The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: DA on September 29, 2016, 08:57:49 AM
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I live in one of those very high property tax states. My mortgage is only about $750 a month. My property taxes are about $590 a month. High property taxes certainly make being a Mustachian harder. First, they don't go away, unlike your mortgage. In fact, they're likely to go up over time. Second, if you want to invest in rental real estate, they destroy your profit margins. Yes, to some extent rents are higher to account for high property taxes, but it doesn't cover the spread between this state and similar states with lower taxes. A Mustachian--at least a retired one--would much rather have high state income taxes than high property taxes.
What's stopping me from moving? Family mostly. I have a young child, and being close to family is helpful for my spouse and I, and is beneficial for the kiddo as well.
Anyone else lamenting their sky high property tax bills?
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That sucks. Are you considering a move to a low-tax area post-FIRE? I've lived in the South my whole life, so there's nothing to lament for me, as far as taxes go.
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
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Income Property mortgage $1500, taxes $1100 per month
Primary Property mortgage $2800, taxes $ 1200 per month
Combined taxes over $26K
How do you deal with this?
Its so out of control where we live.
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Yup. Some people call this place Taxachusetts. I can't complain too much given that we have some of the best public schools systems in the country and plenty of high income opportunities (jobs & businesses). We will also most likely stay long term for family reasons and the schools.
Will we work a few extra years because of it? Yes. Are we (wife and I) making a conscious decision based on our value system? Yes.
The way to avoid the high property taxes: Live in a smaller space and/or rent.
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
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Went from 7800 in 2015 to 8400 in 2016. Illinois
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Yup. Some people call this place Taxachusetts. I can't complain too much given that we have some of the best public schools systems in the country and plenty of high income opportunities (jobs & businesses). We will also most likely stay long term for family reasons and the schools.
Will we work a few extra years because of it? Yes. Are we (wife and I) making a conscious decision based on our value system? Yes.
The way to avoid the high property taxes: Live in a smaller space and/or rent.
It's still frustrating as hell that so much of the benefit from many great job opportunities are skimmed off by corrupt local and state government officials. At least you have good schools to offset some of that pain. Many places the corruption ruins the schools too.
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Went from $2600 last year to $4000 this year. Condo in Chicago. My rental condos went up by a similar percentage too. They also have hinted at another very large increase for next year.
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Yep, my house has a 10k+ a year tax bill.
Can't wait to sell it when I retire and move to a smaller, farther out house where the tax burden will be less.
The city does have some rules that if you are on a fixed income and retired and over 65 (?) you can have your tax bill decreased but I doubt I'll ever quality for such discounts.
I won't need a house that is in a good school district or close to work or as big when I'm retired, either.
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Renting doesn't even help that much; I live in Chicago and the rents are soaring because landlords' property taxes are going up as well. And I hear they're going to go up again? So that's going to get passed on to us renters.
We really want to move when our lease is up next spring because we hate our neighborhood but we're going to end up paying a lot more. (though, that'll probably happen in our current place as well so I guess we're screwed either way.)
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
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In terms of California, its really a crap shoot depending on when you buy. If you buy at the top of the market you'll have much higher taxes then if you bought at the bottom of the market. Personally, I'd like to see no personal residence property tax, or maybe a 500k exemption, replaced by higher county sales taxes and maybe higher state income taxes.
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
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I far prefer the high sales tax approach of WA state. People label it as regressive and it is, but since groceries are excluded it also gives people a lot of freedom to decide how much tax they actually want to pay. I'm happy to let tourists and consumers shoulder the burden and pay a fairly minimal amount of tax compared to my income.
Property tax on home assessed at 600K: 4800
Income tax: 0
Sales tax paid: 10% of a small amount is still fairly small
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You guys are making feel good about my property tax now, just went up from $1600/yr to $1700/yr. Primary residence in AZ :)
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
They use the money to pay for over-promised unsustainable pension plans, to those employed by the state and local governments.
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
They use the money to pay for over-promised unsustainable pension plans, to those employed by the state and local governments.
Wait... I may have read another thread about that where those plans were going to go broke or something? Either way- holy crap!
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I live in one of those very high property tax states. My mortgage is only about $750 a month. My property taxes are about $590 a month. High property taxes certainly make being a Mustachian harder. First, they don't go away, unlike your mortgage. In fact, they're likely to go up over time. Second, if you want to invest in rental real estate, they destroy your profit margins. Yes, to some extent rents are higher to account for high property taxes, but it doesn't cover the spread between this state and similar states with lower taxes. A Mustachian--at least a retired one--would much rather have high state income taxes than high property taxes.
What's stopping me from moving? Family mostly. I have a young child, and being close to family is helpful for my spouse and I, and is beneficial for the kiddo as well.
Anyone else lamenting their sky high property tax bills?
High taxes suck, don't you make up for it through lower income tax? What's your total tax bill? Why invest in real estate if stocks perform better; what's your capital gains tax like where you live?
Being a mustachian means optimizing, if property taxes are high it usually means you pay less in other areas. Try looking at the entire picture and you might be no worse than comparable families in other starts.
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Anyone else lamenting their sky high property tax bills?
Yep. I expect my taxes to be about $4700 this year for a house asessed at <160K. I bought (and live in) a duplex, because I couldn't stomach the thought of paying $400/mo in property taxes alone on a paid off single family home. This way, we'll eventually live housing cost-free, I hope.
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
Waste, mismanagement, law suits, unrealistic benefits for public employees and list goes on.
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That sucks. Are you considering a move to a low-tax area post-FIRE? I've lived in the South my whole life, so there's nothing to lament for me, as far as taxes go.
Can't say for sure. FIRE is a long way off, and there are just too many variables.
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440,000 dollar 4 bedroom 3 bath on .75 acre in suburban nj ...............2016 taxes 13,100/ year...........
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New Hampshire, like our brethren in Taxachusetts, have high property taxes but don't have an income tax as well. Mom's house which she can't seem to sell for 150K has taxes of about $4,200 per year. The school system has a lot to do with this as a recent article in a local paper showed --- they've struggling to cut down on health care costs and hope to return one million dollars to tax payers this year, mostly based on such savings.
Despite the lack of an income tax, there are lots of other ones to help supplement the property taxes. We' ve got ones on gas, cigarettes, and restaurants for instance. Some folks along the borders with Vermont and Massachusetts come over to our side for purchases because they feel it saves enough to be worth the trip so I'm guessing that these are comparatively lower than the neighbors.
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
I always wonder why people think there's such a strong link between spending on schools and the quality of the school. For increased spending to improve educational outcomes, it would have to be true that either: (i) the current teachers are slacking, but paying them more would motivate them to work harder; (ii) there is a massive gap in the skills between the teachers hired at the lower wage and the teachers the school could hire at a higher wage, (iii) more or highly-paid administrators would improve educational outcomes, or (iv) the physical environment of the school is in such bad shape that it actually detracts from learning, and more money is needed to repair it.
Color me skeptical that any of these are true. The most likely to be true is (ii), but union rules would prevent a mass firing of current teachers in any case. Further, teachers in high property tax areas are usually already well-paid, when you factor in vacation time (25% -33% of the year off, with NO BLACKBERRY to check), gold-plated pensions that are available in one's late-50s, in addition to the decent pay relative to actual marketable skills.
It seems to me that when people talk about "great public schools," they mean "schools full of the well-adjusted and intelligent children of successful upper-middle-class people." But you could drop those kids into any of the "worst schools in the country" and they'd be fine. From my vantage point, I see lots of public schools wasting obscene amounts of money on unnecessary luxuries like new football stadiums, swimming pools, etc. The complaint about the old facilities is that they are old, as if that makes them unusable. The real impetus is that the administrators want to one-up their peers in neighboring communities, and also a very shady quid pro quo between government contractors and school district officials. What I care most about is the school's curriculum, and unfortunately for me, public schools usually have the worst curriculums (flavor of the month, progressive nonsense, new math, etc.).
BTW, this should not be construed as an attack on Pigeon. I think a big part of finding a "great school" for your children is just finding one that gives you a good feeling, that your kids like, and which has a curriculum you trust. If Pigeon has found that, I'm happy for her. But where I live, a significant portion of our outrageously high property taxes are wasted on educational spending.
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I have not heard of anyone who willingly pays high property taxes and NOT brag about how great their schools are.
We are on move from the 49th or 50th lowest property tax state to a middle of the road tax state. And you know it doesn’t matter as each of the above posters have noted you stay or move for many reasons and usually property taxes is a very small (If at all) factor on why you stay or leave.
For the record the low property tax state does have excellent schools whereas the mid tax state does not. How can that be? Well in low tax state teachers make 40K, the schools were inexpensive to construct and with new infrastructure cheap to maintain. In mid tax state it is the polar opposite. My point is high tax does not equate to excellent schools, not at all.
