When you purchase a home in Raleigh, North Carolina, it’s important that you purchase a home that you can afford. The amount of your mortgage payment is a pretty reasonable indication of affordability, but there are also other factors. In particular, Raleigh property tax is a real cost that homeowners must pay each year. Homebuyers must factor the cost of property taxes into their decision to purchase a home.
Understanding Property Taxes
If you are purchasing a home in Raleigh, paying taxes comes with the territory. In fact, property taxes are common for homeowners throughout the United States. By understanding your property taxes, you can make an informed decision about whether or not you should purchase a home.
The City of Raleigh uses property taxes for a number of different expenses. In general, property taxes cover the cost of maintenance and operations. Taxes also help provide salaries for police officers and help the city provide cultural resources to its residents.
Raleigh recently experienced a tax increase of $.0212, which increased the average tax bill for residents who own a single-family home by $42.20 for homes valued at $200,000. City Manager Ruffin Hall explains the increase, “Population and service demand growth have rebounded since the Great Recession, and with the (2014-2015) budget, Raleigh is investing additional operating and significant capital revenues in the highest return for our community.
How Property Taxes Are Calculated
It’s important to note that tax rates are predetermined. The current tax rate for property taxes in Raleigh is $.4038, and the rate is assessed against each $100 value. If you choose to purchase a home in the city, you are responsible for both city taxes and municipal taxes. Raleigh is in Wake County; therefore, residents who live in the city would have to pay the Wake County tax rate of $.578 per $100 as well.
Example of Property Tax Calculation
A home that has an assessed value of $200,000 is responsible for $2,001.60 in taxes each year.
Step 1. Divide your property’s assessed value by 100.
$200,000/100 = $2,000
Step 2. Multiply the value from Step 1 by the sum of Wake County’s tax rate and Raleigh’s tax rate.
$2,000 x (.578 + .4038) = $1,981.60
Step 3. Add additional fees, such as fees for recycling.
$1,981.60 + $20 = $2,001.60
A resident living in a typical single-family home in the city limits of Raleigh can expect to pay an extra $2,000 each year beyond their mortgage, insurance, and maintenance costs. In this scenario, the property taxes add $166.80 to the household budget each month.
If you choose to live outside of the city limits, you won’t have to worry about paying Raleigh’s property taxes. You will only be responsible for Wake County’s property taxes. Many people choose this option and save a significant amount of money each year.
How Does Raleigh’s Property Taxes Compare to other Cities?
When you purchase a home in Raleigh, you want to make sure it’s the best deal for you. You research schools, historical home values, and other locations in the state of North Carolina. You want to get the best value for your money.
In terms of property tax, it’s important to know how Raleigh compares to other areas in the state.
County taxes in Mecklenburg (1.08 percent), Forsyth (1.02 percent), and Durham (1.18 percent), and Orange (1.30) counties are significantly higher than Wake County’s taxes. Although both Durham and Orange County are less than an hour from Wake County, the property taxes in these areas are significantly more expensive than Wake County’s property taxes.
To get a better picture, you should compare the property tax rates of the 10 Best Cities in North Carolina, to see how each property tax rate stacks up to Raleigh’s tax rate of 1.0355 percent.
- Apex: 1.0045
- Wake Forest: 1.2745
- Matthews: 1.557
- Morrisville: 1.0245
- Garner: 1.1320
- Clemmons: .8460
- Cary: .9845
- Chapel Hill: 1.3171
- Huntersville: 1.1207
- Mint Hill: 1.0465
Based on the County and Municipal Property Tax Rates and Year of Most Recent Revaluation provided by the North Carolina Department of Revenue, Raleigh is less expensive than many of the cities appearing in the 10 Best Cities in North Carolina. With Raleigh being the state’s capital, new residents will have access to the best of North Carolina at a reduced cost if they choose to purchase a home in Raleigh.
How Does Raleigh’s Property Taxes Compare to Taxes in the United States?
When it comes to purchasing a home, most people purchase a home in the area they grew up in. However, some people who were born elsewhere also purchase homes in Raleigh. As a result of this, it’s important to understand how Raleigh’s tax rate compares to other attractive areas throughout the United States.
A recent study conducted by RealtyTrac ranked North Carolina the 15th cheapest place to live based on its property tax. North Carolina’s effective property tax is .88 percent, compared to a national effective property tax of 1.29 percent, based on this study. At this rate, owning a home in Raleigh is significantly more affordable than other places in the United States.
In particular, the study examined North Carolina’s effective property tax rate to other states. New York (3.01 percent), Texas (2.18 percent), Illinois (2.15 percent) Connecticut (2.11 percent) had the highest property tax rates across the United States. Conversely, there are states that had lower effective property tax rates, including Alabama (.4 percent), Wyoming and Colorado (.55 percent), West Virginia (.6 percent), and Tennessee (.64 percent).
When you choose to purchase a home, you want to make sure that the costs associated with buying your home are affordable. From your mortgage payments to the cost of property taxes, everything you pay out for your home is included in the costs. Your property taxes are an integral aspect of purchasing a home. Compared to other cities in North Carolina and in the United States, Raleigh has affordable property tax rates.
2 Point Highlight
With Raleigh being the state’s capital, new residents will have access to the best of North Carolina at a reduced cost if they choose to purchase a home in Raleigh.
Compared to other cities in North Carolina and in the United States, Raleigh has affordable property tax rates.
