4 ms·

In the States we have property taxes, and it doesn't lead to utopia. Instead, when times are tough it drives small business out-of-business and people out of th

In the States we have property taxes, and it doesn't lead to utopia. Instead, when times are tough it drives small business out-of-business and people out of their homes, and only further enriches the wealthy who snatch up the foreclosures on the cheap.

ThomPete 11y ago
The cities where property taxes matter in the US land is still much more valuable than how much it's getting taxed.
tehwalrus 11y ago
Property tax != land value tax. Properties in foreclosure may well have very low land value.
- mark212 11y ago
  no, in the US at any rate property taxes are scaled exactly by land value. Usual scheme is 1% or so of assessed value, which is typically recalculated yearly. Some states have "homestead" exemptions where the first, say, $150,000 of value on a primary residence is exempt from tax. There are also (at least in California) special assessments for a fire or water district that are put on top of the yearly property tax, usually because of state laws that limit the rate at which assessed value can be increased or super-majority provisions for altering property tax rates, and so on.
  - tehwalrus 11y ago
    Land value being the value of the land less the rebuild cost of any structures? That is the definition I was using. House prices are the wrong metric.
mark212 11y ago
property taxes are virtually never the cause of foreclosure because every state law I've looked at (about 10) have long lead times before the government can sell the property at a tax sale to collect. What happened in the last crash (2006 peak to 2009 trough) was a sharp decline in property values and reassessment at those lower values. So many / most homeowners did see their tax bills fall. (Exception would be in states like California which have Prop 13-like freezes on the ability of the state to increase the assessed value from year to year.) The foreclosure problem was cause by values dropping and hence Loan-to-Value ratios going above 80%, which is about the highest it can go for a refinance loan. Couple that with the pick-a-payment / interest only loan terms and lots of folks were locked into loans that they couldn't get out of, only to find that exactly when unemployment hit their payment went way up.

ThomPete 11y ago

The cities where property taxes matter in the US land is still much more valuable than how much it's getting taxed.

tehwalrus 11y ago

Property tax != land value tax. Properties in foreclosure may well have very low land value.

mark212 11y ago
no, in the US at any rate property taxes are scaled exactly by land value. Usual scheme is 1% or so of assessed value, which is typically recalculated yearly. Some states have "homestead" exemptions where the first, say, $150,000 of value on a primary residence is exempt from tax. There are also (at least in California) special assessments for a fire or water district that are put on top of the yearly property tax, usually because of state laws that limit the rate at which assessed value can be increased or super-majority provisions for altering property tax rates, and so on.
- tehwalrus 11y ago
  Land value being the value of the land less the rebuild cost of any structures? That is the definition I was using. House prices are the wrong metric.

mark212 11y ago

property taxes are virtually never the cause of foreclosure because every state law I've looked at (about 10) have long lead times before the government can sell the property at a tax sale to collect. What happened in the last crash (2006 peak to 2009 trough) was a sharp decline in property values and reassessment at those lower values. So many / most homeowners did see their tax bills fall. (Exception would be in states like California which have Prop 13-like freezes on the ability of the state to increase the assessed value from year to year.) The foreclosure problem was cause by values dropping and hence Loan-to-Value ratios going above 80%, which is about the highest it can go for a refinance loan. Couple that with the pick-a-payment / interest only loan terms and lots of folks were locked into loans that they couldn't get out of, only to find that exactly when unemployment hit their payment went way up.