5 ms·

Property taxes should basically kill the dream of "and don't pay a fucking thing to anyone" for anyone that lives in the US. Especially city dwellers. I was su

Property taxes should basically kill the dream of "and don't pay a fucking thing to anyone" for anyone that lives in the US. Especially city dwellers. I was surprised to see tax for properties I could technically afford cost more per year than I had been paying in rent.

ap3 11y ago
Yes. Because renters don't pay property taxes /s
- AjithAntony 11y ago
  Of course they do. It's part of the rent. edit: oh that was saarcasm
- turar 11y ago
  In fact renters would pay more property taxes to cover the lack of landlord's homestead tax exemption.
- paulddraper 11y ago
  Though they do usually pay less since they usually live in less property.
  - ant6n 11y ago
    This. I rent a small apartment near downtown. If I bought property, it would most likely be in the same area, but not a small apartment.
gozur88 11y ago
Yep. You don't own property in the US. You either rent from someone else, or you rent from the government.
sbochins 11y ago
Homeowners also get a lot of deductions too. In general you end up paying more owning vs renting, but you want to make a good investment when purchasing a home. So, in the end you typically end up ahead when owning, unless you didn't make a wise investment.
javanix 11y ago
Well, in some areas, but it really depends on the market - the property taxes on my home in a University city of 200,000 are 1/3 of what I was paying in rent - with the interest on my mortgage the amount of "lost" money comes out to roughly the same amount for now. As long as property taxes do not outstrip my interest rate, that ratio should stay in my favor going forward.
- kazinator 11y ago
  My yearly property tax is barely a bit more than half of what people pay for one month's rent for a similar place. Tax being 1/3rd of rent indicates rather low rents or rather high tax.
  - javanix 11y ago
    Absurdly high taxes (my parents pay half my tax on a non-rural property twice as big about 120 miles north of me), but still, owning a home is hardly a fiscally ruinous proposition around here. My property taxes this year were ~$4200 on an average sized lot and home, or roughly $350/month. My last apartment cost $1050/month for a small two bedroom condo rental.
    - jandrese 11y ago
      This is similar to my situation. Renting a crappy 2BR apartment was $1700/month thanks to the tight rental market. Mortgage and taxes on a townhouse in a nicer part of town? $1200/month. And theoretically after 30 years I would have an asset I could sell, unlike the renters. Renting just didn't make sense unless you're highly itinerant and don't stick around any one area for more than a year or two.
      - schrodinger 11y ago
        What if you had rented and invested that 500/month (and the maintenance costs you had to pay along the way) in index funds?
kazinator 11y ago
Running water, sewage and garbage collection/recycling are nice, though. The birds have to fly somewhere else just to get a drink of dirty water.
- rsync 11y ago
  (speaking of the US here) Property taxes have nothing to do with water/sewage/garbage/electricity. You pay separate bills to separate providers for all of those things in a simple, fee for service arrangement. Conversely, if you live on a property that does not, or cannot receive water/sewage/trash/etc. from a provider, you still pay full property taxes.
hkmurakami 11y ago
fwiw you do get to deduct property taxes from your taxable income.
- phamilton 11y ago
  Not under AMT.
  - mercutio2 11y ago
    [edit] I misread your post, my bad! I originally responded to HELOC vs. mortgage interest, sorry. Yes, the AMT interaction with municipal taxes is a sizable pain point.
    - phamilton 11y ago
      "fwiw you do get to deduct property taxes from your taxable income." property taxes != mortgage interest EDIT: OPs ninja edit/delete makes this comment seem quite confusing. It was in response to OP getting confused and talking about mortgage interest.
cmdrfred 11y ago
I'm confused about the last statement. Are you implying that your landlord is renting to you and it is costing him money?
scythe 11y ago
Property taxes are what keeps housing affordable. Look at California for an example of what happens when they go away. To be precise, property tax increases the liability of holding a house as an investment relative to other investments, so higher property taxes make capital that was invested in real estate move to other sectors. That means that fewer properties are owned by speculators, so more are owner-occupied. This is why California has one of the lowest homeownership rates in the country (alongside New York and Nevada, which are much more urbanized than Cali): http://www.census.gov/housing/hvs/data/rates.html http://www.census.gov/housing/hvs/data/rates.html (Homeowners don't like to believe this, because the economic reality is basically that investors can buy whatever they want and the middle class picks up the scraps; that's sort of undignified, but true, so people should get used to it)
- matwood 11y ago
  Which is why many places give property tax discounts to owner occupied homes.

