Five states have no property tax on real estate
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge property tax on real estate. However, the details vary significantly. Alaska and Montana exempt primary residences but tax commercial and rental property. Delaware and New Hampshire tax property but at rates so low they function almost like no-tax states. Oregon taxes property but offers broad exemptions for homeowners. No state has zero property tax across all property types.
If you own a home in one of these states, you still pay other taxes — income tax, sales tax, or both. The absence of property tax does not mean lower overall tax burden. Many of these states compensate with higher income tax or sales tax rates.
Key Takeaways
- Alaska and Montana exempt owner-occupied homes from property tax but tax commercial and rental properties.
- Delaware and New Hampshire have property tax but at rates below 0.5%, making them functionally low-tax states.
- Oregon taxes property but offers homeowner exemptions that can reduce the tax owed on a primary residence.
- States without property tax often have higher income tax or sales tax to fund schools and local services.
- Property tax rates and exemptions change by year and by county, so the actual amount you owe depends on your specific location and property type.
Alaska: No tax on primary residences, tax on rentals and commercial property
Alaska does not tax owner-occupied homes. If you live in the house you own, you pay no property tax to the state. However, if you own rental property, commercial buildings, or vacant land, you do pay property tax. The rate varies by municipality — Anchorage, Juneau, and Fairbanks each set their own rates.
Alaska has no state income tax and no sales tax. This combination makes it attractive for homeowners, but renters and business owners face property tax. If you own a rental house in Alaska, expect to pay property tax on that building even though your primary residence is exempt.
Montana: Homestead exemption covers primary residences only
Montana exempts primary residences through a homestead exemption. You must live in the house, own it outright or have a mortgage, and claim it as your principal place of residence. Once you meet those conditions, the state does not tax that property.
Rental properties, vacation homes, and commercial real estate are taxed in Montana. The state property tax rate is among the lowest in the country, but it still applies to non-primary properties. Montana has no state income tax, which offsets the property tax on investment real estate.
Delaware and New Hampshire: Property tax exists but rates are extremely low
Delaware and New Hampshire technically have property tax, but the rates are so low that they function almost like no-tax states. Delaware's effective property tax rate is around 0.57% of home value. New Hampshire's is around 0.84%. For comparison, the national average is about 0.8% to 1.1%.
Both states compensate for low property tax with other revenue. Delaware has no sales tax but charges income tax. New Hampshire has no sales tax and no income tax on wages, but does tax dividends and interest income. New Hampshire also charges a "rooms and meals tax" on hotel and restaurant purchases.
Because rates are so low, a $300,000 home in Delaware might generate $1,700 in annual property tax, and the same home in New Hampshire might generate $2,500. These amounts are significantly lower than most other states, but the tax does exist.
Oregon: Property tax with homeowner exemptions
Oregon taxes all real estate, but offers a homeowner property tax exemption that reduces the amount owed on a primary residence. The exemption applies to the first $30,000 of assessed value. If your home is assessed at $400,000, only $370,000 is subject to tax.
Oregon's property tax rate varies by county but averages around 0.97% of assessed value. With the homeowner exemption, the effective rate on a primary residence is lower. Rental properties and commercial real estate do not receive the exemption and are taxed at the full rate.
Oregon has no sales tax, which is why property tax is a larger revenue source for schools and local government. The state does charge income tax, with rates ranging from 4.75% to 9.9% depending on income level.
How property tax exemptions actually work
An exemption does not mean you pay nothing. It means a portion of your property's value is not taxed. If you own a $500,000 home in Montana and claim the homestead exemption, the state does not tax that property at all. But if you own a $500,000 rental house in Montana, the full value is subject to tax.
To claim an exemption, you typically file a form with your county assessor's office. The form asks for proof of ownership, proof of residency, and confirmation that the property is your primary home. Deadlines vary by state and county — some are annual, others are one-time. If you move or sell the property, the exemption ends.
Exemptions also affect property value for assessment purposes. A home with an exemption may be assessed at a lower value than an identical home without one, which further reduces the tax owed.
What you actually pay in states with low or no property tax
States without property tax do not have lower total tax burden — they shift the burden elsewhere. Alaska has no income tax, no sales tax, and no property tax on primary residences, but it is an exception. Most other low-property-tax states make up the difference.
New Hampshire residents pay no income tax on wages but do pay tax on investment income. Delaware residents pay income tax at rates up to 6.6%. Oregon residents pay income tax up to 9.9%. Montana residents pay income tax up to 6.9%. These income taxes often exceed what residents would pay in property tax in higher-tax states.
The real savings depend on your personal situation. If you own a home outright and have little investment income, a state with no property tax and high income tax may cost less. If you have significant rental income or investment returns, the income tax may offset the property tax savings.
Frequently Asked Questions
Do I have to pay property tax on a vacation home in Alaska or Montana?
Yes. Both states exempt only primary residences. A vacation home, second home, or any property you do not live in full-time is subject to property tax. You must own and occupy the home as your main residence to claim the exemption.
Can I claim a homestead exemption if I rent my house part of the year?
It depends on the state and how much of the year you rent it. Most states require that the property be your principal residence — meaning you live there most of the time. If you rent it out for several months per year, you may lose the exemption. Check with your county assessor's office for the specific rule in your area.
If I move to one of these states, when does the property tax exemption start?
You typically claim the exemption when you file your homestead declaration with the county assessor. The timing varies — some counties process claims immediately, others wait until the next tax year. File as soon as you move and have proof of residency. Delaying can mean paying full property tax for a year or more before the exemption takes effect.
Are property taxes lower in these states than in states with income tax?
Not necessarily. A state with no property tax often has higher income tax or sales tax. The total amount you pay in taxes depends on your income, spending, and property value. A high-income earner may pay more total tax in a no-property-tax state than in a state with moderate property tax and lower income tax.
Do these states tax commercial real estate differently than residential?
Yes. Alaska and Montana exempt owner-occupied homes but tax commercial and rental property. Delaware, New Hampshire, and Oregon tax both residential and commercial property, though Oregon offers exemptions for homeowners only. If you own a business building or rental property, expect to pay property tax in all five states.