We can certainly argue that better paid teachers make better teachers but the point is in an inexpensive state teachers can be employed for less. Heck most everyone is, but the truth is the public in general loves to hate any sort of public employee’s salary
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Goodness do I feel your pain. Our property taxed are approximately $15k a year. We have MUCH more house than we need, but it is 2 miles from work (we carpool if we have to drop kids off further away, which will end in June when the youngest is out of preschool, and then we will walk or bike!!) and we LOVE our community and schools. I am counting down until we can move to a much less expensive place! We definitely fell into the housing part of the "keeping of with the Joneses" thing (moved December 2012 to brand new construction, still pains me to think about it). Found the FIRE community in the last 6-12 months and we are working on everything else we can cut/reduce. The property taxes though are definitely the biggest reason why we will move when the kids are out of school (or sooner if the right situation arises).
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
I always wonder why people think there's such a strong link between spending on schools and the quality of the school. For increased spending to improve educational outcomes, it would have to be true that either: (i) the current teachers are slacking, but paying them more would motivate them to work harder; (ii) there is a massive gap in the skills between the teachers hired at the lower wage and the teachers the school could hire at a higher wage, (iii) more or highly-paid administrators would improve educational outcomes, or (iv) the physical environment of the school is in such bad shape that it actually detracts from learning, and more money is needed to repair it.
Color me skeptical that any of these are true. The most likely to be true is (ii), but union rules would prevent a mass firing of current teachers in any case. Further, teachers in high property tax areas are usually already well-paid, when you factor in vacation time (25% -33% of the year off, with NO BLACKBERRY to check), gold-plated pensions that are available in one's late-50s, in addition to the decent pay relative to actual marketable skills.
It seems to me that when people talk about "great public schools," they mean "schools full of the well-adjusted and intelligent children of successful upper-middle-class people." But you could drop those kids into any of the "worst schools in the country" and they'd be fine. From my vantage point, I see lots of public schools wasting obscene amounts of money on unnecessary luxuries like new football stadiums, swimming pools, etc. The complaint about the old facilities is that they are old, as if that makes them unusable. The real impetus is that the administrators want to one-up their peers in neighboring communities, and also a very shady quid pro quo between government contractors and school district officials. What I care most about is the school's curriculum, and unfortunately for me, public schools usually have the worst curriculums (flavor of the month, progressive nonsense, new math, etc.).
BTW, this should not be construed as an attack on Pigeon. I think a big part of finding a "great school" for your children is just finding one that gives you a good feeling, that your kids like, and which has a curriculum you trust. If Pigeon has found that, I'm happy for her. But where I live, a significant portion of our outrageously high property taxes are wasted on educational spending.
I think it's just people that haven't lived many places. If they did, they would realize there are lots of places with low taxes and good schools, and places with high taxes and terrible schools. What's really funny to me is that most of the people I hear talk about not minding their high taxes because of the good schools aren't actually in a good school system. Their particular school (which captures a disproportionate share of the affluent areas in a school district and has affluent students and involved parents) is good, but other people in the same city (or whatever the taxing authority is for the schools) are paying the same high tax rates while still being stuck with crappy schools. It's not the school that is sucking up tax money to be good. The schools are good because of the mix of students and parents there, and it's other parts of the city that are sucking up and wasting money.
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Where are you OP? My tax rate is around 2.5% iirc
Mortgage: 640/mo on 130k 30yr fixed
Prop tax: 360/mo on 190k assessed value. Had to fight for that!
At least it's deductible...
When I FIRE, I will MOVE.
Public schools suck.
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In terms of California, its really a crap shoot depending on when you buy. If you buy at the top of the market you'll have much higher taxes then if you bought at the bottom of the market. Personally, I'd like to see no personal residence property tax, or maybe a 500k exemption, replaced by higher county sales taxes and maybe higher state income taxes.
I bought near the peak. For several years my prop taxes went down - the reassessed. (In CA)
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
To some degree, yes. It hurts the schools, keeps elderly in their 4BR homes longer, causes home values to go up.
It makes it *much* harder for younger people to buy, and it can greatly affect how good the elementary school is.
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I have two rentals in Dallas county. Both valued about the same. The rental in the great school system (HPISD) I pay $3500 a year in property taxes. For the rental in the awful, and I mean awful, school system (DISD) I pay $7000. Yes, the tax rates are that different.
That's a lot of money in property taxes.
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
Waste, mismanagement, law suits, unrealistic benefits for public employees and list goes on.
My city spent $440,000 for a sign on the way into town with the city's name on it. I can't for the life of me figure out how it could cost that much....
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
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I've lived in Ohio (state income tax / low property tax), Tennessee (no state income tax), and now Texas (no state income tax, high property tax area). It is SO FANTASTIC, while I'm working, to avoid filling out and paying state income taxes! Holy crap, I will NEVER complain!! With property taxes, you have some control over how much house you buy and know the tax rate where you buy. It sucks, in Texas at least, that they reassess your house every year and generally get more property tax, but uou are also free to sell at any time if it is 'killing you'. You can optimize.
But sure, when you FIRE you will probably want to figure out ways to lower propery tax and will not having to worry about having or not having state income tax, and you won't have to live close to work. But if you are doing your FIRE planning right, you should have a good grip on your future tax situation in relation to where you will live.
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You guys in the US with the high property taxes. Do you also pay income tax to your state? Or is it just federal income tax?
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You guys in the US with the high property taxes. Do you also pay income tax to your state? Or is it just federal income tax?
Locally...
Oregon: I pay 0% sales tax, 9% income tax, and about 1.5% property tax.
Washtington (just 10 miles away) pays 0% income taxes, 6.5-9.9% sales tax, and similar 1-2% property taxes.
Everyone has the same rules for federal tax rules, which are bizantine and mostly rigged in favor of those with resources to be rich but appear poor for legal purposes.
State tax rate vary wildly from state to state, and somewhat from county to county.
"Freedom" at its finest.
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Locally...
Oregon: I pay 0% sales tax, 9% income tax, and about 1.5% property tax.
Washtington (just 10 miles away) pays 0% income taxes, 6.5-9.9% sales tax, and similar 1-2% property taxes.
I've been wondering: how practical is it for people in your area to earn all their income in Washington and do all their spending in Oregon?
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In northern NJ property tax on a modest house is approaching the $10K/year mark.
Heck, I know a guy with a 1BR 1BA 900 sq ft house (no sewers or town water) paying over $9K/year.
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Locally...
Oregon: I pay 0% sales tax, 9% income tax, and about 1.5% property tax.
Washtington (just 10 miles away) pays 0% income taxes, 6.5-9.9% sales tax, and similar 1-2% property taxes.
I've been wondering: how practical is it for people in your area to earn all their income in Washington and do all their spending in Oregon?
Vancouver Washington has always intrigued me as a place to live for just that reason....that and the chance to live in the Pacific Northwest. I would, however, have to make sure there is extra money in the budget for umbrellas.
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We left NJ where the taxes on our 1950 split level on 1/4 acre were $12,000. We pay $2,500 for the same size house on the same size lot in Florida.
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Doesn't anyone here qualify for homeowner's deductions for their property tax? For your primary residence, $67.5K is knocked off the assessed price and the taxable rate cannot increase by more than 10% per year. So if your house value appreciates, your property tax grows at a slower rate (but still painful).
Surprised I'm not hearing more of that.
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Lake County, IL property taxes are around 2.5%-4%. Many people struggle financially or work 50+ hours a week to make it work.
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Renting doesn't even help that much; I live in Chicago and the rents are soaring because landlords' property taxes are going up as well. And I hear they're going to go up again? So that's going to get passed on to us renters.
We really want to move when our lease is up next spring because we hate our neighborhood but we're going to end up paying a lot more. (though, that'll probably happen in our current place as well so I guess we're screwed either way.)
It's guaranteed to go up. A lot. Chicago and really IL in general is really screwed due to their vastly underfunded pensions. You'll be picking up that bill.
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Locally...
Oregon: I pay 0% sales tax, 9% income tax, and about 1.5% property tax.
Washtington (just 10 miles away) pays 0% income taxes, 6.5-9.9% sales tax, and similar 1-2% property taxes.
I've been wondering: how practical is it for people in your area to earn all their income in Washington and do all their spending in Oregon?
Work in Oregon but live in Washington and you still get to pay Oregon taxes.
Live and work in Washington and you still, legally, are required to pay sales taxes on out of state purchases. Plenty of people do it, but big items like cars are going to be hard to get away with.
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I far prefer the high sales tax approach of WA state. People label it as regressive and it is, but since groceries are excluded it also gives people a lot of freedom to decide how much tax they actually want to pay. I'm happy to let tourists and consumers shoulder the burden and pay a fairly minimal amount of tax compared to my income.
