Property taxes have been rising in many cities, cutting off the oxygen supply for real estate investors, stymying cash flow, and putting landlords and homeowners in financial jeopardy. Now the states are fighting back.
Despite the importance of property taxes in generating funds for schools, roads, and essential services such as fire prevention for local governments, a tipping point of unaffordability for residents has tilted the scales, causing states to take action.
It follows five years of consistent real estate tax increases of almost 30% nationwide, according to brokerage Redfin, to a monthly median of $250. Now, Realtor.com reports that Florida, Illinois, Kansas, Montana, North Dakota, Pennsylvania, and Tennessee are some of the states considering repeals and reforms.
A Fine Line
Trimming taxes while ensuring local governments are adequately funded is a fine line.
“The affordability benefits to homeowners of reducing property tax rates as property tax values increase are great,” Susan Wachter, Albert Sussman Professor of Real Estate and Finance, and co-director of the Penn Institute for Urban Research, told Newsweek. “This can be done while keeping tax revenues needed for local expenses constant. Cutting more than this imposes real costs, either in lost community services or in the need to raise other taxes.”
A State-by-State Breakdown
Here’s a look at what’s going on in these places.
Florida
Florida, which recently approved a bill to help lower homeowners association (HOA) costs for condo owners, has made headlines for being the first state to propose eliminating property taxes altogether, replacing them…