High property taxes have the effect of depressing property values and ironically lowering tax revenues. There are two effects of this tax since the tax is levied both on the land value and the building value. The effect of the tax on land has the effect of lowering land cost, since it discourages land speculation, thus benefiting buyers and thereby making housing more affordable. The effect of the tax on the buildings has the effect of increasing costs and discouraging construction and job creation.
If property taxes are not paid, states have two means to collect:
- One method (the tax deed auction) has the jurisdiction selling the property itself at public auction to the highest bidder, with a minimum price of taxes owed, interest/penalty, plus costs of sale. The prior owner may or may not have the right to reclaim the property within a certain time, and if so may pay a steep penalty on top.
- Another method (the tax lien auction) has the jurisdiction selling, at public auction, a lien on the property (at a high interest rate); if the lien is not redeemed within a certain time, either the property is then sold or the lienholder can foreclose on it and take possession.
States with lowest property taxes (per capita, annually)
Rates vary across the states, between about 0.2% and 4% of the home value.
States with highest property taxes (per capita, annually)
Source: The Tax Foundation, based on Commerce Department and Census statistics.
- Texas allows a prior owner two years for agricultural or homestead property, and 180 days for all other types, to redeem, with a 25% penalty per year added.
- Iowa offers a rate of 2% per month, or 24% annually, while Florida offers a maximum 18% annual rate with a guaranteed 5% flat return.
- Florida sells the property at auction and the lienholder's investment is the opening bid (if no other bids are received the lienholder can take possession); Arizona allows the lienholder to foreclose without sale.
- 16 word quotation: Fair Use Source: Rawles, James Wesley. Rawles on Retreats and Relocation. 1st. Clearwater, Idaho: The Clearwater Press, 2007. p. 42. Print. see James Wesley Rawles on Fair Use
- http://www.survivalblog.com/retreatareas.html Recommended Retreat Areas accessed March 30, 2014
- http://www.taxfoundation.org/publications/show/1913.html, The Tax Foundation, Property Taxes on Owner-Occupied Housing by State, 2004 – 2009, Published 2009, Accessed March 30, 2014