When buying a home, property taxes are one of the expenses that can make a significant difference in your monthly payment. Do you know how much you might pay for property taxes in your state or local area? Or how much you might pay if you move to a new state? Let’s check it out.
When applying for a mortgage, you’ll see one of two acronyms in your paperwork – P&I or PITI – depending on how you’re including your taxes in your mortgage payment.
P&I stands for Principal and Interest, and both are parts of your monthly mortgage payment that go toward paying off the loan you borrow. PITI stands for Principal, Interest, Taxes, and Insurance, and they’re all important factors to calculate when you want to determine exactly what the cost of your new home will be.
TaxRates.org defines property taxes as, “A municipal tax levied by counties, cities, or special tax districts on most types of real estate – including homes, businesses, and parcels of land. The amount of property tax owed depends on the appraised fair market value of the property, as determined by the property tax assessor.”
This organization also provides a map showing annual property taxes by state (including the District of Columbia), from lowest to highest, as a percentage of median home value.
If you’re planning on moving to Texas, the rate of property taxes can look a little high at 1.81%, but keep in mind that Texas is one of the seven states in the whole country that doesn’t collect personal income tax. That means more money stays in your pocket per paycheck!
Most of the taxes Texas collects comes from taxes on businesses and sales tax, and the property tax is collected in the Lone Star State is collected by counties, school districts, and cities to be used for local needs and infrastructure.
If you’re looking at buying real estate in Austin, or anywhere else in Texas, you will have to get an appraisal done on your home or property, and this is done by county districts. The appraiser will compare your property to other homes in the area that have been sold recently, and will determine your property value in relation. From there, your appraisal amount will be multiplied by whatever the local tax rate is for the city you live in (do your research on local tax rates before you pick a new home!) and that will determine what your property taxes will be. There are exemptions for veterans, seniors, and the disabled.
Check out the graphic below for a breakdown of property taxes across the country.
The top 5 states with the highest median property taxes are New Jersey, New Hampshire, Texas, Nebraska, and Wisconsin.
The states with the lowest median property taxes are Louisiana, Hawaii, Alabama, and Delaware, followed by the District of Columbia.
Thank you for reading our real estate and homeowner’s blog. We are Weichert Realtors – Barton Harris & Co. and we’re happy to have helped you learn more about property taxes and how they can affect your monthly mortgage payment.