Knowing the highest property tax rates in NJ is an important part of home buying. New Jersey has long been known for its high property taxes, and this can significantly impact your overall cost of homeownership.
Rates vary widely between towns, making it important to consider local taxes when planning a purchase. This guide highlights towns with the highest property taxes, explains how these rates are calculated, and explores how they can impact your budget.
What Are Property Taxes Based On?
Property taxes in New Jersey are based on the assessed value of your home. The local tax rate is applied to this value to determine your annual property tax bill.
In many New Jersey towns, property taxes fund local services, including schools, police departments, and road maintenance. The higher the local budget and the larger the population, the higher the property tax rates can be.
However, some towns with high property values may have lower property tax rates due to the larger tax base. In contrast, smaller towns with lower property values may need higher rates to generate sufficient revenue to cover their expenses.
Why Are Property Taxes So High in New Jersey?
New Jersey’s property taxes are some of the highest in the country. The average effective property tax rate in the state is around 2.23% of a home’s value. This is significantly higher than the national average, which hovers around 1.1%.
There are several reasons for New Jersey’s high property taxes:
- Local government funding: New Jersey has a large number of municipalities, and each one funds services like public education, police, fire departments, and public works through property taxes.
- Reliance on property taxes: The state has limited income or sales taxes, so local governments rely heavily on property taxes to cover their expenses.
- School funding: School taxes make up the largest portion of most property tax bills in New Jersey. Local school districts must raise substantial revenue to fund their operations.
Towns With the Highest Property Tax Rates in NJ
Now that you have an understanding of how property taxes are calculated, let’s look at some of the towns with the highest property tax rates in New Jersey. These towns are known for having high tax rates, which can lead to significant annual property tax bills for homeowners.
Millburn
Millburn, located in Essex County, consistently ranks among the towns with the highest property tax rates in New Jersey. The town has a relatively high tax rate combined with higher property values. Millburn is home to luxury homes, top-rated schools, and a prime location, making it a desirable place to live. However, these factors contribute to the higher-than-average property tax bills.
While the high property taxes may seem steep, Millburn offers a strong sense of community, excellent public services, and a prime location near New York City, which can justify the added expense for some buyers.
Demarest
Demarest is another town in Bergen County with high property taxes. This affluent town, known for its beautiful homes and excellent schools, comes with a higher price tag, which includes higher property taxes. The town’s property tax rate is well above the state average, adding a substantial cost to homeownership.
Residents enjoy a quiet suburban lifestyle while still being close to New York City, making it a popular choice for families. The high property tax rates in Demarest are due, in part, to the town’s desire to maintain its strong public services, schools, and amenities.
Tenafly
Tenafly, also located in Bergen County, is another town with high property tax rates. Known for its luxury homes and excellent schools, Tenafly has a significant tax base. The tax rate here is among the highest in the state, reflecting the town’s robust local services, including education, emergency services, and infrastructure.
For many homebuyers, the property tax burden in Tenafly may be offset by the town’s reputation for being a great place to live. With its proximity to Manhattan, the appeal of Tenafly’s quality of life makes it an attractive choice for buyers, despite the high taxes.
Mantoloking
Located on the Jersey Shore, Mantoloking is a small, affluent community known for its picturesque views and luxurious homes.
Property taxes in Mantoloking are among the highest in New Jersey, largely due to the high market values of the homes in the area. As a popular beach town with limited land available for development, the local government relies on property taxes to fund public services and maintain the town’s charm.
While property taxes are high in Mantoloking, the town’s beautiful coastal location and exclusive community make it a desirable place to own a home for those seeking luxury living by the beach.
Bergenfield
Bergenfield, another Bergen County town, also ranks among the towns with the highest property tax rates in NJ. With its prime location close to New York City and a bustling suburban lifestyle, Bergenfield has higher-than-average property tax rates. This town offers a variety of amenities and services, but those come at a price.
Despite the high property taxes, Bergenfield is an attractive option for families looking for an affordable, suburban lifestyle with easy access to Manhattan. The town’s excellent schools, public parks, and vibrant community make it a popular place to live, despite the higher taxes.
What to Do If You Are Buying a Home in a High-Tax Town
Research Local Tax Rates
Before making a purchase, research the highest property tax rates in NJ for the town you’re interested in. This will give you a clear understanding of the costs associated with the property. Consider comparing property taxes in different towns to determine where you can find the best balance between property value and tax rates.
Factor Taxes Into Your Budget
When planning your purchase, factor property taxes into your overall housing expenses. High taxes can add thousands of dollars annually, affecting your monthly mortgage, insurance, and maintenance costs. Accounting for these expenses upfront helps prevent surprises and keeps your budget realistic.
Investigate Property Tax Relief Programs
Some communities offer programs to reduce property taxes for seniors, veterans, or low-income homeowners. Research any available relief programs in the towns you are considering to see if you qualify for exemptions, credits, or rebates. These programs can ease the burden of high property taxes and make homeownership more affordable.
Understand the Long-Term Impact
Property taxes are a recurring expense that can change over time. Rates may rise due to inflation, new municipal budgets, or expanded local services. Reviewing historical tax trends in your target towns can provide insight into potential future increases and help you plan accordingly.
Why Choose NJLux Real Estate
NJLux Real Estate knows the importance of property taxes when buying a home in New Jersey. Our team is dedicated to helping you find the perfect property that fits both your budget and your lifestyle. We can provide you with detailed information on local property taxes, helping you navigate the complexities of homeownership in the Garden State.
If you’re ready to begin your home search, reach out to NJLux Real Estate today.