Property tax on home assessed at 600K: 4800
Income tax: 0
Sales tax paid: 10% of a small amount is still fairly small
I don't think it is regressive, especially when there are often low income rebates and basic items like groceries and second hand goods are excluded.
Rather, it means that those that have more freed up money to spend, and choose to, pay more taxes. Those that have less money to spend pay less.
It ensures that snowbirds or visitors to the area contribute to the government services, too.
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Move, become a politician, or stop complaining. Complaining about something you can't change is a pointless use of mental and emotional energy.
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We pay about 1.7% of assessed value, but 1.45% of appraised value.
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We live 60miles from NYC in Orange County NY. 1000sf house. We pay $3,300 a year and that is cheap compared to most around here. It has doubled in the last 16 years since moving here. Most of my friends are paying btwn $8,000 and $13,000 per year. Peoples pay is not keeping up with these taxes. There IS a breaking point for people. I don't see how it can double again in the next 16 years. Many home owners just do not have the $$$$ to pay this. We have no children yet have to pay school tax. I feel this is not rite. Whether you rent or own they should make people who have kids pay a certain amount for each kid they put into the school system. Then maybe these people would think twice about having that 5th kid when they can't even afford to house and feed themselves.
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Northeastern Ohio here. Have mid-century 1165 sq. ft. flat ranch on 2/3 acre in wonderful location facing walking trails and golf courses of huge Metropark. Nearby Interstate to take me to major airports or anywhere else I want to go. Property taxes yearly are $2265. Ohio income tax yearly is $560. This location is a best-kept secret, no question.
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Northeastern Ohio here. Have mid-century 1165 sq. ft. flat ranch on 2/3 acre in wonderful location facing walking trails and golf courses of huge Metropark. Nearby Interstate to take me to major airports or anywhere else I want to go. Property taxes yearly are $2265. Ohio income tax yearly is $560. This location is a best-kept secret, no question.
Central Ohio not so much. Top neighborhoods/schools in Columbus put you easily over 2% of property value. I'm about 2.3% in northwest Columbus or about $8600 per year. Cheap property tax neighborhoods put you in "ghettoish" schools. Friends with many teachers. A couple close to my family teaches in the ghettoish schools and moved to my neighborhood. They know from first hand experience that paying for school district is not the fallacy that some of the earlier posters suggested.
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You get what you pay for though: Arizona very low property taxes and horrible school system. Northeastern US high property taxes and good public school systems. Hence why everyone moves west once the kids are out of the nest.
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Ours went up almost 8 times from last year! $70 to $550 a year.... But this year included the most of the value of our house. South coastal Georgia. 2000 sq ft house.
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Northeastern Ohio here. Have mid-century 1165 sq. ft. flat ranch on 2/3 acre in wonderful location facing walking trails and golf courses of huge Metropark. Nearby Interstate to take me to major airports or anywhere else I want to go. Property taxes yearly are $2265. Ohio income tax yearly is $560. This location is a best-kept secret, no question.
Central Ohio not so much. Top neighborhoods/schools in Columbus put you easily over 2% of property value. I'm about 2.3% in northwest Columbus or about $8600 per year. Cheap property tax neighborhoods put you in "ghettoish" schools. Friends with many teachers. A couple close to my family teaches in the ghettoish schools and moved to my neighborhood. They know from first hand experience that paying for school district is not the fallacy that some of the earlier posters suggested.
School district where I live is rated 115th out of the 610 school districts in Ohio. So, not too bad.
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You guys in the US with the high property taxes. Do you also pay income tax to your state? Or is it just federal income tax?
Locally...
Oregon: I pay 0% sales tax, 9% income tax, and about 1.5% property tax.
Washtington (just 10 miles away) pays 0% income taxes, 6.5-9.9% sales tax, and similar 1-2% property taxes.
Everyone has the same rules for federal tax rules, which are bizantine and mostly rigged in favor of those with resources to be rich but appear poor for legal purposes.
State tax rate vary wildly from state to state, and somewhat from county to county.
"Freedom" at its finest.
1-2% property tax for WA sounds high at least in Seattle. We are well under 1%. Prop something in the past limited increases in property tax revenue (outside of levies) to 1% per year so when property values are increasing quickly then the % of the house value paid decreases. Seattle, not surprisingly, has seen pretty insane property value hikes - we are up roughly 75% in the past 4.5 years for our house although the assessed value only reflects a 50% jump.
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Like Liberty Stache, I'm also in Taxachusetts. I've lived many places, including Texas and Illinois, and I appreciate the impacts of high taxes on the entire system. In Massachusetts we pay property tax, sales tax, and income tax (5%). We get decent schools, decent regulations (Romneycare is a good thing!), and decent infrastructure. I'd love to move to a lower COL state, but any option we come up with, we lose a lot.
The relationship between bad schools and taxes is complex. Throwing money at the problem won't solve it. But if you fail to invest anything in schools they are likely to get worse!
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Northeastern Ohio here. Have mid-century 1165 sq. ft. flat ranch on 2/3 acre in wonderful location facing walking trails and golf courses of huge Metropark. Nearby Interstate to take me to major airports or anywhere else I want to go. Property taxes yearly are $2265. Ohio income tax yearly is $560. This location is a best-kept secret, no question.
Central Ohio not so much. Top neighborhoods/schools in Columbus put you easily over 2% of property value. I'm about 2.3% in northwest Columbus or about $8600 per year. Cheap property tax neighborhoods put you in "ghettoish" schools. Friends with many teachers. A couple close to my family teaches in the ghettoish schools and moved to my neighborhood. They know from first hand experience that paying for school district is not the fallacy that some of the earlier posters suggested.
School district where I live is rated 115th out of the 610 school districts in Ohio. So, not too bad.
Yeah, I was only speaking about Columbus area. Ohio is a very affordable state, overall. Columbus, when it comes to property taxes in the family friendly neighborhoods is not. It is still a bargain for a lot of other things (House prices of around $100 per square foot in the best neighborhoods services, food, products in general, taxes on cars and registration, etc much much much cheaper than when my dad lived/worked in NH.)
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I pay about $7500 /year on a 4BR/4Bath home in a top 5 school district for my region... and I walk to work.
Trust me -> you get what you pay for.
I have children who will get a top tier education for that money. Private School per kid would be in the 5-20K/year range around here, otherwise. Amazingly, I have some neighbors who send their kids to private school anyway, which is just insane considering the quality of our public schools.
Big dilemma I have in my mind is; after I FIRE, and the kids are off to college and beyond, will it be worth it to pay to keep the old homestead to have a BASE for my kids, with all the memories, neighbors, close parks, and sense of community that comes with it?
Say that altogether maintenance and taxes and utilities run 15K/year. That means I'd need another 375K in my stache to keep the place even though I would likely not live there year round. I feel like the 'ol homestead would definitely be a luxury.
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My property taxes are around $800 for the year. Can't remember exactly. But you really only get the "right" to keep your land. No public services. Schools suck. Etc.
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Property tax was one reason we sold our house and hit the road in our home built RV. The local government was trying to raise everyone's tax by over 35% to build a new $65m school for ~500 students. They said the old school was outdated. It was 24 years old and our house was 31 years old. I did not ask them to build me a new house.
So...bye bye, take your property tax and shove it you know where. I am here camping on free federal government land and not paying one red cent. HAH HAH!
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We pay 2.9% of assessed value. I'm paying $7,443/year or $620/month on a $257,200 house. No sales tax or income tax. We have a great school and public service departments though. Other towns near me have either no police department or no overnight fire department. We have manned stations.
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We live in a state that has no income tax, property tax is ~1700/year (2000sq ft house) and the schools are the top in the state, and some of the best in the US. (if there was a way to accurately rank them)
So no, property taxes are not killing me. I feel like we get our monies worth, especially with kids. I do wish however, that in the winter we had some better snow removal, but it melts in a day or two.
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Property tax was one reason we sold our house and hit the road in our home built RV. The local government was trying to raise everyone's tax by over 35% to build a new $65m school for ~500 students. They said the old school was outdated. It was 24 years old and our house was 31 years old. I did not ask them to build me a new house.
So...bye bye, take your property tax and shove it you know where. I am here camping on free federal government land and not paying one red cent. HAH HAH!
This is the sort of thing I was talking about re: education spending mostly being a waste. I know of a school district that built a brand new state-of-the-art high school for $225M in anticipation of a population boom that never really panned out. It stayed open for less than 10 years. Now the kids go to the old school, and the new school sits vacant. Prior to the new school closing, the old school was only at about 60% capacity (the student population was split over multiple schools). But some politically-connected people got rich off the deal so it wasn't a total loss (sarcasm).
