6 ms·
pay 2% of its value in taxes/year? In a mere 50 years <pedantic> More like 36 years. </pedantic> There's a quick trick to a good approximation for this. The r
by CWuestefeld 8y ago
pay 2% of its value in taxes/year? In a mere 50 years
<pedantic>
More like 36 years.
</pedantic>
There's a quick trick to a good approximation for this. The rule of 72 says that you can estimate the time it takes a compounded investment to double by dividing the interest rate by 72. 2% for 36 years will double the investment (or, since your actual statement was going the other way, strip it to nothing)
See, for example, https://www.investopedia.com/ask/answers/what-is-the-rule-72/ https://www.investopedia.com/ask/answers/what-is-the-rule-72...
- wolco 8y agoAssessed value which is usually lower than market value.
- ves 8y agoThere’s no compounding here, since the property tax is a fee and not a reduction in the value of the asset, so I don’t think that’s applicable.
- xxpor 8y agoIt's not a direct reduction in value, but I would think if the fee went away the value would still increase.
- pesfandiar 8y agoThat's for compound interest. In this case, assuming the value of house stays the same, it does indeed take 50 payments of 2% of the total value until you've paid the full price back to the government.