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The power of property taxes

By Kay Bell ·
Tuesday, November 26, 2013
Posted: 5 pm ET

I know you're finalizing your Thanksgiving holiday plans, but if over the next few days you find you need a break from the relatives, take it, and look into year-end tax moves.

One popular tax-saving option for homeowners is to pay annual property taxes by Dec. 31, so the amount can be deducted as an itemized expense on Schedule A.

That's definitely an appealing option for property owners in New York and New Jersey. Counties in those two states tend have the highest property tax burdens in the country, according to a new study.

Using data from the American Community Survey, analysts at the Urban Institute in Washington, D.C., found that property tax burdens vary substantially by region. Property tax rates are especially high in the Northeast and parts of the Midwest, according to the Urban Institute.

At the state and local level, says the D.C. think tank, more tax revenue -- around three-fourths of all collections -- comes from the property tax.

And as any homeowner can attest, the property tax rate plays a big part in personal finances. The Urban Institute says the tax also affects residential investment and the overall housing sector.

3 property tax options

As a homeowner, you essentially have three options to deal with high property taxes.

  • You can appeal your real estate tax bill.
  • You can urge your local lawmakers to find alternate revenue sources. But don't get your hopes up. The study says that for the foreseeable future, property taxes will continue to serve as a critical revenue source for local governments.
  • Or you can move. The counties with the lowest property tax burdens are in Alabama and Louisiana, according to the Urban Institute.
  • ***

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    Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."

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    February 02, 2014 at 2:56 am

    This blog is nice. I wanna say thanks for this. I'll follow your site also.

    Bill Bodon
    December 08, 2013 at 10:33 am

    Got tired of double dipping cops - teachers - political ingrates after 35 years of property taxes constantly growing out of control

    I sold my house and other properties got the hell out of Jersey and moved to Florida.
    No state income tax - no oil bills - my property taxes are $14,000 less than I paid in Jersey.

    Happily retired in Florida.

    Oh by the way its 78 degrees in the shade.

    December 01, 2013 at 8:38 am

    if you need a job try this site JOBS61 (dot)COM. Dan does it at home and makes $19.97 hourly just sitting and typing stuff all day...No experience needed too

    November 29, 2013 at 11:21 pm

    Refinance right now! Check out US Bank. I refinanced my home through them and they paid all costs. That's right, they paid everything. It was not rolled in to the loan. Not sure what the current rates are, but worth a check.

    Note: With my previous house, I had refinanced and paid the costs in the loan. This is fine, if you are staying in the house 5 years.

    November 28, 2013 at 5:04 pm

    I have had a home for 4 years and although not terrible, the interest rate at 5.625% could have been better considering that about a year ago the interest rate was at its lowest of all time!
    The problem then was that my thinking was that everything had to be redone and repaid for - closing costs - representation - paperwork, basically everything involved in hiring the lender, etc. to get it all done - am I right here? God, I really do hope so.
    It's obviously too late now - just hard to believe that this all came crashing down the way it did.
    I guess I am looking for positive reinforcement having had paid for it already. Also, an important note is that if you were to do that and start over at the great rate of lets say 4 percent - then you would also have to start all over with paying the high interest and building that back up - right?