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Property tax was one reason we sold our house and hit the road in our home built RV. The local government was trying to raise everyone's tax by over 35% to build a new $65m school for ~500 students. They said the old school was outdated. It was 24 years old and our house was 31 years old. I did not ask them to build me a new house.
So...bye bye, take your property tax and shove it you know where. I am here camping on free federal government land and not paying one red cent. HAH HAH!
This is the sort of thing I was talking about re: education spending mostly being a waste. I know of a school district that built a brand new state-of-the-art high school for $225M in anticipation of a population boom that never really panned out. It stayed open for less than 10 years. Now the kids go to the old school, and the new school sits vacant. Prior to the new school closing, the old school was only at about 60% capacity (the student population was split over multiple schools). But some politically-connected people got rich off the deal so it wasn't a total loss (sarcasm).
is that a typo? 225M? that's not possible.
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You get what you pay for though: Arizona very low property taxes and horrible school system. Northeastern US high property taxes and good public school systems. Hence why everyone moves west once the kids are out of the nest.
My experience raising kids in Connecticut was that the quality of the school systems varied quite a bit from town to town. As you might expect wealthy suburbs had the good public school systems you mention above. Some of the bigger city school systems had lots of room for improvement.
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Trust me -> you get what you pay for..
In the 3 states I raised children in the property taxes were, from highest to lowest (in both dollar terms and % of assessed value of the house) Connecticut, California and Utah.
The quality of the public schools they attended from best to worst were Connecticut - Utah - California. So I kinda got what I paid for in CT but not in CA.
Of course, this is a pretty small sample size, your mileage may vary!
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Property tax was one reason we sold our house and hit the road in our home built RV. The local government was trying to raise everyone's tax by over 35% to build a new $65m school for ~500 students. They said the old school was outdated. It was 24 years old and our house was 31 years old. I did not ask them to build me a new house.
So...bye bye, take your property tax and shove it you know where. I am here camping on free federal government land and not paying one red cent. HAH HAH!
This is the sort of thing I was talking about re: education spending mostly being a waste. I know of a school district that built a brand new state-of-the-art high school for $225M in anticipation of a population boom that never really panned out. It stayed open for less than 10 years. Now the kids go to the old school, and the new school sits vacant. Prior to the new school closing, the old school was only at about 60% capacity (the student population was split over multiple schools). But some politically-connected people got rich off the deal so it wasn't a total loss (sarcasm).
is that a typo? 225M? that's not possible.
It's not a typo, unfortunately. I'm reluctant to name the school, but a little googling with that number plus "high school closing " should bring it up.
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I have the dubious pleasure of living in CT - high property taxes ($9200 per year on property worth $265K), high income taxes (6.75%), high sales taxes (6.35%) and high gas taxes (no idea what they are but we have very expensive gas). It also happens that I live in a town with terrible schools (but have no school age kids, so I guess it doesn't matter). And the infrastructure is crumbling all over the state...
I am selling my place and moving to Europe when I FIRE in a year and a half.
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I have not heard of anyone who willingly pays high property taxes and NOT brag about how great their schools are.
We are on move from the 49th or 50th lowest property tax state to a middle of the road tax state. And you know it doesn’t matter as each of the above posters have noted you stay or move for many reasons and usually property taxes is a very small (If at all) factor on why you stay or leave.
For the record the low property tax state does have excellent schools whereas the mid tax state does not. How can that be? Well in low tax state teachers make 40K, the schools were inexpensive to construct and with new infrastructure cheap to maintain. In mid tax state it is the polar opposite. My point is high tax does not equate to excellent schools, not at all.
We can certainly argue that better paid teachers make better teachers but the point is in an inexpensive state teachers can be employed for less. Heck most everyone is, but the truth is the public in general loves to hate any sort of public employee’s salary
Toymeister, I can't speak for every location / everyone who's paid high real estate taxes however the first chart is pretty good at comparing school districts across the country. When playing around with the chart for Massachusetts, even the "middle of the road" towns were still much higher than that national average. For example, Norwood, MA is considered a blue collar town in Mass yet they rate +1.4 grade levels above average. Someone in Norwood, MA might spend $350-500K on a house and pay 1.3% RE tax or $4.5K to $7K. Cheap for MA, expensive for the US. Comparatively, Lexington, MA (rich town) was ranked the highest on the chart at +3.8 grade levels over average and a home owner there might spend $750K - $1M on a house / $10-15K on property taxes.
http://www.nytimes.com/interactive/2016/04/29/upshot/money-race-and-success-how-your-school-district-compares.html?_r=1
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I always wonder why people think there's such a strong link between spending on schools and the quality of the school. For increased spending to improve educational outcomes, it would have to be true that either: (i) the current teachers are slacking, but paying them more would motivate them to work harder; (ii) there is a massive gap in the skills between the teachers hired at the lower wage and the teachers the school could hire at a higher wage, (iii) more or highly-paid administrators would improve educational outcomes, or (iv) the physical environment of the school is in such bad shape that it actually detracts from learning, and more money is needed to repair it.
It seems to me that most likely link between spending on schools and quality would be: (v) reducing student-to-teacher ratios would improve educational outcomes. While (i) and (iii) are where the money actually seems to be spend, (v) and sometimes (iv) are where the money actually may be needed.
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You guys in the US with the high property taxes. Do you also pay income tax to your state? Or is it just federal income tax?
sales tax 8%
income tax 10%
prop tax - 1% of house price, currently I think we're at about $7k a year.
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. . . Then maybe these people would think twice about having that 5th kid when they can't even afford to house and feed themselves.
Your funny, you think people "think" when they procreate.
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I always wonder why people think there's such a strong link between spending on schools and the quality of the school. For increased spending to improve educational outcomes, it would have to be true that either: (i) the current teachers are slacking, but paying them more would motivate them to work harder; (ii) there is a massive gap in the skills between the teachers hired at the lower wage and the teachers the school could hire at a higher wage, (iii) more or highly-paid administrators would improve educational outcomes, or (iv) the physical environment of the school is in such bad shape that it actually detracts from learning, and more money is needed to repair it.
It seems to me that most likely link between spending on schools and quality would be: (v) reducing student-to-teacher ratios would improve educational outcomes. While (i) and (iii) are where the money actually seems to be spend, (v) and sometimes (iv) are where the money actually may be needed.
Interesting that this is coming to a head in Washington State now. The state was sued by parents for not fully funding education and dropping the ball into the lap of local jurisdictions, who can only raise so much money through property tax levies. It went to the State Supreme court and is bouncing back and forth there with no discernible progress. The court is fining the legislature $100k a day in contempt.
About 25 years ago there was a similar case in NJ that was resolved with development of the state income tax. We'll see where this goes.
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Posting location with your taxes would be helpful guys.
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Doesn't anyone here qualify for homeowner's deductions for their property tax? For your primary residence, $67.5K is knocked off the assessed price and the taxable rate cannot increase by more than 10% per year. So if your house value appreciates, your property tax grows at a slower rate (but still painful).
Surprised I'm not hearing more of that.
In Cali the Homeowners Exemption is only a $7,000 reduction on your property's value so doesn't really make a difference when you are talking about median housing price (condos and sfhs) around $650k and up in many areas. What state do you live in that has that big of a deduction?
We also pay state taxes (not sure the %) as well as fed and sakes (varies by city but 9%-ish).
DC.
There are two main benefits to obtaining the Homestead Deduction. First, for the purpose of computing your yearly tax liability, it will reduce your real property’s assessed value by $67,500 $71,700. At a tax rate of $0.85 per $100 of assessed value, that’s a annual savings of $573.75 $609.45. Second, you are entitled to an assessment cap such that your property may not be taxed on more than a 10% increase in the property’s assessed value each year.
It's actually not an unreasonably-priced place to LIVE. It is extremely expensive to live here IF you have a job.
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606.20$ a YEAR - Outskirts of Greenville SC
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WNY - ~$3600 property tax (actually, roughly half true property tax and half is school tax), after the STAR exemption (first $30k property value is ignored).
8% sales tax in my county, 8.75% in the larger metro area south of us where all the stores are.
Income tax 4% at our end of the table (we're negative for fed tax); looks like top rate is 8.82%.
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$14,500 for a 3bd house, the price of a short commute in a big city (and no state income tax)
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As a Canadian I am shocked at the high property tax in some states.
I pay about 1% or $5000 on a $500K home. I don't find it that high but certainly realize that it is an ongoing expense. Combined with utilities & insurance I could rent a 2bdm apartment for less but it wouldn't be the same as a SFH. Our house is on a large lot 50x150 ft.
We have excellent schools. I only know of one private school in our city of close to 1M people.
sale's tax 0%
"State" Income tax 10%
Federal ... Variable ~ 25%
Also, our city is known for sprawl & poor transit but I can walk a block & catch a bus within 10-20 min.
