(STACKER) — Ask any homeowner about expenses and they’ll tell you: If you’re a first-time buyer, you need to carefully calculate the total cost of owning a home before taking the plunge into homeownership.
Owning a home comes with dozens of additional costs, from mortgage payments and interest to upkeep, renovations, and household utility bills. It doesn’t take long before expenses add up—especially when they come on top of potential property tax costs.
To determine which states offer the lowest in property taxes, Roofstock analyzed 2021 data from Wallethub and the U.S. Census Bureau. Costs were then determined for real estate property tax rates, median real estate tax payments, and median home prices for every state and Washington D.C. These amounts were then contextualized with what first-time homebuyers need to know about property taxes.
Indiana by the numbers
- Effective real estate tax rate: 0.85%
- Annual taxes on $217.5k home: $1,853
- Indiana’s median home value: $141,700
- Annual taxes on Indiana’s median home: $1,207
As with many other states, what Indiana residents pay for property taxes will vary significantly from county to county. That’s because real estate taxes in Indiana are assessed on a county and local level, with each local government setting the tax rate for their jurisdiction. Residents of the more populous counties, like Marion County, which is home to the metro area of Indianapolis, pay significantly more than the state average for real estate taxes. Luckily, there are a number of state exemptions that residents in counties with higher real estate taxes can use to cut down on the costs of their tax bills, including the standard homestead deduction and a supplemental homestead deduction.
The funds from real estate taxes in this state are used to help fund local governments and are used to pay for a variety of services, from welfare to building maintenance and construction, police and fire department costs, and local infrastructure and operating costs.
In some states, the high cost of property taxes can cause a home with an otherwise affordable price tag to be well out of someone’s price range. In others, the low cost of property taxes could give you a little more wiggle room in your budget—which is never a bad thing.
If the idea of weighing the estimated costs of property taxes seems overwhelming to you, start by looking at the states with the lowest property taxes listed below. The national list is reverse-ordered by effective real estate tax rate, with Hawaii as the state with the lowest property taxes, though the results would look different if it was ordered by the taxes on the state’s median home. Whether you’re looking for a dream home or next big investment, owning a home comes with several additional costs, property taxes being one of them.
States with the lowest property taxes
#1. Hawaii: 0.28% effective real estate tax rate
#2. Alabama: 0.41% effective real estate tax rate
#3. Colorado: 0.51% effective real estate tax rate
#4. Louisiana: 0.55% effective real estate tax rate
#5. Washington, D.C.: 0.56% effective real estate tax rate
This story originally appeared on Roofstock and was produced and distributed in partnership with Stacker Studio.