Alaska has an interesting approach to property taxes. This is the only state in the United States where a large part of the land mass isn't subject to property tax. However, some areas have a property tax that must be paid accordingly.
Since Alaska property taxes primarily depend on each county and their requirements, it can be tricky to know how much you must pay (or even if you have to pay in the first place).
We've compiled this guide to help you understand Alaska's local taxes at a general level. If you want more specific information about tax requirements for your real estate property, you may want to check with an advisor.
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What Types of Property Tax Bills Can You Expect in Alaska?
Alaska taxes are administered locally, which means that your bill will depend on your local government. You can expect your taxes to be calculated based on property value and government budget requirements.
How Many Times Do You Have to Pay Property Taxes in Alaska?
You'll have to pay for your property taxes once a year. However, keep in mind that you may get different deadlines depending on the area you bought your property in.
Those in Anchorage, for example, have their property taxes due on June 30. They have the option to either make two separate payments (one by June 30 and the second one by August 31) or a single one by June 30. Here, you'll have to either make your payment in person or mail it.
If you were to invest in Homer, though, you'd have to pay your first half of the taxes by September 15 and the second one by November 15.
The best thing you can do is to check your local government website or any other resources and verify the date your taxes are due.
What Are the Consequences of Late Payments?
There are many consequences you can expect if you were to pay late or not pay your taxes at all. However, the exact outcomes will depend on the area.
Most of the time, your overdue taxes could become a lien on the property, meaning the government can use it as collateral to pay your debt. In these cases, the government could place your home in a tax sale process.
Your municipality can start a foreclosure process once the deadline passes and your payment becomes delinquent. If the public sale doesn't happen, your property will be transferred to the government.
Alaska gives people one year to recover their homes after a foreclosure. Those who want to "redeem" their property must pay:
- Overdue taxes
- Newly accrued taxes
The government may also give you up to 10 years to repurchase your property after a foreclosure, as long as it wasn't sold already to someone else.
How to Pay Your Property Tax Bill in Alaska
The process depends on each municipality. Most of the time, you can pay in person or mail the payment to the municipal tax office.
Other municipalities (like Fairbanks, for example), allow you to make online or phone payments. You'll have to check to see if your area accepts different methods to pay your bills.
How Much Is Property Tax in Alaska?
The median property tax rate is currently 1.17%, according to SmartAsset. It's slightly lower compared to other states, even though the number is higher than the national average.
Still, Alaska has a reasonably taxpayer-friendly environment since there are no income taxes to pay, according to the Tax Foundation. Alaska also doesn't have a state sales tax.
Other than that, it's complicated to tell how much you'll pay in property tax since every county has its own way of determining and collecting taxes.
The best thing you can do is evaluate relative property taxes across several areas and see how your real estate investment's taxes compare based on that information. You can also check median property taxes online and use them as a reference.
How Is Property Tax Calculated in Alaska?
Alaska property tax rates are recalculated every year. This happens after the value of every property is assessed.
Your tax rate will be based on the value of every property and the revenue needed to support government budgets. Rates are calculated as mills, which equal $1 for every $1,000 in assessed value.
Property owners can take the median home value in their area to have a reference of the median property tax rate there.
Can You Lower Your Property Taxes in Alaska?
It's important to remember that the state of Alaska doesn't levy income or sales taxes, meaning you could save some money overall. However, your municipality may have its own rules surrounding taxes, so make sure to check before calculating how much you owe.
Another thing you can consider is exemptions. These may allow you to lower your assessed value, meaning you'd pay less taxes.
Unfortunately, the exemptions you can apply for also depend on your municipality. Some boroughs have plenty, whereas others don't.
Anchorage, for example, has many different exemptions to consider:
- Senior Citizen Exemption
- Residential Exemption
- Disabled Veteran Exemption
- Fire Protection Exemption
- Military Service Widow/Widower Exemption
Check with a local tax advisor to see if your municipality has any exemptions you can apply for.
Even though there's no statewide sales tax in Alaska like in other areas in the U.S., remember that counties can still impose taxes. You could use the average combined state and local property tax rates as references, but the final amount will vary based on your locality.
Make sure you check with a professional to be able to calculate how much you must pay every year, your deadlines, and which methods are available.
If you're looking for more tips on property management accounting, check out our whitepaper on the best tips for simplifying this complex process.