All our libraries are free...
I owned property in another Canadian city. My distance to down town similar but the Neighbourhood was more dense. Lot only 25x75 ft. Picture a brownstone. The tax rate was similar 1% of value, but the services were ridiculously good & frequent. Considering the lot size that city collects 4x the property tax.
With this they provided: free water, free garbage & recycle pick-up twice a week, street sweeping once week, oh and snow clearing on our sidewalk within 48h.
I feel like that entire city was full of make-work projects & contracts. Just cutting back a bit on the services could save millions but then their buddies wouldn't get the contracts.
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According to ITEP’s Tax Inequality Index, Washington has the most unfair state and local tax system in the country.
That's not really a surprise, though. Income taxes take most of their money from rich people, but Washington has no state income tax. Sales taxes take most of their money from poor people, and Washington has high sales taxes. The property taxes here are about a wash.
States are going to get their revenue from some combination of those three sources. If you are paying high property taxes then you are probably paying less income and sales tax. I'm not sure it makes sense to complain too much about any one of those without also considering the other two.
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I far prefer the high sales tax approach of WA state. People label it as regressive and it is, but since groceries are excluded it also gives people a lot of freedom to decide how much tax they actually want to pay. I'm happy to let tourists and consumers shoulder the burden and pay a fairly minimal amount of tax compared to my income.
Property tax on home assessed at 600K: 4800
Income tax: 0
Sales tax paid: 10% of a small amount is still fairly small
Of course, WA isn't actually funding its education system.. Last Sept my kid was out of school while the public school teachers went on strike. Whether or not that's due to a lack of funds is still up for debate. http://crosscut.com/2015/09/a-step-by-step-guide-to-washingtons-school-funding-problems/
As someone who hates income taxes due to complexity, I'd be perfectly content if they raised property and sales taxes some more to make up for it. I know it's regressive and all that, but if they (both state & fed gov'ts) can't figure out how to simplify the income tax code, then screw 'em.
EDIT: property assessed at $574k - property tax currently $5056/yr.
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0.3% property tax
20% sales tax (food 0%)
20% total income tax (first 10k exempt)
Decent to outstanding schools
Free healthcare
UK.
You guys are making me rethink that "land of the free" thing - makes me think I'm getting a screaming deal.
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606.20$ a YEAR - Outskirts of Greenville SC
Looks like you're the winner so far. But I'm close - after the recent expiration of an excess levy for the school system, my property taxes just went down to $750/yr on a 2,600 sf 5 bed/3 bath house.
Yes, the school system sucks. But it is still possible to get a decent education, if a student is self-motivated and has supportive parents (at least that was our experience with our son). Students who get on the "advanced" track have opportunities for an o.k. education. The general ed track is basically just free babysitting.
The board of education is trying to re-instate the levy. I'm planning to vote against it out of principle because the population has been declining for decades and now we have a bunch of half-empty old schools that all need a lot of expensive maintenance and renovations. Since the levy expired, the board has been threatening to consolidate the schools. I think they're just making threats to try to scare people into voting for the levy. If they were to actually follow through and close some of the schools, I probably would vote for the levy so they would have enough money to properly decommission the closed facilities. But I don't want to continue subsidizing people who choose to live in the hinterlands and then expect every one else to pay to keep their half-empty neighborhood school open.
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I'm paying about $3k/yr on a $250K house (an avg house around here), but we also have school system income tax of 2% of earned income, so the overall burden effectively dials down when you retire. The schools are very good which matters to me as I have 3 children in them. Growing up myself in a place were they were horrible (and unsafe), and considering the cost of private schooling for a decade for each child, I consider it one of the greatest deals I get.
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606.20$ a YEAR - Outskirts of Greenville SC
Looks like you're the winner so far. But I'm close - after the recent expiration of an excess levy for the school system, my property taxes just went down to $750/yr on a 2,600 sf 5 bed/3 bath house.
Yes, the school system sucks. But it is still possible to get a decent education, if a student is self-motivated and has supportive parents (at least that was our experience with our son). Students who get on the "advanced" track have opportunities for an o.k. education. The general ed track is basically just free babysitting.
The board of education is trying to re-instate the levy. I'm planning to vote against it out of principle because the population has been declining for decades and now we have a bunch of half-empty old schools that all need a lot of expensive maintenance and renovations. Since the levy expired, the board has been threatening to consolidate the schools. I think they're just making threats to try to scare people into voting for the levy. If they were to actually follow through and close some of the schools, I probably would vote for the levy so they would have enough money to properly decommission the closed facilities. But I don't want to continue subsidizing people who choose to live in the hinterlands and then expect every one else to pay to keep their half-empty neighborhood school open.
Your house is 2x as big as mine, so that accounts for that...
As a side note, there are some crazy cheap places to live in west virginia. I was cruising around zillow around where my grandparents used to live ( abandoned coal town) and there were houses from 10-30k. Theres not much around though.... lol
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For the record, Washington has the most regressive state and local tax system in the nation :(
http://www.itep.org/whopays/states/washington.php
According to that link, the bottom 20% spends 12.6% of their income on sales & excise tax. Assuming they pay no federal taxes, are exempt from FICA, have a sweet gig where they somehow pay nothing for rent or groceries (exempt from sales tax), and spend every single dollar they earn on items subject to sales tax, I still don't see how they could reach 12.6%.
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What does the USA spend all this property tax money on ???
Here in super-taxed Canada, my $1M shack (=Vancouver) is $2K/year in taxes. Water is an extra $500/year
According to the bill the majority is schools, then transit/fire/police/roads are 5-10% each
Is it just that income tax is higher here and cities are subsidized by the government, or is there some major public expenditure south of the border?
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What does the USA spend all this property tax money on ???
Public pensions in a lot of places have bankrupted local governments, so a lot of the tax money is just paying for past retirement, not current services.
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606.20$ a YEAR - Outskirts of Greenville SC
Looks like you're the winner so far. But I'm close - after the recent expiration of an excess levy for the school system, my property taxes just went down to $750/yr on a 2,600 sf 5 bed/3 bath house.
Yes, the school system sucks. But it is still possible to get a decent education, if a student is self-motivated and has supportive parents (at least that was our experience with our son). Students who get on the "advanced" track have opportunities for an o.k. education. The general ed track is basically just free babysitting.
The board of education is trying to re-instate the levy. I'm planning to vote against it out of principle because the population has been declining for decades and now we have a bunch of half-empty old schools that all need a lot of expensive maintenance and renovations. Since the levy expired, the board has been threatening to consolidate the schools. I think they're just making threats to try to scare people into voting for the levy. If they were to actually follow through and close some of the schools, I probably would vote for the levy so they would have enough money to properly decommission the closed facilities. But I don't want to continue subsidizing people who choose to live in the hinterlands and then expect every one else to pay to keep their half-empty neighborhood school open.
Your house is 2x as big as mine, so that accounts for that...
As a side note, there are some crazy cheap places to live in west virginia. I was cruising around zillow around where my grandparents used to live ( abandoned coal town) and there were houses from 10-30k. Theres not much around though.... lol
Thought West Virginia might be worth looking at--one of my grand-dads was from there, and several greats and the immigrant great-greats--and it's nice down there--still actually have some distant WV relatives. So I checked Zillow to see what might be for sale in that part of the (rural, hilly, isolated) county. lol Zillow had 0 homes. Zero. So who knows what the taxes might be.
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What does the USA spend all this property tax money on ???
Here in super-taxed Canada, my $1M shack (=Vancouver) is $2K/year in taxes. Water is an extra $500/year
According to the bill the majority is schools, then transit/fire/police/roads are 5-10% each
Is it just that income tax is higher here and cities are subsidized by the government, or is there some major public expenditure south of the border?
Well, I am also in the vancouver area, and my $800k home is taxed at $3k, plus $880 for water and trash... not including the $500 home owner grant.
Friends with a $1.5 Million "dump" e,gm 1965 home, 1500 sq.ft, no renovations, in north van (LOL, the appraised value of their home is $30k, the rest is land value), pay $6000 per year, all in... for taxes.
Not sure what city in vancouver you live in, but Surrey is lowest, I thought, and they pay $4.4 / $1000 assessed value. A $1 million house would cost $4400 + $800 water / sewer / trash - $500 home owner grant = $4700/ year in taxes.
Heck Vancouver tax rate is over $3/$1000, and you don't get a lot of space for your dollar there...
UNLESS
Are you over 65 and get the seniors discount? Old people are subsidized here.
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Went from 7800 in 2015 to 8400 in 2016. Illinois
Holy hell!
Under $700 in Indiana and $1720 for rental in Michigan (no homestead exemption). Both 100-150k homes.
Makes you want to really do your research before an interstate move!
