Property tax rates for the Greater Seacoast Area of New Hampshire and Southern Maine vary quite significantly from town to town. In New Castle NH, for example, the property tax rate is only $4.50 per $1,000 of assessed value, while in Durham NH, it is $29.04 per thousand. Understandably, this can be confusing to Buyers. Why such a wide range? The answer is rather complicated.
There is often an inverse relationship between property tax rates and property values, with lower tax rates correlating to higher home values. For example, the 2022 average sales price was $2,225,455 in New Castle yet only $627,405 in Durham. If market values are 100% on par with the towns’ assessed values for taxation purposes, you could expect to pay about $10,000 per year in New Castle ($4.50 x 2,225) and $18,000 per year in Durham ($29.04 x 627). However, there is a factor known as ‘equalization,’ which defines the relationship of a property's assessed value to its market value. The 2021 equalization rate in Durham was 72.5%, which means that properties were assessed at 72.5% of their market value. Applied to our scenario here, one could expect to pay closer to $13,000 per year vs. $18,000.
It's important to understand that a town's property tax rate is not necessarily an indicator of the quality of its schools, infrastructure or services. Newington NH, for instance, has a low tax rate ($9.88) and sends its students to the SAU 50 middle and high schools in Portsmouth NH, a very desirable district. The school portion of a town budget typically accounts for 60-75% of the property tax burden. Towns with good schools and lower taxes include Rye NH ($7.39) and York ME ($8.55).
High taxes often correlate to larger local governments, as found in Rochester NH ($25.28), and the presence of colleges and universities, as in Durham. Property tax rates tend to increase gradually over time with the largest increases stemming from things like the construction of new schools and public safety buildings, and other general capital improvements.
While a high tax rate may seem undesirable, it shouldn't necessarily disqualify a particular town from your search criteria. It's important to evaluate each property as the sum of its parts, and decide which community is the best overall fit for your needs.
At Tate & Foss Sotheby's International Realty, we're experts on both local and global trends. Our team is uniquely qualified to assist you in purchasing or selling your most valuable possession—your home. Allow us to be a resource, share our extensive knowledge, and show you the Tate & Foss Sotheby's International Realty difference. Speak to our team of professionals today to learn how we can put our experience to work for you!
*Data from the NH Department of Revenue Administration and Maine Revenue Services