President Perceptive Business Solutions Inc.
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Where Can Downsizing Clients Find the Lowest Property Taxes?

Do you have a client who's downsizing and looking for a new state to move to? Bryce Sanders reviews the options available to them at the state, county and metro levels.

Nov 27th 2019
President Perceptive Business Solutions Inc.
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pre-tax retirement

Many simple-sounding questions have no easy answers. It's why professional advice has value.

Let's say as part of your retiring New Jersey client’s downsizing plans, they are looking for someplace to move with low property taxes. The answer is not straightforward. Alaska has a favorable tax climate, yet winter in Barrow includes 67 days with no sunlight. Your client wants low property taxes and a desirable lifestyle. Hawaii’s property taxes are low, but real estate is pricy. How can you help advise them?

Where to Start

They specified property, not income taxes. As an accounting professional, you look at the bigger picture. Nine states levy no state income tax on earned income: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. For retiring clients, a more important question might be, which states don’t tax Social Security benefits? Or, which states don't tax property?

Specific questions deserve specific answers. Here’s ten states levying the lowest property taxes percentagewise and the median property tax bill.

State Property Taxes (as %) Median Property Tax Bill
Hawaii 0.27% $1,259
Alabama 0.42% $558
Louisiana 0.52% $795
Colorado 0.55% $1,575
Delaware 0.56% $1,329
South Carolina 0.57% $851
West Virginia 0.59% $653
Wyoming 0.61% $1,256
Arkansas 0.63% $743
Utah 0.66% $1,573
Source: World Population Review (10/11/19)

States can be big places. There’s got to be pockets with low property taxes.  Right now, they happen to live in Hunterdon County, NJ, where the property taxes are about 1.91 percent, average $ 8,523. The median home price is about $ 446,700. Where are cheaper places?  Fortunately, you have an answer.

State County Median Property Tax Bill
Alabama Bibb $ 210
  Walker $ 232
  Blount $ 352
  St. Clair $ 391
Oklahoma Lincoln $ 479
Virginia Amelia $ 691
Georgia Meriweather $ 710
Tennessee Fayette $ 746
Source:  the (1/30/19)

If they're seeking metro areas with low prices and really want to get specific, I mention talking about these:

City Median Property Taxes Effective Rate
Laredo, TX $527 0.35%
Honolulu, HI $3,228 0.36%
Montgomery, AL $548 0.37%
Colorado Springs, CO $1,417 0.42%
Florence, SC $666 0.58%
Source:  Mansion Global, ATTOM Data Solutions 2018 analysis

Cost to Buy a Home

Hawaii appealed to your client. However, they explain they are downsizing, which they define as (maybe) smaller home, but (definitely) extra money in pocket. Their Hunterdon County, NJ home is worth about $ 446,700. They ask: “Where can I buy a home in or near a city for under $ 200,000?” Funny you should ask.  CNBC addressed the question back in August.

City Median Home Price
Lincoln, NB $199,800
St. Louis, MO $194,800
Cincinnati, OH $194,100
Memphis, TN $194,000
Columbia, SC $188,500
Lexington, KY $183,900
Winston Salem, NC $179,500
Tulsa, OK $178,400
Cedar Rapids, IA $170,000
Wichita, KS $163,700
Rochester, NY $156,700
South Bend, IN $146,000
Charleston, WV $141,700

Source:  CNBC 13 Cities Where Average Home Price is under $ 200,000 (8/29/19)

What Has Your Client Learned?

Your client is getting pickier by the minute. However, they remark Memphis might be pretty good because Tennessee has no state income tax on earned income. What else have they learned?

  • South Carolina has low property taxes. They might be able to get a home under $200,000 in Columbia, the capitol. Florence isn’t bad either.
  • Alabama has low property taxes. Montgomery, the capitol, seems to have some of the lowest property taxes in the country.
  • Tennessee isn’t bad if they don’t mind living in a smaller town. They might even step up to Memphis and get a house under $ 200,000.

Your client has now realized downsizing isn’t simply about finding a cheap place to live. This is an important decision. They need to get it right. You are a number cruncher. You can help.

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