New Hampshire Property Tax: A Comprehensive Guide

There's no way around it — property taxes are a significant ongoing cost that New Hampshire property owners just can't avoid. But understanding the state's approach to property taxation at least allows investors to get a handle on evaluating those costs accurately. This article covers how the system works and what it means for your real estate business.

By
Nichole Stohler
|
Last Updated
May 29, 2024
New Hampshire Property Tax: A Comprehensive Guide

Property taxes represent a significant operational expense for real estate owners in New Hampshire. The state has one of the highest property tax rates in the United States because it doesn't have personal income or sales tax. As such, local governments rely heavily on property taxes to fund municipal services like public education, infrastructure, and emergency response.

This article explains how the property tax system works in the state, detailing how towns and cities set tax rates based on local budget needs. We also cover the assessment process used to value properties and potential strategies property owners can consider to manage and potentially reduce their property tax liabilities.

New Hampshire's eye-popping property tax rates may give you sticker shock, but understanding the state's approach to property taxation allows owners to properly evaluate their investment decisions.

Understanding New Hampshire property taxes

New Hampshire's property taxes fall under a local government system to fund municipal and school district services. The New Hampshire Department of Revenue Administration establishes and approves tax rates for each local jurisdiction. Here’s a detailed look at how local property taxes work in the state:

Local determination of tax rates

Local municipalities determine property tax rates. This means the rate can vary significantly between different towns and cities, depending on local budget needs.

Each locality calculates its tax rate by determining the total funds needed for municipal and school district budgets. This amount gets divided by the total assessed value of all property within the jurisdiction. From there, the tax rate is expressed in dollars per thousand dollars of assessed value.

Several counties in New Hampshire make it easy to see what your total property tax is with online property tax calculators. A few examples are:

Assessment of property values

Local assessors determine the market value of properties. New Hampshire law requires municipalities to update these assessments periodically to reflect current market conditions. The assessment aims for fairness and accuracy in property valuation, which is the basis for the property tax calculated.

Role of local governments

New Hampshire's local governments have autonomy in managing citizen property taxes. They are responsible for:

  • Assessing properties
  • Setting tax rates
  • Collecting property taxes
  • Managing appeals or grievances

Additional local charges

New Hampshire does not have a uniform state property tax rate. Instead, localities may implement additional charges or fees based on voter-approved initiatives. These can include charges for specific local projects, infrastructure improvements, or other community services added to the property tax bill.

Voter-approved initiatives include:

  • Bonds: This is a common type of voter-approved initiative where the community agrees to increase property taxes to fund large projects.
  • Levies: These are additional charges approved by voters for specific purposes. Levies can be for operations or capital projects.
  • Special assessments: These fund specific projects that benefit a defined geographical area within the community. Examples include sidewalk improvements, street lighting, or sewer system upgrades.
  • Override or exclusion: This type of initiative temporarily or permanently lifts the cap on property tax increases set by local or state laws. These overrides or exclusions typically occur to fund unforeseen financial needs or budget shortfalls.

Funding essential services

Property tax revenues in New Hampshire primarily provide funding for critical local services such as:

  • Public education
  • Road maintenance
  • Emergency services
  • Municipal administration

Property types

Every parcel of real property, no matter how big or small, is assessed. Property includes land and any permanent structures attached to it. Examples include:

  • Houses
  • Office buildings
  • Vacant land
  • Apartments
  • Mobile homes
  • Accessory buildings such as garages or barns

All real property gets assessed, but not all of it is taxable. Some properties, like those owned by religious or government entities, are completely exempt from paying property taxes. Others are partially exempt, such as properties owned by elderly or disabled individuals who qualify for a tax exemption on part of their property tax.

What is an assessment?

The assessed value of your property is an estimate of your property's worth calculated by the government. This value might differ from your property's market value, which is the price you could sell it for. Here are a few details and factors that impact assessed home value:

  • Purpose: This only calculates property taxes. It's not to determine market value or what you can sell the property for.
  • Criteria: Assessors consider the property's size, number of rooms, age, condition, and any recent renovations.
  • Reassessments: Towns or cities may reassess property values periodically, usually every five years, to make sure that the values match current market conditions in the area.
  • Finding details: Your property's assessed value is on your tax bill, or you can get it from your local assessor's office.

Determining the tax rate

Different government bodies in New Hampshire determine property tax rates based on their annual operational needs. Here's the process:

1. Budget planning

Local government authorities decide their annual budgets for education, emergency services, roads and infrastructure maintenance, and other essential functions.

2. Revenue calculation

Based on the approved budgets, they calculate the total revenue needed from property taxes to fund these services. This revenue includes various types of taxes such as:

  • Local school tax
  • Municipal tax
  • County tax
  • State education tax

3. Assessment of property values

The local government calculates the total assessed value of all taxable properties within the jurisdiction by summing the individual assessed values.

4. Setting the rate

The government sets the tax rate at a level that will generate the needed property tax revenue to fund the budget. The rate is in mills, where 1 mill equals $1 tax per $1,000 of the assessed value.

For example, if a town needs $10 million in property taxes and the total assessed value of all properties is $1 billion, the tax rate is calculated as: $10,000,000 / $1,000,000,000 = 0.01 or 1%.

