With the federal income tax filing deadline quickly approaching, taxes are on many people’s minds. So LendingTree wanted to mark the occasion by looking at a tax all too familiar to homeowners: property taxes.
How much you pay in property taxes — which are often called real estate taxes interchangeably — varies significantly and can be influenced based on the home’s worth and location, among other things.
To illustrate the variances in people’s property taxes, LendingTree looked at the median amount paid annually in each of the nation’s 50 largest metropolitan areas.
In doing so, we found that homeowners in some metros can expect to shell out thousands of dollars more a year in property taxes than homeowners in other parts of the country.
Key findings
Property taxes can vary significantly across the nation’s 50 largest metros. For example, annual median property taxes in Birmingham, Ala. — where homeowners pay the least in real estate taxes — are about $7,700 cheaper than in the New York metro area, where they’re the highest.
Birmingham, Ala., is the only metro where median property taxes are less than $1,000 a year. The median amount of property taxes paid by homeowners in Birmingham is only $909. For comparison, residents in the next two metros with the lowest median real estate taxes — New Orleans and Louisville, Ky. — owe $1,345 and $1,563 a year, respectively.
New York, San Jose, Calif., and San Francisco are the metros where homeowners pay the most in property taxes. Unsurprisingly, residents in these metros known for their expensive real estate shell out a lot of money in property taxes each year. The median amount paid is $8,602 in New York, $7,471 in San Jose and $6,508 in San Francisco.
Median property taxes on homes without a mortgage are 18% less expensive, on average, than on homes with mortgages. There are various reasons for this, ranging from home values tending to be less expensive on homes without a mortgage to some states having tax exemptions or reductions for older homeowners who may be more likely to own their home outright. Salt Lake City and Seattle — the two metros where median property taxes are slightly higher for homes without a mortgage — illustrate there are exceptions.
Metros with the lowest property taxes
No. 1: Birmingham, Ala.
Median property taxes paid — all homes: $909
Median property taxes paid — homes with a mortgage: $976
Median property taxes paid — homes without a mortgage: $753
No. 2: New Orleans
Median property taxes paid — all homes: $1,345
Median property taxes paid — homes with a mortgage: $1,494
Median property taxes paid — homes without a mortgage: $1,101
No. 3: Louisville, Ky.
Median property taxes paid — all homes: $1,563
Median property taxes paid — homes with a mortgage: $1,650
Median property taxes paid — homes without a mortgage: $1,413
Metros with the highest property taxes
No. 1: New York
Median property taxes paid — all homes: $8,602
Median property taxes paid — homes with a mortgage: $8,819
Median property taxes paid — homes without a mortgage: $8,180
No. 2: San Jose, Calif.
Median property taxes paid — all homes: $7,471
Median property taxes paid — homes with a mortgage: $8,559
Median property taxes paid — homes without a mortgage: $4,838
No. 3: San Francisco
Median property taxes paid — all homes: $6,508
Median property taxes paid — homes with a mortgage: $7,267
Median property taxes paid — homes without a mortgage: $4,384
Tax tips for homeowners
Though you can potentially deduct various home-related costs on your federal tax return — such as property taxes and mortgage interest — you’ll need to decide whether you want to itemize to take advantage.
While itemizing your deductions can make the tax-filing process more time-consuming, tax tips can help homeowners save money and determine if itemization is right.
To make itemizing a tax return worth it, a person’s deductible expenses must be higher than their standard deduction. For the 2021 tax year (that is, taxes to be filed in 2022), the standard deduction amount is $12,550 for single taxpayers and married taxpayers filing separately, $18,800 for heads of households and $25,100 for married taxpayers filing jointly.
There are limits to how much people can deduct for home-related expenses. The total amount that can be deducted for all state and local taxes, including property taxes, is $10,000 — or $5,000 for married taxpayers filing separately.
While easing the tax burden can help some people struggling to pay housing costs, there are often better ways to manage those kinds of expenses. Ultimately, people who feel home costs chronically overburden them may be better off looking at alternative ways of easing their burden rather than relying on tax breaks on their returns. For example, refinancing your mortgage could help you lower your monthly housing payments depending on the rate you can get.
Keep reading on Lending Tree.
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