprofit owns substantial acreage. Unfortunately, this exemption shifts the burden of public benefits, such as police patrol and streetlights to the homeowners and for-profit businesses. Some local municipalities attempt to ease the financial burden facing taxpayers, and therefore, require nonprofits to make payments in lieu of taxes.

In my opinion, nonprofits should have some “skin the game.” I understand nonprofits are serving the public good, but there are also many for-profit Certified B Corps who meet rigorous standards of social and environmental transparency, yet do not enjoy the exemptions provided to tax-exempt entities. States and municipalities need tax revenue to support broader public interests, and leaving nonprofits out of that revenue source means additional taxes for homeowners.

Tiffany B. Ballard Wealth Manager at Bergland Wealth Management

Do people consider property taxes when deciding where to move? Should they?

Occasionally, property taxes are considered prior to relocating to another state. However, the top two reasons for moving tend to be either job-related, or to be closer to family. As one can imagine, taxes take a backseat when competing with a better job or that new grandchild. Yes, property taxes should be taken into consideration if a person is relocating to a state that has significantly higher property taxes. Odds are overwhelming that there is a greater cost of living, which should be accounted for in their overall plan. Failure to account for increased living expenses can have a negative impact on accomplishing one’s long-term goals.

Should more types of property be subject to property taxes? If yes, what types?

No.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

No. The United States of America is unfortunately divided today. Segmenting groups of people to give them benefits of tax exemption or a lower tax rate does not provide a path to unity. If anything, segmenting groups of persons feeds discrimination.

Todd Minear Financial Advisor and President of Open Road Wealth Management

Do people consider property taxes when deciding where to move? Should they?

When deciding where to move, all taxes should be considered and that, of course, includes property taxes. Only comparing property taxes could give bias to the region with lower property taxes, as such a region may have other taxes, such as state, local, sales, and earning taxes that are higher than in the higher property tax region. In other words, a property tax to property tax comparison could be the same as comparing apples to oranges. For a true apples-to-apples comparison, all taxes should be included in the analysis.

Another property tax thought is that they have at least two ways to go up -- increased assessed value, and higher property tax rates. While assessed rates may go down, as we saw in some regions during the Great Recession, property tax rates rarely go down. Ever notice on ballots, “no increase in property taxes?” That’s because when one tax levy is expiring, another is proposed to take its place. And still others are added, that increase property taxes.

Kathleen Longo President & Founder of Flourish Wealth Management

Do people consider property taxes when deciding where to move? Should they?

Yes, in my experience, people definitely consider property taxes when deciding where to move. This decision is especially relevant at retirement, as they look to find their “final home” while working to drive down and manage their fixed expenses. When considering a move, they will look at the whole tax package, including property taxes, state income taxes, sales taxes, and some will also consider estate taxes. There are certainly other life factors that come into consideration, like proximity to family and community resources.

It will be interesting to see the impact of the new tax laws in 2018, which limit the state and local tax deduction for property and real estate to a maximum of $10,000, which will be less appealing for higher-tax states. There are also new restrictions on the ability to deduct mortgage interest on the first $750,000 of home debt incurred after December 15, 2017. The combination of these provisions may decrease the appeal of a new home purchase, even in retirement, but increase the need to incorporate tax considerations in the purchase process. Overall, I think people need to look at a number of factors in considering where to move, such as proximity to social support with family and friends, access to quality medical care and other life resources, along with the financial trade-offs for the whole tax package.

Should nonprofits pay property taxes?

