• Property taxes are an important consideration when buying a house.
• Taxes tend to be highest in Northeast and Midwest cities.
• These are the 10 cities that paid the highest taxes relative to home value in 2023.

When it comes to purchasing a house, homebuyers need to consider the down payment, mortgage, insurance — and who could forget — property taxes.

Although sometimes dubbed a "hidden cost" of buying a home, property taxes can hit your wallet hard. Local governments levy property taxes to fund public services such as schools, infrastructure, fire and police protection, and other local services. And depending on where you live, they could make a serious difference in home affordability.

SmartAsset ranked 342 of the largest cities in the US to find where homeowners are paying the highest property taxes relative to home value, using data from the US Census Bureau's 2023 American Community Survey.

Cities in the Northeast and Midwest tended to have the highest effective property tax rates, and several cities from Illinois and New York made the list. According to SmartAsset, Illinois has the second-highest property taxes in the US, with a statewide average effective tax rate of 2.1%. That's more than twice the national average rate of 0.9%.

Many cities in upstate New York also made the top 10 list. Since property taxes are set by the local municipality, there's high variability within the state. While New York City is infamous for its sky-high cost of living, property taxes in the city are actually in line with the national average of 0.9%. SmartAsset found that Monroe County, located in upstate New York, has one of the highest effective property tax rates in the state, at 2.9%.

One Texas city also made the list. While Texas is known for having no income tax, that doesn't mean taxes are lower across the board, as Texas cities tend to rely heavily on property taxes as a revenue source.

Property taxes have been increasing across the board nationally. According to Redfin, monthly property tax bills have increased in 48 out of the 50 most populated metro areas since 2019.

As home prices go up, so do property taxes, said real estate data provider CoreLogic. That's because local tax assessors periodically reevaluate property values, rendering tax bills higher if home values have gone up. For those who live in states or tax jurisdictions with annual property reassessments, property taxes have likely soared alongside appreciating home values in recent years.

Between 2019 and 2023, US median property taxes increased 23.6%, from $2,287 to $2,826. That's a 5.9% average annual increase.

Listed below in descending order are the 10 cities with the highest property taxes, as well as the median real-estate taxes paid and the median home value for each, according to the SmartAsset analysis.

Peoria, IL

Percent of home value paid for annual real estate taxes: 2.6%

Median real estate taxes paid: $4,455

Median home value: $168,900

Rockford, IL

Percent of home value paid for annual real estate taxes: 2.5%

Median real estate taxes paid: $3,452

Median home value: $140,300

Waterbury, CT

Percent of home value paid for annual real estate taxes: 2.4%

Median real estate taxes paid: $5,607

Median home value: $234,400

Syracuse, NY

Percent of home value paid for annual real estate taxes: 2.4%

Median real estate taxes paid: $3,254

Median home value: $137,800

Albany, NY

Percent of home value paid for annual real estate taxes: 2.3%

Median real estate taxes paid: $5,561

Median home value: $237,700

Paterson, NJ

Percent of home value paid for annual real estate taxes: 2.3%

Median real estate taxes paid: $10,000

Median home value: $432,000

Elgin, IL

Percent of home value paid for annual real estate taxes: 2.2%

Median real estate taxes paid: $6,394

Median home value: $287,300

Aurora, IL

Percent of home value paid for annual real estate taxes: 2.2%

Median real estate taxes paid: $6,310

Median home value: $285,300

Rochester, NY

Percent of home value paid for annual real estate taxes: 2.2%

Median real estate taxes paid: $3,001

Median home value: $136,900

Pearland, TX

Percent of home value paid for annual real estate taxes: 2.2%

Median real estate taxes paid: $7,847

Median home value: $364,000

• Spain's planned 100% tax on non-EU homebuyers is unlikely to solve its housing crisis.
• Spain's prime minister said too many foreigners were buying properties as investments, not homes.
• But hiking taxes could discourage buyers and hurt Spain's economy, economists told BI.

Spain's plan to impose a 100% tax on homebuyers from non-EU countries like the US and UK may fail to achieve its intended results, and could easily backfire on the country's economy, experts told Business Insider.

Prime Minister Pedro Sánchez announced the measure on Monday, as part of his government's efforts to tackle the country's growing housing problem.

If approved by lawmakers, the 100% tax would effectively double the cost of properties for non-EU homebuyers.

Sánchez said that too many foreign buyers saw Spanish property as an investment, and were buying homes for financial gains rather than to live in.

But experts said the impact may not be what the government hoped.

Jesús Alonso, a real-estate agent with Engel & Völkers, said the tax was unlikely to resolve Spain's housing crisis.

Instead, he said it could trigger a decline in demand for luxury properties, which could reduce new projects, especially in regions reliant on foreign buyers.

He also said the move could hurt regions reliant on foreign spending, as well as the retail and hospitality sectors, especially in coastal regions.

"A drop in demand could discourage new developments and stagnate this market," he added.

According to Spain's Association of Registrars, foreigners bought 24,700 properties in Spain in the third quarter of 2024, accounting for 15% of all real estate purchases.

This included EU and non-EU buyers.

The number was higher in the first half of 2024, when foreigners bought and sold 69,412 properties, or 20.4% of total sales and purchases, according to data from Spain's General Council of Notaries.

Antonio Fatas, a professor of economics at INSEAD, a French business school, said foreign purchases are not large enough to determine market prices.

He described the 100% tax as an "easy" fix to a "complex" problem, one that ignores the underlying cause of Spain's housing crisis, which is about supply and demand.

According to research by Caixa Bank, the supply of new housing in Spain is being weighed down by factors including a lack of land earmarked for development and a shortage of skilled labor.

"In the absence of a significant increase in the housing supply in the coming years, the gap between supply and demand will steadily widen," it said.

Caixa Bank said in September that it expected Spanish house prices to rise by 5% in 2024, and 2.8% in 2025.

José Carlos Díez Gangas, an associate partner at the venture capital firm LUAfund, said the government's strategy is to try to curb demand growth.

However, echoing Fatas' point, he said: "There is a shortage of supply, and the greatest effect will be on prices, which will surely continue to rise until more houses come on the market."

At the same time, Spain has seen many ghost towns spring up, due in part to the 2008 financial crisis, a lack of public services, and migration from rural areas to cities.

Some estimates point to upward of 3,000 abandoned villages, even as other areas struggle to find enough housing.

Still, experts say the latest government idea could backfire on the economy as a whole.

"Does it make sense to make it difficult for a foreigner to buy a home in Spain?" said Fatas, adding: "Clearly, this represents a flow of capital into Spain that can have positive effects on the economy."

He said that stopping these flows would "negatively affect the construction, tourism sector, and anyone who could benefit from such a transaction."