Florida Property Taxes High, But Could Be Worse

Think your local tax bill is high?

It is. No question about it. But, relatively speaking you might not be taking as big a hit in terms of property taxes as people in other parts of the country. Consider the average New Jersey resident who paid $6,005 in local taxes. That’s the highest in the nation, according to a new study using research done on federal income tax returns.

The real estate blog in the Palm Beach Post examines a study by the National Association of Home Builders using 2003 federal income tax returns, the latest available from the IRS. The results show just how drastically mill rates vary from place to place.

Since the Palm Beach housing market boom began around 2000 and area home prices have spiraled ever upward — and pumping millions of extra dollars into local government accounts as home valuations balloon — the county’s home and condo owners have been complaining and urging that property tax rates should be scaled back.

Nevertheless, when it comes to real estate taxes across the United States, Floridians did not even place in the top five, deducting an average of $3,397 on their federal tax returns.

After New Jersey residents, New York home owners rank second in the nation, deducting an average of $5,181 in property taxes. If you’re sensing a pattern with the Northeast here, well done. Right behind N.Y. and N.J. is N.H. — New Hampshire, that is, where home owners wrote off an average $4,830 on their federal tax returns, good for third in the country.

All in all, the 1.9 million Floridians who took advantage of the property tax deduction took off a total of $6.4 billion in taxes on their 2003 returns, a nice chunk of the $119 billion deducted nationally. The 39 million households nationwide who made use of property tax deductions claimed an average of $3,000, according to the report.

The mortgage interest tax deduction, another hugely important benefit for homeowners, especially for working families, weighed in heavily in Florida as real estate costs led to increasingly expensive Florida home loans. The Sunshine State ranked third in the nation in mortgage interest deducted, with a cool $17.6 billion, the study showed. About 1.75 million taxpayers filed for it. The average deduction? A strong $10,050.

The average mortgage interest tax deduction was slightly less than that nationally, with $9,650 per filing household. A total of 35 million Americans claimed the deduction, totaling $338 billion in mortgage interest. The nation’s most populous and expensive state, California, ranked first with $64.9 billion in mortgage interest deducted, while New York was the only other state to top Florida at $19.7 billion.

The lowest average property tax deduction? Alabama’s $868. Sure that’s cheap, but would you rather live there than Palm Beach County? Doubtful!