I support a number of local nonprofits as a Board Member, Committee Member, Volunteer, and financial donor, so my passion is to help nonprofits accomplish their mission. Every dollar is precious for these organizations, as they strive to accomplish their mission and support the local community. If a new expense for property taxes was added to the budget, many nonprofits would struggle to accomplish their mission statement, and could potentially be in danger of staying financially viable. At the same time, the entire community benefits from the efforts of the various nonprofit entities, and I believe those positive contributions outweigh any potential income from property taxes, so I think the current system, where nonprofits are exempt from paying property taxes, should stay the same.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

I have seen many situations where older, retired people are forced to leave their long-term homes due to the rising costs of property taxes. To address this unfortunate situation, I would be in favor of reducing or exempting long-term homeowners based on age. Some states are already offering property tax exemptions to the elderly, including South Dakota, Washington, and Texas. Each state has its own way to apply these exemptions and they are subject to change, but it is an important consideration for our retired clients who are looking to relocate and will most likely live in their new home for over 15 years. I would support broader adoption of property tax exemptions for homeowners over age 65 to help this segment of our population, which is also becoming larger every year, as the baby boomer generation ages.

Kenneth J. Eaton Managing Principal of Stepp & Rothwell

Do people consider property taxes when deciding where to move? Should they?

Most of my clients are relatively affluent and they are located in low-cost and high-cost states. From the conversations that I have had with them, as well as with other friends and acquaintances, I think that most people in their socio-economic category perceive property taxes as the price of doing business. When they move into an area, they are much more focused on safety, accessibility, proximity to work, and quality of education, and they are willing to pay more in property tax for those benefits, especially if the surrounding areas have similar tax regimes. I also think that most people feel better about paying tax to their locality than to a state or federal government, because they perceive a tangible benefit in the form of cleaner streets, police presence, better schools and the like.

Jon Ripans Property Tax Attorney, Commercial Real Estate Appraiser, Arbitrator and General Mediator at Valuation Matters LLC and The Ripans Law Firm LLC & Property Tax Affiliate Member of the Institute for Professionals in Taxation

Do people consider property taxes when deciding where to move? Should they?

Property taxes often play a role in where people live, even if indirectly. Property taxes show up in the rents people pay for apartments or homes, as well as in monthly mortgage payments. This can affect loan approval in which the affordability of housing in the mortgage underwriting process considers the overall principle, interest, taxes, and insurance (PITI) payments of a proposed loan as a percentage of household income.

Whether people directly pay attention to property taxes in deciding where to move often depends upon geography, commuting times, and proximity to shopping, desirable schools, and other amenities. “Tax flight” is easiest when just a small change in location, commuting times, and amenities results in a big difference in affordability caused by the property tax component of monthly rent or mortgage payments.

In the larger states (geographically) in the Western United States, with larger counties (geographically), “tax flight” or “tax hopping” is fairly difficult. But, back East, particularly in New England and the “tri-state” areas of New York, Philadelphia, and Washington, D.C., tax avoidance is easier. It is even possible in Georgia and Virginia, which have the second most and third most county-equivalents in the United States, at 159 and 133, respectively.

Of course, businesses often consider the overall tax climate when deciding where to locate or where to incorporate. Sadly, Connecticut is still smarting from the defection to Massachusetts of long-time corporate resident General Electric.

Should nonprofits pay property taxes?

In most U.S. jurisdictions, nonprofits do pay property taxes unless they meet all of the following criteria: they are non-profits, they are engaged in educational, charitable, religious, or other activities that are “in the public good,” and the property at issue is not only owned by the nonprofit, but is actually being used for one or more of those purposes.

So, for example, there is a Georgia Court of Appeals case in which a church owned a second building that was undergoing extensive renovations which took more than one year. The court held that the property was not exempt from taxation during the time that it was not being used for activities consistent with the mission of the church. But, of course, the condition of the building and the fact that it was unusable affected the value for property tax purposes.

If nonprofits use property to make money, for example, by renting out a banquet hall for weddings or other receptions, they are often subject to property taxes. The effects of this can be mitigated by splitting the property into two tax parcels -- one for the exempt parish/sanctuary and another for the taxable portion of the property. This has also appeared in a Georgia Court of Appeals case.