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Damn, people. On our $210,000 duplex we pay something like $768. Per year. If I recall the city assesses only the land, not the structures. I am definitely not complaining. I do pay a flat $2k per year for water which is a little unfair, my coworker pays half that and has six kids and four bathrooms, but I get billed double for my two kitchen two bath duplex with tiny yard and four occupants.. the complaining is endless.
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Just under $1,100 annually for house, barn, and 25 acres, but we have the land under a conservation easement which pretty well makes up for it being zoned residential instead of agricultural.
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24k/y in the Bay Area. My taxes are so high because many people pay almost nothing thanks to prop 13. So those of us who have bought recently have to pay for their services in addition to our own.
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606.20$ a YEAR - Outskirts of Greenville SC
Looks like you're the winner so far. But I'm close - after the recent expiration of an excess levy for the school system, my property taxes just went down to $750/yr on a 2,600 sf 5 bed/3 bath house.
Yes, the school system sucks. But it is still possible to get a decent education, if a student is self-motivated and has supportive parents (at least that was our experience with our son). Students who get on the "advanced" track have opportunities for an o.k. education. The general ed track is basically just free babysitting.
The board of education is trying to re-instate the levy. I'm planning to vote against it out of principle because the population has been declining for decades and now we have a bunch of half-empty old schools that all need a lot of expensive maintenance and renovations. Since the levy expired, the board has been threatening to consolidate the schools. I think they're just making threats to try to scare people into voting for the levy. If they were to actually follow through and close some of the schools, I probably would vote for the levy so they would have enough money to properly decommission the closed facilities. But I don't want to continue subsidizing people who choose to live in the hinterlands and then expect every one else to pay to keep their half-empty neighborhood school open.
Your house is 2x as big as mine, so that accounts for that...
As a side note, there are some crazy cheap places to live in west virginia. I was cruising around zillow around where my grandparents used to live ( abandoned coal town) and there were houses from 10-30k. Theres not much around though.... lol
Thought West Virginia might be worth looking at--one of my grand-dads was from there, and several greats and the immigrant great-greats--and it's nice down there--still actually have some distant WV relatives. So I checked Zillow to see what might be for sale in that part of the (rural, hilly, isolated) county. lol Zillow had 0 homes. Zero. So who knows what the taxes might be.
I don't think Zillow is very accurate or complete for this area. Try realtor.com and search for your county of interest.
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Bumping.
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I live in the City of Atlanta (not the suburbs), biking distance from downtown or midtown, in a 3bed/2bath 1500 ft2 house. Assessed value is $115K, but actual value is probably closer to $150-200K. If I renovated the kitchen and bathrooms, it would be worth $300K+.
My taxes are $1200 this year (up from $650 in 2013, when the assessed value was really low). My next-door neighbor's taxes are $3500/year on a similar-but-renovated house, assessed at $285K.
There are two interesting things about how property tax works around here. First, we have a Homestead Option Sales Tax (HOST) which subsidizes the first $X worth of property value from sales taxes. For a cheap property like mine, it probably cuts my tax nearly in half compared with it should be based on the millage rate. (Conversely, it means the tax penalty for making improvements is larger than what it would otherwise be, which is unfortunate.) Second, capital improvements to the school system tend to be funded by a Special Purpose Local Option Sales Tax (SPLOST) instead of property tax. Between the HOST, SPLOST, MARTA (transit) sales tax, and the additional MARTA and transportation sales tax that I hope we pass later this year, our sales tax will be up to 9%, I think.
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our sales tax will be up to 9%, I think.
Pshhh, I dream of the good old days when we only paid 9% sales tax.
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our sales tax will be up to 9%, I think.
Pshhh, I dream of the good old days when we only paid 9% sales tax.
Don't get me wrong, I'm not complaining about it! First of all, it means the tourists and people who commute in from the suburbs are subsidizing us city folks. Second, high sales taxes encourage (to some extent, at least) mustachian habits. Third, although sales taxes are unfortunately regressive, GA exempts groceries so it could be worse.
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Yep another person here from Vancouver, WA. Very good tax structure for Mustachians.
0% State Income
9.9% Sales Tax (But don't buy much of anything or shop in Portland, probably totals less that $1000 per year.)
1.5% property tax (so about $1500 on a 180,000 condo.)
I think last year my wife and I made about $125000 and paid about 8% in federal income.
7.7% FICA taxes (this is a future benefit though)
So in total we pay about 17% effective tax (not counting gas tax which might add at most 2%). I'm not sure what all the Canadians and Europeans are saying about our taxes being high. The US might have high tax brackets, but there are huge deductions on income tax that lower that rate significantly. On our federal married couples can combine income and get the first $20k tax free, then about the next $20k at 10%. The tax deductions are even more ridiculous if you have kids. This doesn't even include all the benefits the US government hands out in the form of ROTH or HSA accounts.
Property taxes, especially in WA, are a function of local counties. They pay for police, fire, etc. At least where I live they calculate property taxes each year based on City, County and State needs.
Total Tax Revenue Needs / Total Property Value of County = Property Tax rate that year.
They do it this way so that taxes do not wildly fluctuate with property prices and taxes per house do not relatively change too much either. At least at the moment, WA is a gold mine for engineers and other middle-high income earners.
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They do it this way so that taxes do not wildly fluctuate with property prices and taxes per house do not relatively change too much either. At least at the moment, WA is a gold mine for engineers and other middle-high income earners.
So much so that we might have to build a wall.
http://www.nytimes.com/2016/10/03/technology/next-big-tech-corridor-between-seattle-and-vancouver-planners-hope.html
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Wow, so am I (are we) the low tax champions of the forum?
State/local income tax: 0
Federal income tax on 90k: net -.5%
FICA: same as everyone
Sales tax: 7.1% but not on groceries, our biggest expense
Property tax on $210k home: $768/y
Probably not, but maybe among employed homeowners! Knowing in theory that taxes are generally higher elsewhere is apparently different from seeing it demonstrated.
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Wow, so am I (are we) the low tax champions of the forum?
State/local income tax: 0
Federal income tax on 90k: net -.5%
FICA: same as everyone
Sales tax: 7.1% but not on groceries, our biggest expense
Property tax on $210k home: $768/y
Probably not, but maybe among employed homeowners! Knowing in theory that taxes are generally higher elsewhere is apparently different from seeing it demonstrated.
Nice. Let me guess, rural WA, two 401(k)s, two traditional IRAs, a couple kids?
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
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My investment property in Tennessee averages 2.3k in YEARLY taxes (county & city) per 125k
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
If there's a bubble, all housing values rise, so your taxes would stay the same. In my municipality, it's the levy divided by the total assessments. So if ALL values rise 10%, my taxes remain the same.
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Wow, so am I (are we) the low tax champions of the forum?
State/local income tax: 0
Federal income tax on 90k: net -.5%
FICA: same as everyone
Sales tax: 7.1% but not on groceries, our biggest expense
Property tax on $210k home: $768/y
Probably not, but maybe among employed homeowners! Knowing in theory that taxes are generally higher elsewhere is apparently different from seeing it demonstrated.
Nice. Let me guess, rural WA, two 401(k)s, two traditional IRAs, a couple kids?
Nevada, no kids, one simple and two trad IRA's, HSA. Wife is in a community college for a $1,500 American Opportunity tax credit :).
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They do it this way so that taxes do not wildly fluctuate with property prices and taxes per house do not relatively change too much either. At least at the moment, WA is a gold mine for engineers and other middle-high income earners.
So much so that we might have to build a wall.
http://www.nytimes.com/2016/10/03/technology/next-big-tech-corridor-between-seattle-and-vancouver-planners-hope.html
FYI for anyone as confused as I was: FIPurpose lives in Vancouver, WA (across the river from Portland, OR). The article is about Seattle and Vancouver, Canada. For a minute there I thought somebody was proposing building a tech corridor through Olympia etc.
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
In NJ's case, they run duplicates of basically every government function.
http://www.njspotlight.com/stories/15/03/02/explainer-why-property-taxes-are-so-high-and-why-reform-efforts-fall-short/
The state has 565 separate municipalities and even more school districts, nearly all of them led by their own administrators and support staff – who are often doing similar jobs in very close proximity.
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In response to that comment about NJ duplication of services... this really resonates with me. Where I live there are >100 different municipalities in our county. This all stems from when these municipalities were originally created >100 years ago. Thus, every community has there own police offices, firemen, parks people, mayors and councilmen.
I find this ridiculous. My guess is that in some of the "newer" communities in the southwest, the square mileage of the towns are probably a lot bigger, and there is a lot less duplication of services.
There was a proposal to consolidate alot of these municipalities a few years ago into own "greater city", and thus share all the resources and reduce inefficiencies. Every single local community czar screamed blood murder about loss of control, reduction in services, poor response to homeowner complaints, etc.... Now I wonder why local elected leaders didn't want to lose their jobs?
