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Fla. 1 of 16 States That Taxes Investment Homes More

States where the effective tax rate for investment homes was higher than the effective tax rate for owner-occupied homes included Florida, Pennsylvania, Michigan, Indiana and Arizona.

By Toby Tobin

IRVINE, Calif. – April 7, 2017 – The effective tax rate for investment homes was lower than the effective tax rate for owner-occupied homes in 34 states, including California, Texas, Ohio, Illinois and New York, according to a study from ATTOM Data Solutions.

States where the effective tax rate for investment homes was higher than the effective tax rate for owner-occupied homes included Florida, Pennsylvania, Michigan, Indiana, and Arizona.

The average annual property tax for only owner-occupied single family homes nationwide was $3,658, an effective tax rate of 1.21 percent. That was higher than the average annual property tax of $2,437 and effective tax rate of 1.03 percent on non-owner occupied (investment) homes.

Investment property homeowners owed $51.4 billion in property taxes in 2016, accounting for 19 percent of the total property taxes owed nationwide, while the number of investment properties accounted for 26 percent of all single-family homes.

The effective tax rate, according to ATTOM Data Solutions, is the average annual property tax expressed as a percentage of the average estimated market value of homes in a geographic area. ATTOM Data Solutions identified the following 10 states as having the highest effective property tax rates in 2016:

  • New Jersey: 2.31 percent
  • Illinois: 2.13 percent
  • Texas: 2.06 percent
  • New Hampshire: 2.03 percent
  • Vermont: 2.02 percent
  • Connecticut: 2 percent
  • Pennsylvania: 1.89 percent
  • New York: 1.88 percent
  • Ohio: 1.68 percent
  • Rhode Island: 1.64 percent

"Ohio, in recent history, has among the highest average property taxes in the nation, even though housing is among the most affordable," says Matthew Watercutter, senior regional vice president and broker of record for HER, Realtors®, in Dayton, Ohio. "Typically, the more populated urban and suburban counties have a higher effective tax rate than their more rural counterparts.

"This issue affects the affordability of housing, as property taxes do affect the ratios for potential buyers. By continually raising property taxes to support schools, as well as other infrastructure in lieu of other funding sources such as sales tax – which generates revenues from property owners as well as non-property owners – property taxes limit a buyer's ability to purchase as well as the property's ability to appreciate in value."

© 2017 Florida Realtors®. All rights reserved. Reprinted with permission.

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Don "Toby" Tobin is a licensed real estate professional affiliated with Grand Living Realty. Toby is a member of the Flagler County Association of Realtors®, the Florida Association of Realtors, Enterprise Flagler, Flagler Home Builders Association, and the National Association of Realtors.

GoToby.com proivdes real estate news, commentary, and analysis for Palm Coast and Flagler Country Florida, as well as Realtor® referrals and consultation to buyers, sellers, and developers.