Ultimately, the more exceptions and “carveouts” there are from the tax base or tax digest, then the higher the property tax rate (millage rate) needs to be to meet the revenue targets of local governments and school boards (unless they can make up the difference with sales and income taxes or user fees). Most tax jurisdictions readily allow nonprofits to avoid taxation, so long as the exempt property is being used exclusively for the purposes discussed above.

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

This is a very interesting question that is within the discretion of each state. Every state taxes at least some property, whether it is business property, apartments, or automobiles, even if private residences are virtually exempt. And, some states tax commercial real estate at a different rate than single-family residences.

When it comes to owner-occupied houses, Hawaii, Alabama, Louisiana, Delaware, D.C., South Carolina, West Virginia, Wyoming, Colorado, and Arkansas have the lowest statewide average rates. But, this can be misleading. Arkansas is reported to have a statewide average of about 0.62 percent of fair market value. Some city/county combinations in Arkansas are higher. In the meantime, there are very nice lake homes in unincorporated Putnam County, Georgia, with effective tax rates of about 0.69 percent of fair market value, while some houses inside the City of Atlanta portion of Fulton County, Georgia have effective tax rates approaching two percent.

Ultimately, state and local governments are overwhelmingly funded by three forms of taxation: income taxes, sales taxes, and property taxes. In the United States, there are approximately 3,143 counties, parishes, or boroughs. The average size is about 100,000 people, but half of Americans live in just 150 counties. Los Angeles County has 10 million people and could generate quite a bit of revenue just from income and sales taxes. But, there are counties throughout the country with surprisingly low populations. Delaware is broken into three counties, but one of them has only 170,000 residents, which is not a very large population when it comes to raising revenue through sales and income taxes. Georgia has twenty-five counties with 10,000 or fewer residents, including one with only 2,000 residents. In Loving County, Texas, which boasts 113 hardy souls, everybody really is somebody. New York City subway cars can hold over 100 persons seated and standing.

With a dependence upon state-wide income taxes instead of local property taxes, revenue flows to the state capital, where it is reallocated based upon statewide politics, as opposed to local priorities. You can hear the protest: “Why is the neighboring county getting a new high school when ours is older?” And, depending upon geography, a lot of sales taxes can be avoided. This isn’t just a “case” of liquor runs from one New England state to another, where alcohol taxes are lower. With 10 million people, Georgia has passed New Jersey as the tenth most populous state in the United States. Yet, when you see how close downtime Atlanta is to the Alabama line (55 miles) and its various exurbs are to the Tennessee and South Carolina lines, one can easily imagine large purchases and other shopping sprees taking place outside the state if Georgia sales taxes were to rise substantially.

Columbus, Georgia has a huge population thanks to Fort Benning, and Alabama is right next door. Ditto Augusta, with Fort Gordon with South Carolina right next door. Savannah has Fort Stewart and South Carolina is right next door, and Jacksonville just a zip down I-95. So, loss of sales tax revenue is a real possibility, and even income taxes for those who commute from nearby states. Is a one-hour commute from northern Jacksonville to southern Savannah worth it to save on income taxes? Some people vote with their gas pedal.

This is a big problem in New England and the tri-state areas of New York City and Philadelphia, but it can even show up in Georgia, which is the largest state by land mass east of the Mississippi River (no fair, Michigan and Florida, we don’t want to hear about how much coastal water is within your boundaries, at least not when it comes to property taxes).

The solution is generally to have individual and business taxes that are a mix of moderate property taxes, moderate income taxes, and moderate sales taxes. It lessens the incentives for sales tax and income tax avoidance.

Should more types of property be subject to property taxes? If yes, what types?

The more property that is exempt from taxation, the higher the tax rate must be on remaining properties in order to meet the revenue needs of local government, unless a jurisdiction can capture the necessary revenue through sales or income taxes or from user fees.

Property taxes usually start with each state’s constitution, and those constitutions start off by saying that all (tangible) property shall be subject to property taxes (ad valorem taxes).

