New Hampshire Tax

It’s that time of year again…That’s right…tax season.

New Hampshire is known for being one of the few remaining states without a sales tax.  We are also one of the few states without an income tax. (Well, there is an angle to that but let’s save that for another time.)Image

Unfortunately, states cannot live without money, so New Hampshire must get its revenue stream somehow.  While there is a gas tax, a cigarette tax and a room and meals tax that help, the state’s largest form of income comes from property tax.  To that end, New Hampshire has come up with some creative ways of increasing that tax.

The mantra in real estate is “location, location, location” and New Hampshire has jumped on that gravy train.  Clearly you cannot pick up and move your home if you do not like where it is located, so buying a home in a desirable location is key.  New Hampshire abounds with beauty and early on the state realized that waterfront property garnered higher home sales prices than similar homes without direct water access.  They began to assess properties accordingly causing a disparity in tax rates between the homes situated on the water and similar homes not on the water.

Not satisfied with that, the state then began increasing property taxes even if your property wasn’t on the water, but had direct access.  Then there was the infamous “view tax,” increasing property values and tax rates based on a properties view or even “potential view.”

The Assessing Standards Board “Assessing Reference Manual” states,

“There are also value influences that affect individual properties. These can include such things as water frontage, water access, panoramic views, highway views, proximity to industrial or commercial uses, and heavy traffic counts. These property specific influences may be difficult to isolate, but are critical in the development of accurate values.”

Most agree that assessing value based on views is highly subjective.  There are many gray areas.  A farmer with wide open fields many not notice his view and the land may only be used for farming, yet his taxes may be higher than someone who has the same amount of wooded property.  Should someone with 180 degree views that are made up of landfills, sand pits or power lines be assessed the same as someone with 180 degree views of trees?  Is a water view rated higher than if it was all land?

Add to this that New Hampshire is rated as the second highest property tax state only behind New Jersey and you have to wonder if the state isn’t putting most of its (tax) eggs in one basket.

The sad part is that families that may have owned their properties for generations are now being taxed out of those properties.  While there is a tax break for people over 65, for those who have seen their property taxes double or more in the last 10 years, that tax break may not be nearly enough.

On The Flip Side

There are many factors that go into the value of a property and certainly the view is one of them.  Look at any local real estate listing service and you will find that waterfront homes or homes with sweeping views are certainly on the high end of the price range.

In 2005, there was an attempt to change the property tax policy to become more based on actual property values.  It did not pass. However, one can argue that this may not change many of the tax rates if people are willing to pay higher prices for properties with nicer views.

Having lived in New Hampshire all my life, I could never imagine living anywhere else.  While property taxes are some of the highest in the country we rank in the top five in having the overall lowest tax burden.  (We follow Alaska, Nevada, Wyoming and Florida respectively.)  That’s pretty good for living in such a beautiful area.

Love it or hate, the view tax is likely here to stay.  Many of those who fall into this tax bracket merely shrug their shoulders knowing that not only does the view increase the value of their home, it gives them everyday pleasure.

Those of us looking to buy a home in New Hampshire will have to weigh the cost of having a nice home and the cost of having a home with a view.  Once you have lived in New Hampshire, it’s hard to imagine living anywhere else.

Below are some links to various sources regarding New Hampshire taxes:

http://www.kiplinger.com/tool/retirement/T055-S001-state-by-state-guide-to-taxes-on-retirees/index.php?state_id=30

http://taxes.about.com/od/statetaxes/a/Highest-State-And-Local-Taxes.htm

http://www.revenue.nh.gov/munc_prop/assessing-board/documents/asbmanualv1_2008.pdf

http://247wallst.com/investing/2011/04/05/the-ten-states-with-the-worst-property-taxes/1/

http://stateimpact.npr.org/new-hampshire/tag/taxes/

http://taxes.about.com/od/statetaxes/a/Highest-State-And-Local-Taxes.htm

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