Property taxes are a major source of income for many local governments, even though effective residential property taxes vary greatly by region and state. Counties with high property tax burdened ratios tend to be in the New York and New Jersey areas, while the states with the least burdened ratios are found in Alabama and Louisiana
There are a number of reasons why residential property taxes are often unfair to local governments. One of these reasons is the unequal distribution of the tax burden. Because residential property taxes are raised uniformly from local governments, those communities that have few income-earners will receive less money per year than those communities with many high-income households. This is not the case with income-based property taxation, in which certain properties are more heavily taxed than other properties within a similar size area. Another reason for the uneven treatment of residential property taxation is the special political characteristics of the United States government. click for more info on this topic
Local governments rely heavily on residential property taxes to fund schools, provide public safety services, and maintain important city utilities. Because many homeowners believe that these taxes are fair and appropriate, they can often appeal to local assessors to reduce or eliminate them. Unfortunately, many local assessors ignore the ability of homeowners to reduce their assessment, especially for higher values. When homeowners try to pay their share, they often come under the threat of having their homes assessed at a new market value, and then having their property reassessed at a higher assessment.
Some states, like Washington, D.C., provide incentives for home owners to save property taxes by allowing them to exempt some or all of their residential property taxes from being used for city services, like public safety. But there are limits to this ability. The amount of the tax itself may be deducted; the amount of interest and other assessments may also be reduced. If the amount of the residential property taxes that you’re paying is over the assessed value of your home, and you cannot qualify for this incentive program, you may still be able to lower your tax bill by negotiating with your local assessor.
Tax experts agree that it’s impossible to expect any national, state, or local tax rates for residential property taxes anytime soon. In Washington, D.C., the assessed valuation of homes has not increased for fifteen years, and in many parts of the country, the tax rates are at historical lows. Many real estate professionals blame the perennially low real estate market for the discrepancies between property taxes and market values, but some tax experts suggest that the discrepancies are caused by owners-occupied residential property taxes being assigned values that are higher than they actually should be. Even if the national tax rate does not change for the foreseeable future, there’s no guarantee that the values of homes will remain the same.
The main reason that the residential property taxes in the United States differ so much from one part of the country to another is because different local jurisdictions apply different assessment amounts for properties. As a general rule, the larger cities tend to have very high tax rates, since these places house more affluent citizens and businesses. Cities like New York, Chicago, Los Angeles, San Francisco, and Miami, Florida are prime examples of “urban centers.” Urban centers are places where property values are especially high, since many homes are priced far below their actual market value. Incomes are also typically far higher in these cities, and there’s a lot of commerce going on.
In contrast, the states with few urban centers have low-income levels, and these areas are traditionally low-income cities. In Florida, for example, the lowest-income cities are Fort Lauderdale and Miami, Florida; in New Jersey, Atlantic City and Hoboken, NJ; in Illinois, Evanston, IL; in California, San Diego, Orange County, and Santa Barbara, CA. As it turns out, the difference between residential property taxes in the big cities and the outlying rural area is primarily the difference in assessment amount. Urban properties are assessed at a much higher amount than the property taxes in the rural area. But that may not be such a bad thing, especially if you live in the big city and are paying a lot of property taxes.
Fortunately, you can usually take advantage of some property tax exemptions in order to minimize your residential property taxes. There are several residential property taxes exemptions that you can claim, and they are based on your locality and level of income. For instance, you can get a property tax exemption on your home in Florida if your home is located within a certain “zone,” which is typically defined as no more than a certain number of square feet in either direction. If your home falls under this category, you’ll be able to reduce your property taxes.