What happens next is a matter of politics and of voter choice over time, resulting in lots of carveouts in various states. Even though a constitution trumps a statute, some states allow this to happen merely by the supermajority passage of a statute that is signed into law by the governor. Other states require that a referendum or constitutional amendment be approved by the voters. This is usually something voted out of the legislature in the spring and placed on the ballot in the fall election.

Common exemptions or partial exemptions in many states include:

• Homestead exemptions for primary residences (usually with evidence of voter registration and at least one motor vehicle being domiciled there);
• Sheltering retirees from the public-school portion of the property tax bill (which is often 60 percent);
• Property placed in conservation easements;
• Historic preservation properties;
• Brownfield properties undergoing environmental remediation;
• Certain pollution control equipment;
• Timber or other multi-year crops, until the year in which they are cut/harvested, at which point they are subject to a severance tax -- otherwise, they would get taxed every year (even if at a very low rate), despite the possibility of eventual crop failure due to weather, fire, disease, etc.;
• Various agricultural lands or equipment.

Of course, not all these exemptions have the same impact in different jurisdictions. For example, Savannah, Georgia, and Charleston, South Carolina, have numerous historic preservation properties in prime locations, but they are also small jurisdictions where the removal of these properties from the tax rolls has a much bigger impact than it would, say, in Philadelphia or Boston.

Also, there are state and federalism issues. Property owned by the state or the federal government is often exempt from taxation by counties, cities, and school boards. This has a huge impact in Washington, D.C., which is only 68 square miles, but loses a lot of land to everything from the National Mall and Rock Creek Park to the U.S. Capitol Building and grounds, the Supreme Court, and the White House. It can also have a huge impact in counties with large military installations or colleges/universities. Madison, Wisconsin, Tallahassee, Florida, and Austin, Texas, each have a large university and a state capital with lots of government buildings. Columbia, South Carolina, in Richland County, has a trifecta, with the University of South Carolina, the state capital, and Fort Jackson.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

The most common exemption is a homestead exemption for a person’s primary residence. This reduces, but does not eliminate, property taxes, but enables a person to pay a little less in property taxes on the property that they occupy as a primary residence than they would on the exact same house that they also happen to own across the street, but rent out to a tenant.

Other common exemptions are for retirees, especially for the public-school portion of the tax bill, exemptions for veterans, and surviving spouses of military, first-responder, and public safety personnel.

Ultimately, exemptions or a difference in tax rates is a matter of voter or legislative choice, which pits notions of fairness and decency against the mathematical reality that the more people or properties are exempt or partially sheltered from taxation, the higher the overall tax rate must be for property taxes, unless the difference can be gained back through sales and income taxes or other user fees.

It is up to each taxpayer, perhaps with the assistance of a family member, neighbor, or a professional, to check out the laws of the jurisdiction to find out what exemptions might apply to him or her, or to his or her property. These exemptions, as well as instructions and deadlines, can usually be found by visiting the web page for the county department of revenue or board of tax assessors, or sometimes on the web page for the state department of revenue. Many deadlines are December 31/January 1 or March 31/April 1.

There are even steps that can sometimes be taken to mitigated taxes for a long time. For example, in Georgia, a person with a house on a large rural tract might want to sever the house and a couple acres of land from the larger tract, and put the latter into a state (not federal) conservation easement for ten years. There are limitations and restrictions that come with this, but the tax savings might be worth the time and effort of commissioning a survey and a quit claim deed. A federal conservation easement contains severe limitations and is almost always in perpetuity.

