Homeowners in Birmingham, Ala., Louisville, Ky., and Salt Lake City Pay the Lowest Real Estate Taxes

March 26, 2019 at 12:30 PM EDT
LendingTree looks at real estate taxes in the nation's largest metropolitan areas

CHARLOTTE, N.C., March 26, 2019 /PRNewswire/ -- LendingTree®, the nation's leading online loan marketplace, today released its study on how owning real estate impacts people in different areas around the country from a tax perspective.

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LendingTree looked at the average amount of real estate taxes (also known as "property taxes"), mortgage interest and mortgage insurance premiums that were paid by homeowners in a given metro, as reflected on their tax returns. The study then ranked the nation's 50 largest metros to show where people paid the lowest taxes on their homes.

The purpose of the study is not only to show where real estate taxes are the lowest, but also to help familiarize the average person with a few key elements present in the 2017 Trump tax bill. That way, homeowners will not only have a better understanding of what their tax burden is like compared to other people from around the country, but they will also have a better idea of the kinds of steps they need to take to maximize their tax refund.

Key findings

  • People from metros in more rural states tend to pay less in real estate taxes. Homeowners in Birmingham, Ala., Louisville, Ky., and Salt Lake City pay an average of $2,600 on real estate taxes, which is the lowest out of the nation's 50 largest metros.
  • Those who live in metros in more heavily-populated and urban states tend to pay higher real estate taxes. Homeowners in New York, San Jose, Calif., and San Francisco paid an average of $9,400 in real estate taxes, close to double the average amount paid across the 50 largest metros.
  • The average amount of mortgage interest paid across all metros is about $8,500. People who pay high yearly interest costs on their mortgage might benefit from itemizing their tax returns. As a result, if you want to make sure you're saving the most on your taxes, you should pay careful attention to how much mortgage interest you are paying.
  • The average mortgage insurance premium charged to someone living in one of the nation's largest metros is about $1,600. As with mortgage interest, people who pay high mortgage insurance premiums can sometimes save on their taxes by itemizing. Most homeowners will likely be better off by trying to avoid paying mortgage insurance premiums all together — they can do this by having equity of 20 percent or higher in their home.
  • Relatively few Americans itemize their tax returns because they either save more by taking the standard deduction or find taking it more convenient. People who pay very high property taxes, mortgage interest and/or mortgage insurance premiums can sometimes save more by not taking the standard deduction and instead itemizing their tax returns, but this usually isn't the case. Consequently, this is why around 7 in 10 federal tax returns filed don't contain any specific info on things like real estate taxes or mortgage interest paid.

Metros with the lowest real estate taxes

Birmingham, Ala.
% of returns with real estate taxes: 26.5%
Average real estate tax amount: $2,035
% of returns with mortgage interest paid: 24.0%
Average mortgage interest paid: $7,455
% of returns with mortgage insurance premiums paid: 4.1%
Average mortgage insurance premium amount: $1,200

Louisville, Ky.
% of returns with real estate taxes: 27.7%
Average real estate tax amount: $2,733
% of returns with mortgage interest paid: 24.2%
Average mortgage interest paid: $6,297
% of returns with mortgage insurance premiums paid: 4.3%
Average mortgage insurance premium amount: $1,227

Salt Lake City
% of returns with real estate taxes: 31.1%
Average real estate tax amount: $2,765
% of returns with mortgage interest paid: 27.8%
Average mortgage interest paid: $8,328
% of returns with mortgage insurance premiums paid: 6.6%
Average mortgage insurance premium amount: $1,758

Metros with the highest real estate taxes

New York
% of returns with real estate taxes: 28.7%
Average real estate tax amount: $10,202
% of returns with mortgage interest paid: 23.2%
Average mortgage interest paid: $9,868
% of returns with mortgage insurance premiums paid: 1.49%
Average mortgage insurance premium amount: $2,076

San Jose, Calif.
% of returns with real estate taxes: 32.7%
Average real estate tax amount: $9,626
% of returns with mortgage interest paid: 28.0%
Average mortgage interest paid: $15,044
% of returns with mortgage insurance premiums paid: 0.6%
Average mortgage insurance premium amount: $2,408

San Francisco
% of returns with real estate taxes: 31.8%
Average real estate tax amount: $8,493
% of returns with mortgage interest paid: 27.6%
Average mortgage interest paid: $14,496
% of returns with mortgage insurance premiums paid: 1.0%
Average mortgage insurance premium amount: $2,329

To view the full report, visit www.lendingtree.com/home/mortgage/real-estate-taxes-in-metropolitan-areas.

About LendingTree
LendingTree (NASDAQ: TREE) is the nation's leading online marketplace that connects consumers with the choices they need to be confident in their financial decisions. LendingTree empowers consumers to shop for financial services the same way they would shop for airline tickets or hotel stays, comparing multiple offers from a nationwide network of over 500 partners in one simple search, and can choose the option that best fits their financial needs. Services include mortgage loans, mortgage refinances, auto loans, personal loans, business loans, student refinances, credit cards and more. Through the My LendingTree platform, consumers receive free credit scores, credit monitoring and recommendations to improve credit health. My LendingTree proactively compares consumers' credit accounts against offers on our network, and notifies consumers when there is an opportunity to save money. In short, LendingTree's purpose is to help simplify financial decisions for life's meaningful moments through choice, education and support. LendingTree, LLC is a subsidiary of LendingTree, Inc. For more information, go to www.lendingtree.com, dial 800-555-TREE, like our Facebook page and/or follow us on Twitter @LendingTree.

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SOURCE LendingTree