Anyone here from Louisville, KY? I know they did the consolidation thing, how did it turn out?
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I'm torn, as a Californian.
I think originally it was intended to prevent the elderly from being priced out of their homes. I don't necessarily think that's a bad thing. When you are on a fixed income, taxes can easily start to eat up what you need to live on. (My husband is from NY state, and houses in his home town are CHEAP but taxes are not. I've done some back of the envelop math, and taxes would make being a real estate investor difficult.)
So, that's a positive thing - a limit on the increase of taxes.
On the other hand, there are negatives.
In my area, you will have two houses right next to each other with vastly different taxes. I will give an example of two friends who are next door neighbors. Same size houses, both currently worth about $1.2M.
House #1, taxes in 2006 (peak, which is when they bought the house): $12,000. Taxes now (because the county / city reassessed): $8000.
House #2, taxes in 2006: $918. Taxes now: $1149.
Uhhh...that's a big difference. And it really REALLY hurts the schools. I just had a conversation with the old guys at the gym this morning, about how their "property taxes are outrageous and they are voting against the school bonds." I said "that's nice, do you realize the state of the schools? Backed up plumbing, leaking roofs, deteriorating portables, broken windows, etc." As expected, when schools get old, things break. But maybe a guy whose "outrageous" property taxes at $3500 a year doesn't want to pay an additional $400 because his kids are grown - and the state of his grandkids schools? Eh, who cares.
(Not to say that there shouldn't be transparency in budgets and how money is spent, both on infrastructure, administrative salaries, etc. There should be.)
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Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I've taken the same attitude toward Prop 13. I think there are more problems with it in areas with the highest property values than there are in moderately priced markets.
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Yep we live in a HCOL area. Nearly half of our mortgage is property tax. However, we have two kids in school currently and it's one of the top school districts in our area and top 20 in the state. We sold our last house, in the same school district, for asking price because the family was so eager to get their kids into the schools.
We were lucky to find a cheap fixer upper and not have to change school districts. Our home value has skyrocketed. Funny thing is we could literally move 5 miles down the road to a different school district and pay roughly half in property taxes than what we do now and find the same size house for much cheaper. That's our plan when the kids are done with school and we FIRE.
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According to ITEP’s Tax Inequality Index, Washington has the most unfair state and local tax system in the country.
That's not really a surprise, though. Income taxes take most of their money from rich people, but Washington has no state income tax. Sales taxes take most of their money from poor people, and Washington has high sales taxes. The property taxes here are about a wash.
States are going to get their revenue from some combination of those three sources. If you are paying high property taxes then you are probably paying less income and sales tax. I'm not sure it makes sense to complain too much about any one of those without also considering the other two.
Your analysis is incorrect. Higher-income individuals pay more in sales tax than do lower-income individuals (on average) because people that make more money spend more money. The same is true of property taxes--higher-income people live in more expensive dwellings that incur higher property taxes compared to their lower-income brethren (again, on average). What ITEP was likely referring to was the fact that sales taxes are "regressive," which means that poorer people pay a higher percentage of their income than richer people.
Lost in this debate is the fact that businesses pay a lot of sales tax (though they shouldn't, technically, because it is supposed to fall upon consumers) and also pay a lot of property taxes. Businesses in Washington also pay the B&O Tax, a tax on their gross receipts (levied without respect to profits). We're not really sure who bears the burden of these taxes paid by businesses; is it the (wealthy) owners, the employees in the form of lower wages, or the consumers in the form of higher prices? We can't say for sure.
But we do know for sure that people who earn more definitely pay more income*, sales, and property taxes, although these will typically represent a small proportion of their overall earnings. If you compare someone in the bottom 10% of earnings to someone in the top 10% of earnings, the top 10-percenter will pay way more in taxes 99% of the time, especially after you factor in transfer payments.
*I know WA doesn't have a personal income tax, but most states do, and this is a generally applicable statement.
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
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I don't see how you good people make ends meet.
With ridiculously high incomes, made possible by all of those high taxes. Would you take a 100% increase in your tax burden of it came with a 100% increase in your income? I certainly would, gladly.
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
My property taxes in AZ are similar, and AZ is not flat. There are other options.
The money near NYC is much better, though....so here I am.
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Northeastern Ohio here. Have mid-century 1165 sq. ft. flat ranch on 2/3 acre in wonderful location facing walking trails and golf courses of huge Metropark. Nearby Interstate to take me to major airports or anywhere else I want to go. Property taxes yearly are $2265. Ohio income tax yearly is $560. This location is a best-kept secret, no question.
Central Ohio not so much. Top neighborhoods/schools in Columbus put you easily over 2% of property value. I'm about 2.3% in northwest Columbus or about $8600 per year. Cheap property tax neighborhoods put you in "ghettoish" schools. Friends with many teachers. A couple close to my family teaches in the ghettoish schools and moved to my neighborhood. They know from first hand experience that paying for school district is not the fallacy that some of the earlier posters suggested.
Interesting perspective. I'm currently looking at homes, and the tax rates tend to be inversely correlated with the quality of the schools in the areas where we're looking. The one of the best school districts in the state has the lowest tax rates in the area, because homes are so expensive that the county is easily funded on a smaller percentage (<1%). On the other hand, if you go next door to a county with an average school system, the tax rate is ~1.5%, but the homes are less than half as expensive, so they don't get as much money for a comparable property even with the higher rates.
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
My property taxes in AZ are similar, and AZ is not flat. There are other options.
The money near NYC is much better, though....so here I am.
Everyone has priorities - Seattle for me (for now) and access to great climbing, backcountry skiing, mt. biking, sea kayaking, and hiking is good. Taxes not so bad. The density of the city certainly is not going down.
Was in Tucson recently - nice town and great hiking. But no snow!
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
My property taxes in AZ are similar, and AZ is not flat. There are other options.
The money near NYC is much better, though....so here I am.
Everyone has priorities - Seattle for me (for now) and access to great climbing, backcountry skiing, mt. biking, sea kayaking, and hiking is good. Taxes not so bad. The density of the city certainly is not going down.
Was in Tucson recently - nice town and great hiking. But no snow!
Not in Tucson, but ~40 miles away: http://www.skithelemmon.com/
;)
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Looks cool. I've rock climbed at Lemon, haven't been there in winter.
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I think it's just people that haven't lived many places. If they did, they would realize there are lots of places with low taxes and good schools, and places with high taxes and terrible schools.
I live in one of the poorest cities in America. Our local "failing" school district is heavily subsidized by the state, and spends more per-student than any of the suburban district for far worse results. Hey, our high school graduation rate finally broke 60%! Let's throw a party!
The correlation between school district spending and performance is coincidental at best. Results are far more tightly correlated with the student's household income and parental academic achievement than anything else.
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I'm torn, as a Californian.
I think originally it was intended to prevent the elderly from being priced out of their homes. I don't necessarily think that's a bad thing. When you are on a fixed income, taxes can easily start to eat up what you need to live on. (My husband is from NY state, and houses in his home town are CHEAP but taxes are not. I've done some back of the envelop math, and taxes would make being a real estate investor difficult.)
So, that's a positive thing - a limit on the increase of taxes.
On the other hand, there are negatives.
In my area, you will have two houses right next to each other with vastly different taxes. I will give an example of two friends who are next door neighbors. Same size houses, both currently worth about $1.2M.
House #1, taxes in 2006 (peak, which is when they bought the house): $12,000. Taxes now (because the county / city reassessed): $8000.
House #2, taxes in 2006: $918. Taxes now: $1149.
Uhhh...that's a big difference. And it really REALLY hurts the schools. I just had a conversation with the old guys at the gym this morning, about how their "property taxes are outrageous and they are voting against the school bonds." I said "that's nice, do you realize the state of the schools? Backed up plumbing, leaking roofs, deteriorating portables, broken windows, etc." As expected, when schools get old, things break. But maybe a guy whose "outrageous" property taxes at $3500 a year doesn't want to pay an additional $400 because his kids are grown - and the state of his grandkids schools? Eh, who cares.
(Not to say that there shouldn't be transparency in budgets and how money is spent, both on infrastructure, administrative salaries, etc. There should be.)
Not a fan, it is not tied in any way to CPI, or even to cost of city services, which is higher than CPI, but a fixed low number like 2%. This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
Sure, that's no mystery to me. They feel entitled to keep things the way they were, rather than as they are now. They don't like change. My own grandfather was priced out of his home in CA.
Some of those same people also feel that America itself has gone to hell, and rising property taxes are just another symptom. "There are darkies at the country club now! Men can't even keep their wives from working!" My grandfather, in addition to being a kind and generous man, was also a raging sexist and a horrible bigot.
