So you just signed a new lease, huh? Congratulations! Renting an apartment equals freedom. You’re free from landscaping responsibilities, maintenance costs, and mortgage payments!
However, there’s one expense that confuses renters and homeowners alike—property taxes. If you’re like most, you’ve probably wondered, “Do renters have to pay property taxes, too?” ApartmentSearch is here to explain.
What Are Property Taxes For?
Real estate owners must pay property taxes to support their municipalities or townships. Local leaders direct property tax income towards community needs such as:
- Maintaining infrastructure and amenities like roads, libraries, parks, hiking trails, etc.
- Paying the salaries of city workers and public safety officers
Since renters use roads and receive protection from the same police force that protects homeowners, then tenants pay property taxes, right?
Not exactly. To understand if renters pay property taxes, you must first understand what rent covers!
What Renters Pay
At the start of every month, apartment tenants across the country hand over their hard-earned money to a landlord. Those funds cover their rent for the following month.
The amount of rent you pay isn’t an arbitrary number made up by your landlord. When determining how much to charge for monthly rent, landlords and property managers usually consider the following costs:
- Maintenance supplies and salaries
- Landlord insurance
- Cost of utilities for shared spaces
- HOA fees
- Local property taxes
The amount of property taxes your landlord pays depends on the home or apartment’s assessed value and the local tax rate. That’s why many property owners calculate rent as a small percentage of the property’s market value (usually 0.8% to 2%). Accordingly, in cities where home values are rising, rent is increasing, too!
So, while your landlord factors property taxes into your monthly rent, you are not personally on the hook to the local municipality. The legal obligation belongs to the property owner and not to his or her tenants.
A Quick Tour of Property Taxes
A look at some recent property tax data published by USA Today underscores the squeeze landlords can feel—and subsequently pass along to you.
Here’s a snapshot of average annual property taxes around the country:
- Texas – $4,660
- Minnesota – $2,752
- Missouri – $1,923
The state with the highest average property tax of them all? Homeowners find it in New Jersey—along with a bill for a whopping $8,477. If you’re in New Jersey and wonder why your rent is so high, taxes could be to blame.
Find Rent That Fits Your Budget
From Seattle to Washington D.C., rental housing prices are on the rise! However, cheap rent isn’t impossible to find. Use ApartmentSearch to sort and filter apartments by monthly rent and find the right place at the right price.
Source: blog.apartmentsearch.com