ap3 11y ago

Yes. Because renters don't pay property taxes /s

AjithAntony 11y ago
Of course they do. It's part of the rent. edit: oh that was saarcasm
turar 11y ago
In fact renters would pay more property taxes to cover the lack of landlord's homestead tax exemption.
paulddraper 11y ago
Though they do usually pay less since they usually live in less property.
- ant6n 11y ago
  This. I rent a small apartment near downtown. If I bought property, it would most likely be in the same area, but not a small apartment.

gozur88 11y ago

Yep. You don't own property in the US. You either rent from someone else, or you rent from the government.

sbochins 11y ago

Homeowners also get a lot of deductions too. In general you end up paying more owning vs renting, but you want to make a good investment when purchasing a home. So, in the end you typically end up ahead when owning, unless you didn't make a wise investment.

javanix 11y ago

Well, in some areas, but it really depends on the market - the property taxes on my home in a University city of 200,000 are 1/3 of what I was paying in rent - with the interest on my mortgage the amount of "lost" money comes out to roughly the same amount for now. As long as property taxes do not outstrip my interest rate, that ratio should stay in my favor going forward.

kazinator 11y ago
My yearly property tax is barely a bit more than half of what people pay for one month's rent for a similar place. Tax being 1/3rd of rent indicates rather low rents or rather high tax.
- javanix 11y ago
  Absurdly high taxes (my parents pay half my tax on a non-rural property twice as big about 120 miles north of me), but still, owning a home is hardly a fiscally ruinous proposition around here. My property taxes this year were ~$4200 on an average sized lot and home, or roughly $350/month. My last apartment cost $1050/month for a small two bedroom condo rental.
  - jandrese 11y ago
    This is similar to my situation. Renting a crappy 2BR apartment was $1700/month thanks to the tight rental market. Mortgage and taxes on a townhouse in a nicer part of town? $1200/month. And theoretically after 30 years I would have an asset I could sell, unlike the renters. Renting just didn't make sense unless you're highly itinerant and don't stick around any one area for more than a year or two.
    - schrodinger 11y ago
      What if you had rented and invested that 500/month (and the maintenance costs you had to pay along the way) in index funds?

kazinator 11y ago

Running water, sewage and garbage collection/recycling are nice, though. The birds have to fly somewhere else just to get a drink of dirty water.

rsync 11y ago
(speaking of the US here) Property taxes have nothing to do with water/sewage/garbage/electricity. You pay separate bills to separate providers for all of those things in a simple, fee for service arrangement. Conversely, if you live on a property that does not, or cannot receive water/sewage/trash/etc. from a provider, you still pay full property taxes.

hkmurakami 11y ago

fwiw you do get to deduct property taxes from your taxable income.

phamilton 11y ago
Not under AMT.
- mercutio2 11y ago
  [edit] I misread your post, my bad! I originally responded to HELOC vs. mortgage interest, sorry. Yes, the AMT interaction with municipal taxes is a sizable pain point.
  - phamilton 11y ago
    "fwiw you do get to deduct property taxes from your taxable income." property taxes != mortgage interest EDIT: OPs ninja edit/delete makes this comment seem quite confusing. It was in response to OP getting confused and talking about mortgage interest.

cmdrfred 11y ago

I'm confused about the last statement. Are you implying that your landlord is renting to you and it is costing him money?

scythe 11y ago

Property taxes are what keeps housing affordable. Look at California for an example of what happens when they go away. To be precise, property tax increases the liability of holding a house as an investment relative to other investments, so higher property taxes make capital that was invested in real estate move to other sectors. That means that fewer properties are owned by speculators, so more are owner-occupied. This is why California has one of the lowest homeownership rates in the country (alongside New York and Nevada, which are much more urbanized than Cali): http://www.census.gov/housing/hvs/data/rates.html http://www.census.gov/housing/hvs/data/rates.html (Homeowners don't like to believe this, because the economic reality is basically that investors can buy whatever they want and the middle class picks up the scraps; that's sort of undignified, but true, so people should get used to it)

matwood 11y ago
Which is why many places give property tax discounts to owner occupied homes.