money-house-land-treeblueImpatiently waiting for the real estate market to recover from the recession, my niece, spurred on by the $8,000 government tax credit for new homebuyers, finally jumped in and bought herself a house. Happily for her, she’ll be paying property taxes in Virginia, one of the twenty states that have the lowest property tax rates in the country.

Of these 20 low property tax states, the northern most state is Wyoming, which comes in at number 10. For our water-lover friends, eight of these bargain tax states are on the coastline: California on the Pacific: Delaware, Maryland, Virginia and South Carolina on the Atlantic and Alabama, Mississippi and Louisiana on the Gulf of Mexico. The majority of the states are in the sunny South or Southwest.

The rock bottom property tax rate on owner-occupied housing in the country is .14% in the Deep South State of Louisiana. The highest rate is in Texas at 1.76%. For an idea of the difference, if a house is valued at $126,800 in Texas, you would pay $2,232 in property taxes. If that same $126,800 house is sitting on Louisiana soil, you would plunk down $178 for your property tax bill. A tidy $2054 difference.

Property tax rates are only part of what can be a multi-layered property tax situation. Never having owned a home, I just found out that one reason Connecticut property taxes are so high at 1.50% is that a large part of that tax covers schooling. If you have children who go to public school there, lucky you, you don’t pay a dime for their education. But if you have children in Virginia, which has a much lower tax rate with less money going to support schools, you have to pay extra school fees to cover your children’s education. Where this difference really kicks in is when the kids leave school. In Virginia, residents will no longer have to cough up those school fees and can now live in their home with that low tax rate for the rest of their lives. Whereas In Connecticut, residents must continue paying that high property tax even though their children no longer utilize the schools. For retired people on fixed incomes, this could be a difficult proposition.

For a balanced tax picture in each state, the property tax rate and all its ramifications should be considered in combination with State, City and County Income and Sales taxes.

The Tax Foundation, a tax research group in Washington, DC, provides these numbers for the 20 Lowest State Property tax Rates on Owner-occupied Housing in the USA in 2008:

  1. .14% Louisiana
  2. .32% Alabama
  3. .43% Delaware
  4. .43% Washington DC
  5. .47% Mississpippi
  6. .48% West Virgina
  7. .49% South Carolina
  8. .51% Arkansas
  9. .51% New Mexico
  10. .54% Wyoming
  11. .56% Utah
  12. .57% Arizona
  13. .58% Colorado
  14. .61% California
  15. .63% Nevada
  16. .66% Idaho
  17. .67% Tennessee
  18. .69% Virgina
  19. .70% Kentucky
  20. .72% Oklahoma

For a more detailed property tax picture of the entire country, MSN Money features a rollover map covering inter-related tax information in each state.

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