The data shows that property tax rates have risen across the United States in the past five years. This is one slice of a large trend against home affordability.
If the question of property taxes comes up to you when working as a buyer’s agent, how do you respond to your client? Should you discuss the tax as an unavoidable cost or give them another perspective? What general advice should you offer to assuage client concerns, while making sure there is no chance of misleading them?
Why are taxes going up?
The easiest place to start the conversation is at the root. Explain that current high property taxes are part of an upward trend and, if your client pushes further, why these taxes have been increasing. Understanding will better allow a buyer to weigh the pros and cons.
For example, a 2024 report from Redfin found that Florida metro areas have experienced some of the highest property tax increases. Why? One reason that probably won’t excite buyers is because the state is funding more projects to protect against local weather disasters such as hurricanes. In this case, the higher-cost comes from higher risk of living in the area.
However, other reasons for high property taxes in Florida (per Redfin) are increasing home values and a population surge demanding more funding for public services—these are qualities that can make Florida neighborhoods even more attractive for buyers.
High property taxes can be a sign of greater overall affordability
The cost of buying a home is divided into portions—taxes, like a mortgage or home repairs, are an ongoing cost. That cost, though, can come with advantageous offsets.
A 2024 study by the Minneapolis Federal Reserve Bank found evidence that higher property taxes can correlate to lower home-prices. The data compared California (which has low property taxes but high home prices) with Texas (the opposite, high property taxes but more affordable home prices). The resulting impact of raising property taxes is thus that more younger and lower-income families can afford homeownership, while existing homeowners can be incentivized to downsize (another transaction for which they’ll need the help of an agent).
This dichotomy can be a compelling (and honest) way to broaden your buying clients’ perspective. They might be paying more tax the longer they live in the home, but they’ll be paying less at purchase for the home itself. This can be especially useful for first-time homebuyers to get their foot in the door.
Avoid inadvertent steering
Property taxes are a trade-off, with the money collected being invested back into the community as public service funding. Your client might want your perspective on those services, and if they’re worth the cost. But as tempting as it could be to highlight strong local schools for a family searching for a new home, it’s not recommended practice.
The National Association of REALTORS® (NAR) advises that, if a client asks about a community’s school districts, to direct them to reliable third-party sources that can offer the information they’re seeking. This is so as to avoid the impression of “steering” your clients towards a specific neighborhood and ensure compliance with fair housing laws.
Once the client finds the information they’re seeking, they can make an informed call about if the property tax costs are fair for what they’re getting.
Refer homebuyers to tax professionals
Part of giving your client the best service is to know when others are more equipped to handle a problem they have.
If your client is concerned about their coming tax burden as a homeowner, then you don’t want to give them the impression that they have no options. So, in your referral rolodex, have professionals—such as appraisers or accountants—who can give them the advice they need for navigation.
For example, refer them to an appraiser who can help them make their case for a property tax appeal or advise whether to pursue it.
Property taxes are collected by local governments, so rules can vary widely. For instance, New York State offers the School Tax Relief (STAR) program which can provide exemptions from school property taxes for homeowners that meet eligibility criteria.
Then there are national tax breaks, available no matter what part of the country you’re in. The State and Local Tax deduction (SALT) enables a taxpayer to write off the cost of their state/local taxes on their federal tax bill. SALT is currently capped at $10,000, but for most homeowners, that can still be a pretty penny saved.
Do your homework on the breaks allowed in your area for your own sake, but avoid offering specific advice to clients—even if you have absolute confidence, the liability for possibly giving “bad information” is too much of a risk. Referrals to other, trusted service providers can only increase your credibility in your clients’ eyes.
