Local and City Taxes
These taxes are generally based on the assessed value of the property. They vary widely depending on the state and county, with an observed range between 0.5% and 3% of value.
The tax bills are sent automatically to the registered owner of the property, and online payments options is generally available. Unlike incomes taxes, there is no need to file a specific return.
Note that a 3% tax typical in Texas on a property returning 10% a year brings down the after tax return to 7%. This would be equivalent to a 30% tax on gross income. This explains in part the large differences in rental yields between states as landlords generally pay less for an asset that comes with a large local tax liability.
