Property taxes vs home appreciation

[Oey12]

I get my tax breakdown every year. The school taxes are sickening. My kids are constantly off, none of their mandatory electronic school devices can be charged at school (my financial burden), and the teachers get paid well above any other “civil” service ISH entities including the cops in my area that have some of the highest salaries in the state. School taxes are over 10.5k and my total taxes are 13k.

Owning a home is overrated but I enjoy the memories with my family. I would be beyond elated if I could break even in 40 or 50 years. Property taxes, I fear will never allow for that though. At the current rate of tax increases I will be 19k in 45 years…

 

[4WD]

I get my tax breakdown every year. The school taxes are sickening. My kids are constantly off, none of their mandatory electronic school devices can be charged at school (my financial burden), and the teachers get paid well above any other “civil” service ISH entities including the cops in my area that have some of the highest salaries in the state. School taxes are over 10.5k and my total taxes are 13k.

Owning a home is overrated but I enjoy the memories with my family. I would be beyond elated if I could break even in 40 or 50 years. Property taxes, I fear will never allow for that though. At the current rate of tax increases I will be 19k in 45 years…

Just wait until they are out of school - and the next kids get way more spent on them for “better schools” - but grades drop anyway - and taxes skyrocket

 

[Fitter30]

Bought a house in 1976 new suburb of St. Louis 30 miles out for $48k 3 bed 2.5 bath 2 car garage 1900 sq ft. Sold it November 23 $359k. Housing price and taxes stayed relatively flat for 40 years under $200k then started to creep up till 4 years ago and took off and so did the taxes $3800 2023.

 

[ATex7239]

The problem with this is that the government is taxing the inflated value of your home, a home that you haven’t sold and profited from. Equity is nothing more than a mirage until the asset is sold, but the government is allowed to tax that mirage.

It’s analogous to last year’s proposal to tax UNREALIZED gains on stock (the mirage). I remember the howls of protest asking how can anyone possibly justify taxing the profit on something you haven’t yet sold, yet a tax strategy like this is mandated on your home.

It’s not like the government will go without; there’s income taxes, sales taxes, capital gains taxes, energy taxes, internet taxes, cell phone taxes, hotel taxes, etc.

Scott

The government authorizes the making of money, the spending of money, and the taking of money and somehow they always seem to do too much of all of it.

 

[ecotourist]

The problem with this is that the government is taxing the inflated value of your home, a home that you haven’t sold and profited from. Equity is nothing more than a mirage until the asset is sold, but the government is allowed to tax that mirage.

It’s analogous to last year’s proposal to tax UNREALIZED gains on stock (the mirage). I remember the howls of protest asking how can anyone possibly justify taxing the profit on something you haven’t yet sold, yet a tax strategy like this is mandated on your home.

It’s not like the government will go without; there’s income taxes, sales taxes, capital gains taxes, energy taxes, internet taxes, cell phone taxes, hotel taxes, etc.

Scott

All the taxpayers are in the same boat. The local government has to get its money from somewhere and the fairest way to do that is to apportion the total costs based on everyone's assessed property value. The assessed value is based on a recent sale, or an experienced person's best guess.

I can't think of a fairer way to do it. You're being taxed based on what they think your property is worth. If you disagree you can always appeal the assessment.

In our case I think the assessed value is quite fair.

 

[SC Maintenance]

All the taxpayers are in the same boat. The local government has to get its money from somewhere and the fairest way to do that is to apportion the total costs based on everyone's assessed property value. The assessed value is based on a recent sale, or an experienced person's best guess.

I can't think of a fairer way to do it. You're being taxed based on what they think your property is worth. If you disagree you can always appeal the assessment.

In our case I think the assessed value is quite fair.

There is nothing fair about assessing based on property value. Your saying that someone who's house is twice as valuable, should pay twice as much because they use twice the services, but that is generally not the case. I doubt there is a correlation of services vs value. If anything its inversely correlated.

Its done because its a) Easy, and b) those with more valuable properties can afford to pay - ie its progressive.

Not saying I have a particularly better way. I would suggest a flat tax per unit would be the most fair, but of course no one would ever go for that.

 

[KrisZ]

All the taxpayers are in the same boat. The local government has to get its money from somewhere and the fairest way to do that is to apportion the total costs based on everyone's assessed property value. The assessed value is based on a recent sale, or an experienced person's best guess.

I can't think of a fairer way to do it. You're being taxed based on what they think your property is worth. If you disagree you can always appeal the assessment.

In our case I think the assessed value is quite fair.

Tax the business and corporations, leave people alone with only the sales tax. It has been like that before 1913 and the country flourished. Now various governments cannot think of anything else than increasing their revenue. They can never have enough, and manage to spend everything they collect and often get in debt. The corruption and waste is quite obvious. And the more they collect, the more corrupt they get.

 

[JTK]

I live in a rural, mixed zoning area of the PR of NY, about 24 miles outside of Buffalo. Per my town and county, my full market value is ~$320K. My assessed value is $76800 for which I am taxed on (24% of full market). Total taxes for 2024 for the home/property was $5830. I live on one acre.

 

[Vil_Riker]

I sold my house and use the interest income on the proceeds to pay the rent for my current abode. I did a quick comparison of own versus rent. With the rented apartment my living area is half as much (so property taxes paid are probably the same as the house because landlords don't normally get deductions and the rates are higher) and I don't have a garage. Owning my last house netted me a negative number when accounting the appreciated sale price less all the maintenance costs/taxes/selling expenses. I'm in rural America so our home prices haven't been like Los Angeles.

So financially rent is better but the quality of life is worse.

 

[Ride_Red]

Maybe or maybe not. If you rent and pay no property taxes you still get police/fire service, social services, public schools for the renter's kidlets, public parks, things like libraries etc. OTOH the property owners pay for that but get the same services in quality and quantity.

