Dear Overseas Property Alert Reader,
Property tax is high on the list of concerns for many older Americans.
I receive countless letters from readers who are worried about their ability to manage what can be an exorbitant expense.
The worry is legitimate. Of the three main types of taxes paid at a state level by individuals, property taxes can be the least manageable for those who are retired.
Income taxes are scaled to earnings and typically only increase if a person’s earnings increase. Retirees may be in lower income brackets relative to their working years, so the burden of income tax may be lower during retirement.
Sales and excise tax also tends to be lower relative to younger people, as retirees tend to spend less.
Levies for property taxes, however, keep increasing with the value of real estate and can therefore be a financial challenge for older homeowners on limited or fixed incomes.
The national disparity in property tax levels is another source of discomfort for homeowners…
The average effective property tax in the United States is 1.07%, but the range is from a high of 1.88% in New Jersey to a low of 0.29% in Hawaii. This means that people in New Jersey will pay 6.5 times as much in property tax as homeowners in Hawaii for equally priced real estate.
The average annual residential property tax bill in the United States was $4,271 in 2024 according to NAHB Economics. Sixteen counties (located in California, New York, New Jersey, and Virginia) had median property taxes more than $10,000.
At the other end of the spectrum, 11 counties (located in Alabama, Alaska, Louisiana, and South Dakota) had median property taxes less than $250.
The total average state tax burden across the 50 states in 2025 ranges from 13.30% in Hawaii to 4.92% in Alaska, according to Wallet Hub.
Can The Property Tax Burden Be Lightened?
Moving overseas to an exciting, expat-friendly country where real estate prices and property tax rates are lower than the United States is one solution to the growing disadvantage of the property tax burden.
If you move to a country where real estate prices are a fraction of U.S. prices for comparable homes and where property tax rates are lower, the natural outcome is significantly lower property taxes.
Another strategy is to move to a country with a strong local revenue source so that the cost of basic services for its residents is partially offset.
Many countries offer other types of tax benefits. Having more after-tax income and lower living costs means that you have more money to maximize your enjoyment of your new life abroad.
Panama
With beautiful landscapes, strong connectivity, low costs of living, and a U.S. dollar environment, Panama is a longtime favorite relocation destination.
It also has low taxes—both from property and in general. One of the reasons for this is because the national government receives significant revenue from the transit fees for shipping through the Panama Canal.
Property taxes in Panama are based on the cadastral value of the land plus buildings and improvements. The cadastral value is registered with the government and may differ from market values.
Property taxes in Panama are progressive with rates increasing at valuation thresholds. The first $120,000 of a primary residence value is exempt from taxation. Values from $120,001 to $700,000 are taxed at 0.5%. Above $700,001, the rate increases to 0.7%.
Newly constructed properties receive additional exemptions. As a primary residence, the first $120,000 is exempt from taxation, and the value range between $120,001 and $300,000 is also exempt for three years from the date of occupation.
An older home costing $300,000 would incur an annual tax obligation of $900 and a new home at the same price would be tax free for three years before triggering the annual $900 tax. On average, a $300,000 home in the United States would be taxed at $2,700 per year.
In addition to the low property taxes, income earned outside of Panama is not subject to Panamanian taxes. Combine the low tax regime, a cost of living that is about 50% lower than in the United States with the tropical climate, and you have an affordable piece of paradise.
Portugal
Portugal is another top retirement destination. Expats have been relocating to this small country in southwest Europe in increasing numbers over the past decade.
Real estate is about 25% less expensive in Portugal compared to similarly sized properties in the United States. Municipal Property Taxes (IMI) in Portugal are based on the taxable value of the property, as determined by tax authorities.
Property tax rates in urban areas range between 0.3% and 0.45%, or a third to half of the average U.S. rates. Combined with the lower real estate prices in Portugal, property taxes are about 65% to 75% less in Portugal than the United States.
Spain
With its Mediterranean climate, beautiful beaches, sophisticated culture, and well-appointed lifestyle, Spain is another popular retirement destination. Annual property taxes typically range between €20 and €1,500 per year. The rates and assessments are set locally, so they can vary regionally and be subject to revisions.
Generally, the municipality rates range from 0.4% to 1.1% and are multiplied by a cadastral value set by the local municipality. Popular locations on the Costa del Sol like Mijas and Fuengirola have tax rates of 0.5%. The cadastral rates are usually between 30% and 50% of the market values because they are rarely updated to market values.
If you own a Spanish property as a non-resident, it will be subject to an additional tax that is tied to a deemed income of its rental value. For a €300,000 property, the non-resident property tax would amount to an additional €650 levy.
Belize
If reducing your property taxes is a primary reason for moving overseas, Belize is the perfect destination. Property taxes in this small, English-speaking Caribbean nation are between $50 and $200 per year.
The reason for the incredibly low levies is that property taxes are set at 1% of the undeveloped land value, irrespective of whether the land has been developed or a house has been erected.
Additional benefits of owning property in Belize are that there are no capital gains or estate taxes on property sales. As a resident, foreign-sourced income is free from taxation.
Until next time,