Step-by-step calculation of your property taxes

Let's use an example to provide a step-by-step process for calculating your property taxes. Suppose you have a single-family home with three bedrooms, two bathrooms, and 2,000 square feet of living space. Here are the steps:

1. Find the assessed value

Review your property tax statement or contact the local county assessor's office to find the assessed home value. For example, in Hillsborough County, you can contact the local assessor's offices in cities like Manchester and Nashua. Each county typically has an online database where you can look up property values and other relevant information.

For our example, let's say the assessor gives your home an assessed value of $300,000 based on recent sales of similar properties in your area.

2. Find the tax rate

The local tax rate is a percentage of your property's assessed value. For instance, if your town needs to raise $10 million in property taxes and the total assessed value of all properties is $1 billion, the tax rate would be set at 1% or 10 mills.

3. Use the formula

Take the assessed value of your property and multiply by the tax rate to find out what you'll owe. If the tax rate is 2.17%, your property tax calculation would be:

  • $300,000 x 0.0217 = $6,510

You would owe $6,510 in property taxes for the year.

New Hampshire property tax due dates

Important dates and deadlines for New Hampshire property taxes include:

  • April 1st - March 31st: Property tax year.
  • July 1st: First installment due.
  • December 20th: Second installment due.

Ways to lower your property tax bill

While no one enjoys paying high taxes, sometimes it's an unavoidable reality depending on where you live. However, there may be strategies available to potentially reduce your property tax burden in New Hampshire. These include:

Appeal the assessment

Review your property's assessed value by comparing it with similar properties in your area. You can challenge the assessed property value if you find discrepancies or believe the assessment over values your property.

This typically involves filing an appeal with your local tax assessor's office and presenting evidence that your property's value should be lower.

Filing an appeal

  • File an application: You submit a request to reduce your property tax to your local municipality.
  • Municipality reviews: The local government looks over your request and makes a decision. If they don't make a decision, they automatically deny your request.
  • Appeal the decision: If you still disagree with the assessment after the municipality's decision, you can file an appeal with the Board of Tax and Land Appeals (BTLA) or the superior court, but not both.
  • Final resolution: The BTLA or the court will then resolve your appeal. If you're not satisfied with their decision, you can appeal to the supreme court.

Dates for filing an appeal

  • March 1st: Submit an abatement request with the municipality by this deadline if you believe the assessment over values your property.
  • July 1st: This is the deadline for filing an appeal with the BTLA or superior court if your abatement request is denied or not acted upon by the municipality.

Apply for homestead exemptions

Many jurisdictions offer homestead exemptions that can reduce the taxable value of a home for primary residents. Check if you qualify for any such exemptions in your area and apply for them.

Use other tax relief programs

Look for other tax relief programs such as exemptions for seniors, veterans, or individuals with disabilities. Each program has specific qualifications and can provide reductions in property taxes. Examples include:

  • Senior citizen exemptions: Provides property tax reductions for homeowners over a certain age, typically based on income and residency requirements.
  • Veteran exemptions: Offers tax relief for veterans, often requiring proof of service and, in some cases, a service-related disability.
  • Disability exemptions: Available for individuals with certain disabilities, requiring medical documentation and proof of eligibility.
  • Low-income homeowners: Programs designed to assist low-income homeowners with property tax relief based on specific income thresholds and other criteria.

Make strategic improvements

Avoid making extensive improvements or renovations right before your property is due to be assessed. Certain types of improvements can increase your property’s assessed value and increase your tax burden.

Property assessors often consider the exterior appeal in their assessments. Limiting enhancements that are visible from the street may help prevent increases in assessed value.

Verify proper land use classification

Confirm that your property is classified correctly according to its use, i.e. residential or commercial. Incorrect classification can lead to higher tax rates.

Negotiate payment plans or discounts

Some localities may offer discounts for early payment of property taxes or options for installment plans that make payments more manageable, though these won’t lower the bill itself.

Regularly review tax bills and assessments

Keep an eye on annual property tax bills and assessment notices. Measurements, property descriptions, and tax calculations can sometimes contain errors.

Property taxes in NH

New Hampshire's reliance on property taxes to fund local services results in tax rates that are among the highest in the nation. While the system allows municipalities to meet their budgetary needs, it also places a financial burden on property owners statewide.

For real estate investors, understanding how the property tax system operates can help you plan accordingly. Take advantage of any available exemptions and be aware of your options, as appeals or payment arrangements can provide some relief.

By proactively managing your property tax situation, you can enact smart financial planning for your New Hampshire property.

Property tax New Hampshire FAQs

How much is property tax in New Hampshire?

Property tax rates in New Hampshire vary by municipality. For specific rates, check with the local tax assessor's office or visit the New Hampshire Department of Revenue Administration website.

Why is NH property tax so high?

New Hampshire property taxes are high because the state does not have a state personal income tax or sales tax, relying heavily on property taxes to fund local services.

At what age do you stop paying property taxes in New Hampshire?

New Hampshire does not have a specific age at which property taxes stop. Senior citizens may qualify for property tax exemptions or deferrals depending on their income, assets, and the municipality's regulations. Contact your local tax assessor's office for details on available programs.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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