It may come as no surprise to New Jersey residents, but that state has the highest property taxes in the United States, according to a new study from WalletHub.
That means that mansion dwellers in the Garden State—from Bruce Springsteen, with his Colts Neck horse farm, to Jon Bon Jovi livin’ it up in a stately compound in Red Bank—are doling tens of thousands a year to Uncle Sam. The effective tax rate there is roughly 2.35%—about half the current mortgage rate—according to WalletHub, a credit advice website.
Other pricey states include Illinois, where the effective property tax rate is around 2.3%. In New Hampshire, where the motto is “Live Free or Die,” you certainly won’t be living tax free—the state has the third-highest effective rate, at 2.15%.
On the flipside, the lightest property tax load in America is in tropical Hawaii, where WalletHub found an effective tax rate of a paltry 0.27%. But don’t book your flight just yet: The median home price on the island, at $515,300, is nearly triple the national median, according to WalletHub.
Alabama, Louisiana and Delaware are also at the bottom of the tax ladder, all with rates below 0.55%.
WalletHub calculated the rankings by using U.S. Census Bureau data to determine the median tax and dividing by the median home price in each state.
Curiously, Washington, D.C., home to the nation’s lawmakers also has one of the lowest property tax rates in the nation. That means the slew of Trump administration policymakers dropping millions to live in the nation’s capital, get a break on their taxes compared to homes they hold elsewhere.
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For example, Treasury Secretary Steve Mnuchin, who recently splurged on a new home in swanky Massachusetts Avenue Heights in Washington, will pay closer to 0.8% on his home assessed at $9.24 million, according to property records. In comparison, he’ll fork over around 1.2% in taxes on his mega-mansion in Bel Air, California, assessed at $28.9 million, records show.
While a burdensome tax rate may not may not cause a New Yorker to pack her stuff to move to Hawaii, it might cause a buyer to consider the tax rate of surrounding areas like Connecticut or New Jersey, said Cameron Hess, a tax attorney who provided expert insight to WalletHub.
The decision-making as to minimizing taxes usually involves comparing neighboring states and counties, such as California versus Oregon or retiring in California versus Florida, Mr. Hess told WalletHub.
Still, it’s worth noting for the international jet set that the U.S. still has among the very lowest taxes on luxury homes in the world. The average tax rate on a home worth $1 million in the U.S. is roughly 0.6%, according to a different study by UHY LLP, a London-based network of independent certified accountants. The global average is around 3.3%.
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