A recent study done by tax-rates.org compared the property tax rates of all 50 states and the District of Colombia. Out of the 50 States and the District Delaware ranked 48 out of 51. WOW! Only Alabama, Hawaii and Louisiana had a lower property tax rate. According to the study a property tax is defined as a municipal tax levied by counties, cities or various tax districts on homes, businesses and land. Since tax rates vary widely from county to county tax-rate.org used aggregate data to compare median property tax in dollars, median property tax as percentage of home value, and several other benchmarks. Their findings and rankings really make Delaware an attractive place to buy or invest in Real Estate.
So how does Delaware compare to our neighboring states? Let’s take a look. Since Delaware is situated in the DelMarVa peninsula let’s first take a look at the three states that comprise DelMarVa. Starting with Delaware the comparison data shows that Delawarians pay a median property tax of about 0.43% of assessed fair market value. A number in and of itself seems irrelevant until you start to look at our neighbors ranks. As most of Delaware is flanked by the State of Maryland we will look at that first. According to tax-rate.org’s data Marylanders pay twice as much as Delawarians. Their median property tax ends up being 0.87% of assessed fair market value. At that rate it ranks Maryland at #25 on the list.
Next up is Virginia. While we do not share any borders with Virginia it still occupies the DelMarVa Peninsula. Also we have a lot of summer time visitors that make the annual pilgrimage to our beaches and enjoy what we have to offer. In looking at the property taxes in Virginia they are not quite double like Maryland but they are considerably higher. Their rate ends up being about 0.74% of assessed fair market value. This lands them with a ranking among the states at #34. In addition to Real Estate property tax Virginia also has a personal property tax. It ranks as the #1 state in the Nation for vehicle tax! Looking at this from a dollars and cents comparison the average Delaware home will pay $917.00 in property tax and $0.00 in vehicle tax. The average Virginia home will pay $1,369.00 in property tax and $962.00 in vehicle tax for a total of $2,331.00 in property taxes. If we look at Maryland a homeowner will pay $1,889.00 in property taxes and $0.00 in vehicle taxes.* So comparatively looking at the DelMarVa Peninsula Delaware definitely shines in the property tax arena.
Looking to our Northern border we have Pennsylvania and New Jersey. The State of Pennsylvania moves up the charts in property tax. Coming in at #13 in the nation, at a rate of 1.35% of assessed fair market value, Pennsylvania’s property tax is more than three times the rate of Delaware. Pennsylvania shares Delaware and Maryland’s 0% tax rate on personal property so that becomes a non-issue when speaking of property taxes. Now looking at Delaware’s other neighbor to the North and East we find the State with the #1 highest property tax rate in the U.S.A. With a tax rate of 1.89% of assessed fair market value New Jersey property tax is almost 4 ½ times higher than a comparable home in Delaware! Luckily for residents of the State of New Jersey they do not have a personal property tax.
So what does this all mean? Well the obvious is that if you move from an adjacent state to the Delaware Beaches you will have lower property taxes. So how much lower? Let’s use their numbers and make a comparison. For arguments sake let’s assume that you are living in a $500,000.00 3 bedroom 2 bath home in your home state and you are looking at a comparable $500,000.00 3 bedroom 2 bath home in the Delaware Beaches area. For our argument we will assume that you are moving to Delaware and not purchasing a second home here.
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Wow that’s a crazy amount of savings especially if you are moving from New Jersey! Today I saw gas was $1.99/gallon at the Royal Farms in Ocean View. If your car takes 20 gallons of gas to fill up and you moved here from Maryland you could fill your car up 55 times! If you moved here from New Jersey you could fill the same car up with gas 183 times! WOW! It’s a great time to buy at the Delaware Beaches so give me a call. Have a great holiday season.