People need to remember that property taxes are unique. Unlike all other forms of taxation, in property taxes, the government tells you what the value is going to be and how much you owe. And this is based upon subjective determinations, because real estate valuation is not an exact science. Other forms of taxation, such a sales taxes, income taxes, capital gains taxes, etc., are overwhelmingly self-reporting and objective. You pay $500 for a big screen TV, the sales tax is $35, end of story. Not so with real estate. In other forms of taxation, it is the taxing authority that initiates the appeals process. In ad valorem taxation, it is up to the taxpayer to determine whether an appeal is justified. The good news is that for most properties and tax years, a tax appeal is not justified. But, the best way to find out is to do some research or to consult a professional. Or both.

Tod Buckvar Vice President at Buck Realty

Do people consider property taxes when deciding where to move? Should they?

Yes, and they should as well. Property taxes are a constant expense, and one that generally doesn’t decrease but only increases. Additionally, most homes with high property taxes are located in better school districts as the community pays more into the school budget, which enables more programs for the students. When buying a home, the quality of the school district is a major factor in determining which home you purchase.

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

It should be adjusted to rely less upon property taxes, as eventually, this system will not be sustainable. People will no longer be able to live in those areas as they will no longer be able to pay the taxes, which will result in the bankrupting of the municipalities. Peoples’ wages and compensation cannot keep up with the tax increases.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

Yes -- families starting out, people paying student loans, and low-income and senior citizens. Right now, these are the people who should be buying homes, but they cannot, because they cannot afford the taxes. Perhaps implementing programs for first-time homebuyers where there is a tax abatement will include additional incentives for recent graduates who have a lot of student loan debt. Provide a program with a reduced initial tax amount, gradually increasing each year.

Joe Pitzl Managing Partner at Pitzl Financial

Do people consider property taxes when deciding where to move? Should they?

For most people, I believe they primarily consider property taxes in the context of their monthly PITI payments. They absolutely should consider them, but they should look into the financial strength of the taxing county and city, as well. Property taxes tend to increase far more rapidly in areas that are struggling financially. In addition, these taxes support a lot of vital local services, so that same assessment of financial health can shed light into how likely it is their property taxes will be used for services they care about.

Should nonprofits pay property taxes?

I believe they should. Property taxes support local governments, which are responsible for law enforcement and fire, road and park maintenance, water and sewer, waste disposal and recycling, etc. These are all services that nonprofits rely on to operate effectively, and they expect them to respond and treat them in the same manner as they would for any for-profit entity, renter, or homeowner. I completely agree with exemptions from state and Federal income taxes, as many nonprofits offer services that would otherwise require Federal or state funding. However, they are heavy participants in local government services and usually do not replace those services.

Should local tax policy be adjusted to rely more or less on property taxes versus other forms of taxation?

I think property taxes are a very effective way to handle local taxes, as the beneficiaries of local governments are overwhelmingly the residents and businesses that are located there.

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

I think this is done fairly effectively via the income tax system. Everyone benefits from local government services and are consumers of those services, to a certain degree. Many local governments are already stretched thin, so adding additional layers of complexity to a reasonable system is likely to end up counterproductive.

Methodology

In order to determine the states with the highest and lowest property taxes, WalletHub compared the 50 states and the District of Columbia by using U.S. Census Bureau data to determine real-estate property tax rates and applying assumptions based on national auto-sales data to determine vehicle property tax rates.

For real-estate property tax rates, we divided the “median real-estate tax payment” by the “median home price” in each state. We then used the resulting rates to obtain the dollar amount paid as real-estate tax on a house worth $184,700, the median value for a home in the U.S. as of 2016 according to the Census Bureau.

For vehicle property tax rates, we examined data for cities and counties making up at least 50 percent of a given state’s population and extrapolated this to the state level using weighted averages based on population size. For each state, we assumed all residents own the same vehicle: a Toyota Camry LE four-door sedan — 2017’s highest-selling car — valued at $24,000, as of February 2018. Please note that Georgia formerly imposed vehicle property tax but replaced it in 2013 with a one-time tax imposed on a vehicle’s fair market value (FMV).

Sources: Data used to create this ranking were collected from the U.S. Census Bureau and each state’s Department of Motor Vehicles.

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