So sombody is getting a free lunch and some other schmo is picking up the tab. BTW, I've been both a renter and a schmo.

The property owners of the rented buildings have to pay property tax. Therefore, renters pay property tax indirectly through their rent. You can bet if the property tax goes up, the owner will raise the rent.

 

[slo town]

All the taxpayers are in the same boat. The local government has to get its money from somewhere and the fairest way to do that is to apportion the total costs based on everyone's assessed property value. The assessed value is based on a recent sale, or an experienced person's best guess.

I can't think of a fairer way to do it. You're being taxed based on what they think your property is worth. If you disagree you can always appeal the assessment.

In our case I think the assessed value is quite fair.

I assume you agree that taxing unrealized gains for stocks should be taxed?

I find it troubling that a homeowner who qualified fair and square for their mortgage based on the home's value at the time of purchase can lose their home even though they're able to pay their mortgage, but can no longer afford paying ever increasing property taxes because of inflationary government policies (which are deliberate).

Scott

 

[doitmyself]

Wow! And, WOW again.

When did this concept of home ownership as a great investment go down the toilet? The great American dream?? I can't remember seeing such a turn of opinion regarding real estate. Or, am I missing something? Is this just internet amplification of a small minority?

 

[ecotourist]

I assume you agree that taxing unrealized gains for stocks should be taxed?

I find it troubling that a homeowner who qualified fair and square for their mortgage based on the home's value at the time of purchase can lose their home even though they're able to pay their mortgage, but can no longer afford paying ever increasing property taxes because of inflationary government policies (which are deliberate).

Scott

I'm not actually in favour of paying high property taxes. I'd rather have all the services I require and pay a lot less.

The big discussion should be around the civic budget. If you think it's wasteful (which it might be) and too high in general you could run for office and put it right. But that would be lot of work and most likely none of us could meaningfully reduce the civic budget anyway. If you don't agree you should run for office and put it right. Let us know how it goes.

When we lived in Winnipeg there were large areas of the city that didn't even pay their own way. Poor people live there. How to tax people who are barely scraping by? The options are (1) don't collect enough taxes and let the city (or that area) go without adequate police, schools, snow clearance, and fire services, (2) don't collect enough taxes and borrow money to pay for the required services until the whole thing collapses, or (3) charge people who live in better off areas a bit more than would be required to service their area.

I think (3) is the only sensible option. And how to do that? The Mil rate X Assessed value is about the only fair option. If you have a grand property you pay more. People with grand properties might disagree and I'm completely open to hearing other ideas.

You could argue that someone who bought their house in 1950 for peanuts should pay property taxes based on the purchase price, but that's not fair for people who bought a similar property more recently. A fair system has to be fair for everyone.

I do agree that inflation hits many seniors/retirees hard. Many communities have a system whereby the increase in property taxes can be held in abeyance and only collected (with interest) when the property is sold or the owner dies. And that would be fair too.

 

[brandon9715]

I bought my house last August for $206,000 and my property taxes are around $1900/yr. Thumb of Michigan.

 

[johnnydc]

My taxes have quadrupled in the 29 years I owned my house. Gotta love government.

 

[ArrestMeRedZ]

The property owners of the rented buildings have to pay property tax. Therefore, renters pay property tax indirectly through their rent. You can bet if the property tax goes up, the owner will raise the rent.

I respectfully disagree with the last sentence. Landlords generally charge the market rate for rentals unless there is rent control. That rate is independent of expenses.
High expenses, be they interest rates, maintenance costs, insurance or taxes will affect the willingness of landlords to buy or build property and may cause a shortage of rentals, thus indirectly causing rents to rise, but I've never seen a direct correlation in the markets I've been a renter ot a landlord.

 

[JHZR2]

They reassessed us this year. Properties have doubled more or less since the last reassessment. It wasn’t that long ago, maybe just before the pandemic.

What we were told was that 30% of the taxes would go down, 30% would go up, 30% would stay the same, roughly. How they get to that I don’t know. I guess based upon improvements, degradations, recent sales, etc.

On a tax base ranging from roughly $8-20k per property, most folks went up or down by $1-2k, at most based upon folks in town.

The reality is that there have been lots of improvements over the last while, many homes getting redone. So it is likely that they were reassessed with additional bathrooms and whatnot.

But with the overall rise in assessments, they lowered the percentage on value.

Something seems wrong for OP. The property value may have gone up a lot, but the tax rate should have also dropped.

 

[JeffKeryk]

Maybe or maybe not. If you rent and pay no property taxes you still get police/fire service, social services, public schools for the renter's kidlets, public parks, things like libraries etc. OTOH the property owners pay for that but get the same services in quality and quantity.

So sombody is getting a free lunch and some other schmo is picking up the tab. BTW, I've been both a renter and a schmo.

You are paying the property taxes indirectly.

 

[JeffKeryk]

Wow! And, WOW again.

When did this concept of home ownership as a great investment go down the toilet? The great American dream?? I can't remember seeing such a turn of opinion regarding real estate. Or, am I missing something? Is this just internet amplification of a small minority?

I flat out love my little home. My cost of living is dirt cheap; you could not rent a 1 bedroom apartment for my recurring costs.
Oh yeah, and you may have heard of the value of Silicon Valley real estate...
Property taxes? Luxury problems.

 

[Passport1]

You are paying the property taxes indirectly.

Perhaps indirectly but a $100/month rent increase only faintly compares to the huge rapid and direct tax increases the OP and others here have demonstrated. The taxes at my beach property last year nearly doubled. I don't get any increase in the value of my property for the involuntary contribution.

The comparison seems like preferring a mosquito bite or a yellow jacket sting.