Wisconsin Property Taxes

[Johna M Winters]

Hello,

I've been looking at Milwaukee to invest in rental properties. I'm kind of put off by the property taxes though. It looks like it goes up according to market value and doesn't have a cap. Some properties I've looked at have $5,000/yr in property tax. Has this turned out to be an issue, or do investors just factor increasing property taxes into rent over time?

Thanks!

[Marcus Auerbach]

Milwaukee property taxes are high, but also not well understood. 

1.) Property Taxes are the only form of local taxation that is allowed in Wisconsin. Most metro areas in the US are able to fund their budget through sales tax or local income tax. Sales tax is a lot less offensive to people than property tax, because it is collected in tiny amounts.

2.) The City of Milwaukee has a total tax levy for the year, which then gets divided up between all properties. If all properties would equally double in value, each property owner would pay exactly the same - not double like most people would wrongly assume.

That's the cap you are looking for. Of course if a neighborhood moves from low value to medium value their "fair share" goes up and people complain about that, but that also means that other properties pay less (nobody mentions that). 

We invest in above-median price points and have seen property taxes go down over the last years, because of this redistribution.