Property taxes vs home appreciation

[CarLuver]

My mother called me to complain about a rise in her property taxes. its rose $2k to $9k . they value her house at $850k. She has live there for 45 years .I have been telling her to sell it and rent an apt for a $2k and take the rest of the money and run.

She is always of the thought that houses appreciate . i always tell her "yeah it appreciates, but till you sell her the only one happy is the property tax accessor". in the meantime one just pays higher taxes. many times these days its less expensive to rent the same place than to buy it .

So how much is your property tax and the value ?

 

[gfh77665]

2K to 9K over how many years? Most entities can't raise over 10% per year.

For an elderly person, yes take the money and run if she cannot handle the tax load.

 

[CarLuver]

2K to 9K over how many years? Most entities can't raise over 10% per year.

For an elderly person, yes take the money and run if she cannot handle the tax load.

sorry it went up $2k this year to $9k .

 

[slo town]

The base property tax in California is 1% plus whatever your local town or city charges, which is usually an additional 0.2% to 0.4% more.

California always gets slammed, but one thing Cali did right was Prop 13. It limits property taxes increases to 2% a year.

California has relatively low property taxes relative to home values but it makes up for it with high income taxes, up to 13%. California does not tax Social Security income.

Scott

 

[1444buicking]

Inflationary policies make it easy for everyone to gouge. The people lose track of how much things cost. The city can reassess values and enjoy a tax windfall.

 

[Lubener]

Unfortunately, since home values have sky rocketed over the past half dozen years, this situation is widespread everywhere. We do not know the specifics but there could be a recently passed school levy involved too. Hopefully she is taking advantage of a homestead exemption if she qualifies to lower her taxable house value. Her alternative is to get an actual appraisal and appeal the auditor's update. I have found that actual updates from the auditor is usually lower than what she could get on the market should she sell.

 

[ATex7239]

I’ve been telling my mom to sell her old house for years. She could have a nice bank account and enjoy her life a lot more without it. She cannot maintain it very well anymore and I’m too far away to help.

It seems to me some folks get attached to houses and it means security for them. And I get that. However you cannot eat a house or pay your taxes with a piece of your house. Liquid money is a better security blanket IMO.

 

[BISCUT]

The base property tax in California is 1% plus whatever your local town or city charges, which is usually an additional 0.2% to 0.4% more.

California always gets slammed, but one thing Cali did right was Prop 13. It limits property taxes increases to 2% a year.

California has relatively low property taxes relative to home values but it makes up for it with high income taxes, up to 13%. California does not tax Social Security income.

Scott

Similar here in NY. Hasn't slowed my$20k/year tax burden.

 

[John105]

Well just this year our county taxes went up 23% (taxes did not go up 2020 to 2023 even with a reassessment that essentially doubled values). To give you an idea I live in a suburb of the Super Bowl champs. Here, we can get a massive house I’m talking new 5500 sq ft and 3 car garage at a nice price.

In Lexington MA, the same money gets a person 2900 sq ft, built in the 90’s.

Taxes? $39k where I live, $19k in Lexington MA, same value. This stinks but really in some way we cannot “choose” where we live it happens. I tried for a job in Framingham MA 1998-1999 and had I gotten it life would have unfolded differently.

Here’s the kicker. The Lexington MA schools are way way better.

The only retort I have to the above is we have excellent ice hockey teams starting from mini mites through major midget. Everything is true as far as I know

 

[cptbarkey]

In Texas they raised the homeowners exemption last year and I was looking forward to a small cut. In reaction to that, most cities, counties and municipalities raised their taxes above the cut. My taxes ended up being $1000 more even after I hired a professional protest company. Now the house/senate did the same exemption tax cut again this year, and strongly worded that there shouldn't be any raises by cities and municipalities. I'm expecting yet another raise in my bill. Dont move to Texas, its not all that its cracked up to be.

 

[LazyDog]

Property taxes is what makes people moved. I got here really bad last year in Crook's County but at some point it is nice to sale the house and just moved.

 

[CarbonToast]

I’ve been telling my mom to sell her old house for years. She could have a nice bank account and enjoy her life a lot more without it. She cannot maintain it very well anymore and I’m too far away to help.

