Property taxes in the United States are primarily divided into two main categories:
Real property encompasses land, along with the buildings and fixtures permanently affixed to it. Real property taxes are assessed on agricultural, industrial, commercial, residential, and utility property.
A foreigner investing in U.S. real estate needs to take state taxes into account. Each state generally sets property tax rates as a percentage of a property’s assessed value. However, there are wide variations of real estate property tax from state to state. It ranges from 0.28% in Hawaii to 2.49% in New Jersey, and there can also be local rate variations among different locales in the same state.
For example, Maria, a Canadian citizen, purchases a $500,000 condominium in Princeton, New Jersey, as an investment property. Based on New Jersey’s property tax rate of 2.49%, she would pay approximately $12,450 annually in property taxes ($500,000 × 0.0249 = $12,450).
While property taxes may be similar for foreign nationals and U.S. citizens, there could be slight differences. For example, many states with high levels of second-home ownership (for instance, Vermont) offer tax discounts to state residents, which effectively raises rates for non-state residents.
Personal property is property that is not permanently attached to land: e.g., automobiles, equipment, furniture, tools, and computers.
Many state as well as local governments levy tax in the form of ad valorem property taxes on tangible personal property (TPP).