It seems to me some folks get attached to houses and it means security for them. And I get that. However you cannot eat a house or pay your taxes with a piece of your house. Liquid money is a better security blanket IMO.

Exactly this. There is this assumption that somehow renting is throwing money away. Yet, everyone ignores the easy $1k / month it takes just to own a house. Taxes, insurance, maintenance is all sunk costs.

 

[johnmyster]

The city can reassess values and enjoy a tax windfall.

Our assessments went way up. Our millage rages went down, almost enough to offset it. Our local officials understand their sponsors (citizens) vote, and aren't money trees.

 

[SC Maintenance]

South Carolina is low, and capped at 3% yearly increase if its your primary residence. But they get you in other ways. There is no free lunch anywhere, its been discussed here many times.

However I agree - a house as a asset is a lousy bet. Maintenance and taxes kill you over the long term. Better off putting your cash in a T-bill or equity and do nothing but collect money. However you do have to live somewhere, so it still beats renting for most families. For a single person, yes a nice apartment might make more sense, especially for maintenance or lack thereof.

 

[SevenBizzos]

$9k on $850k. It's barely over 1%. That being said, if she's old enough she should be eligible for a reduction and/or "freeze" of the taxes. Up $2k in one year sounds like a lot, but isn't. My home is less than a 1/3 of that value and my taxes went up $900 in one year. Yes, this is a state and local issue but I'm pointing out it happens. (For comparison my taxes are about 3.5% of market value).

 

[supton]

Our assessment went up but the rate went down. Overall the bill went up but not by much.

The town tries to keep assessments up to date, and supposed to be actual market value, so it adjusts yearly or every couple, something like that. I think some towns have exemption for elderly, where it's capped; no idea if there is a cap on max increase per year.

 

[ecotourist]

I'm not so sure I agree with those who recommend selling. In Canada house prices have literally taken off. If you were out of the market for any length of time you probably can't afford to get back in. In this area a crappy house might be $1,000,000 (has about doubled in the last 7 years). A nicer house would be at least $1,400,000. Something really nice, with a view, might be $4,000,000 or even more.

Taxes on our $1,400,000 2400 sq foot home, in a nice area, without a view would be in the range of $4,000/year.

Rental property is practically non existent and rents are very high, in the range of $2500 - $3,000 for a small home or apartment. And that's probably not high enough to justify buying or building property to rent.

Owning your own home at least gives you some degree of cost control and an asset that can be sold eventually (or you could mortgage or take out a reverse mortgage on it) if as a retiree you ever run out of money.

We plan to keep our house, pay someone to provide maintenance if/when we can't do it ourselves anymore, and live here as long as possible.

 

[Ride_Red]

Property taxes seem to only go up. Even when the housing market goes down, taxes hold firm.

Elderly folks may want to consult a financial advisor about asset protection before selling and cashing out. Liquid cash and other assets are vulnerable to medical bills, Medicare spend-down and long term care expenses. I believe you are allowed to keep your home, which can be a considerable asset. Something to think about.

 

[Wrenchturner44]

Property taxes seem to only go up. Even when the housing market goes down, taxes hold firm.

Elderly folks may want to consult a financial advisor about asset protection before selling and cashing out. Liquid cash and other assets are vulnerable to medical bills, Medicare spend-down and long term care expenses. I believe you are allowed to keep your home, which can be a considerable asset. Something to think about.

This is probably the most sound advice.....consult a professional who can help complete an analysis before making decision.

That being said, houses might appreciate, but they also consume cash.....insurance, upkeep, taxes, etc. From a pure return on investment, my house is my worse asset.

 

[SC Maintenance]

This is probably the most sound advice.....consult a professional who can help complete an analysis before making decision.

That being said, houses might appreciate, but they also consume cash.....insurance, upkeep, taxes, etc. From a pure return on investment, my house is my worse asset.

I agree with @Ride_Red in checking with an advisor or tax attorney - but this is it- the insurance, maintenance, and taxes never get factored into the "appreciation". Its ridiculous. The realty industry screams about how much the return is over some period of time, but never factors in any of the costs. Of course I am talking about realty as an investment. A home I don't really consider an investment - its a place to stay dry.