His solution to these parallel "problems" was to sell his expensive California home and buy an estate in rural Arkansas, where taxes are low and "people know their place". Good riddance, Grandpa. RIP, but the world is ready to move on without you.
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
It's just heartbreaking to imagine them wiping away those tears with the millions of dollars that they got by selling.
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Homes are funny. Pretty much everyone agrees that you should pay taxes on that dirty capital gains money you made in the stock market. Home triples in value? That wasn't blind luck, it was a smart responsible decision for cleaning the gutters every Saturday. Let's find a way to make sure these hard-working hearty folks get that massive homestead exclusion.
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DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I would like to live in a fair system first, and pay lowest possible taxes second. I would be OK paying higher taxes if that was what it took to have a system that truly worked for the best interests and betterment of the citizenry. The aim of Prop 13 is fine, but it throttled things too much, and resets with property sales which leads to unequal tax burdens beyond what is fair or healthy. Two identical families in identical houses, yet one family can pay several times more than the other purely based on when they moved in. In Oregon taxes are throttled, but don't reset when sold, which I find more fair.
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
Here, seniors can apply to defer property taxes until the sale of the home. If taxes increase because their location rockets in value, it still works because the home sale increase is greater than tax increases.
The city would lose out for many years if everyone did this, but it is so far only a few, at staggered years.
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Here, seniors can apply to defer property taxes until the sale of the home. If taxes increase because their location rockets in value, it still works because the home sale increase is greater than tax increases.
The city would lose out for many years if everyone did this, but it is so far only a few, at staggered years.
It's common in one super expensive region of Vancouver - but at the same time the cost of the city services declines when your average citizen is >70 and a property multi-millionaire.
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
I actually saw this happen in a northern part of Kentucky. A small family owned farmhouse with quite a bit of land was ought out by a very wealthy developer. They didn't want to move but did so after being offered a couple millions dollars. I think they originally purchased for 20-30K. The developer built quite literally a castle on the property (seriously has a moat).
I would love for some millionaire to build multi-million dollar homes right next to me. I would immediately sell my house for a hefty profit. And not worry about tax rates.
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
Me neither. See the Appalachian mtns for an idea of where I live. Plenty of beautiful places here without the fear of random banjo music echoing out of the woods... ;)
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Wow. We pay just over 4k/annum for TWO properties per year and I was thinking it was a little much. What do your states do with the money?
Waste, mismanagement, law suits, unrealistic benefits for public employees and list goes on.
My city spent $440,000 for a sign on the way into town with the city's name on it. I can't for the life of me figure out how it could cost that much....
Someone's BiL owns the sign company... j/k
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This means that those owners pay a smaller and smaller share of the city services. After decades, ends up with terrible tax rates for new buyers.
Exactly. I'm also mystified as to why we spend so much money trying to "protect" the elderly from being priced out of their homes by rising taxes. If your home is worth two million dollars, then it is worth two million dollars regardless of who owns it, or what they paid for it. And I think it should be taxed accordingly.
We NEED elderly people to be priced out of their homes, just like we need poor people to be priced out of gentrifying neighborhoods. This is capitalism at work. I think there's a strong argument to be made that the greater social good is met when resources are reallocated to most efficiently reflect their market values.
I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
It's just heartbreaking to imagine them wiping away those tears with the millions of dollars that they got by selling.
You know, I suppose they could do a reverse mortgage to pay the taxes...
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I think it's just people that haven't lived many places. If they did, they would realize there are lots of places with low taxes and good schools, and places with high taxes and terrible schools.
I live in one of the poorest cities in America. Our local "failing" school district is heavily subsidized by the state, and spends more per-student than any of the suburban district for far worse results. Hey, our high school graduation rate finally broke 60%! Let's throw a party!
The correlation between school district spending and performance is coincidental at best. Results are far more tightly correlated with the student's household income and parental academic achievement than anything else.
Bingo.
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I saw a good study that showed (but can't find it now!) that the strongest predictor of a school's student body performance was the percentage of kids on the free and reduced cost meal program. I've always found it odd that we expect teachers to perform miracles when they are but one influence on a kid.
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I saw a good study that showed (but can't find it now!) that the strongest predictor of a school's student body performance was the percentage of kids on the free and reduced cost meal program. I've always found it odd that we expect teachers to perform miracles when they are but one influence on a kid.
On a related note, I'd love to see a study comparing educational outcomes for kids in schools with a high free/reduced price lunch percentage but who are not eligible for that themselves vs. kids in schools with a low free lunch percentage who also are not eligible themselves (i.e., "do the kids with the good homes do well even at the 'bad' schools?"), as well as the inverse (i.e., "do the kids from bad homes do poorly even at the 'good' school?").
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My property taxes are around $550/month. It doesn't bother me because we have great schools and services. Great schools are very important to me, and not just for my own kids.
Our total annual property taxes are ~$750 for a ~2000 sq ft house at the edge of town near a school built a few years ago. In flyover country. Our house payment is about ~$900.
I don't see how you good people make ends meet.
Likewise, I could never live where the topography is flatter than piss on a plate. :)
Me neither. See the Appalachian mtns for an idea of where I live. Plenty of beautiful places here without the fear of random banjo music echoing out of the woods... ;)
Not to hijack, but I just can't let that one go by. So what is wrong with banjo music coming out of the woods? And on my road, you'll hear a couple of us jamming on our mountain dulcimers. (Which we bought with savings from our low taxes.) Country roads, take me home.
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
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I saw a good study that showed (but can't find it now!) that the strongest predictor of a school's student body performance was the percentage of kids on the free and reduced cost meal program. I've always found it odd that we expect teachers to perform miracles when they are but one influence on a kid.
On a related note, I'd love to see a study comparing educational outcomes for kids in schools with a high free/reduced price lunch percentage but who are not eligible for that themselves vs. kids in schools with a low free lunch percentage who also are not eligible themselves (i.e., "do the kids with the good homes do well even at the 'bad' schools?"), as well as the inverse (i.e., "do the kids from bad homes do poorly even at the 'good' school?").
I don't have a "study", but I did do an analysis and some graphing of our local schools, because my district and the three next door have vastly different percentages of students who are English learners and on reduced/ free lunch.
In short: kids from good homes at "bad" schools do as well on standardized tests and kids from good homes who go to good schools. For the most part. (When the % of kids in a particular demographic gets below a certain percentage, they don't break it out for you.) In our school, the teachers mostly go out of their way to challenge the bright kids, while trying to teach the kids who are 2-3 grade levels behind.
The poor kids at a "good" school actually perform better than poor kids at a "poor" school. Overall. I don't know if it's because they are pushed harder, or they are expected to keep up with the rest of the class, or that their parents cared enough to transfer them in to the "better" school. Some of it is that these "better" schools raise hundreds of thousands of dollars, that goes to pay for classroom aides. More teachers in the classroom (better ratios) = better outcomes.
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I have not heard of anyone who willingly pays high property taxes and NOT brag about how great their schools are.
Then let me brag about my $1200 a year, property tax and schools the educated my two children to the point where they qualified for a Bright Futures Scholarship. Then both were accepted to THE University of Florida. < - < -
Low property taxes doesn't mean you can't get a quality education.
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Mine are about 1% on my condo, would be 1.7% without the homestead exemption. I'm in South Florida in a very good school district. The homestead exemption makes property tax here very progressive and doesn't apply to investment property. No income tax and 6% sales tax.
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When I owned my home, I was paying $600/year on a $135k home. 5% income. 8-9% sales (they bumped up to 9% in the last few years, after I sold the home).
I grew up here, my high school class had at least one person going to each Ivy league school. I personally graduated with over 60 hours of college credit through AP courses and a few dual enrollment classes. TBH, that had more to do with the parents (lots of engineers) than the funding I'd guess.
That has changed from what I understand. Evidently someone high ups in education misused tax dollars and the system is hurting because of it. I haven't really followed it though.
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
Oh, OK, I get it now. Thanks. (Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
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(Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
Most of us coastal elites live in constant fear of uneducated white country folks. Rednecks are scary. That movie is about 80% to blame.
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(Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
Most of us coastal elites live in constant fear of uneducated white country folks. Rednecks are scary. That movie is about 80% to blame.
Well, gol dang it, roll me in cornmeal and fry me for a catfish! I'll have to take all the money I save in my low tax area, put my (imaginary) shotgun in my (imaginary) pickup truck, and take a drive out to the PNW to take a gander at some of you coastal elites. I have a little education, so I reckon you don't have to be afeard of me, by gum.
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
Oh, OK, I get it now. Thanks. (Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
I think the preferred term is Appalachian-Americans
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
Oh, OK, I get it now. Thanks. (Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
I think the preferred term is Appalachian-Americans
When I actually saw this movie I was surprised at all the misconceptions about it. Apparently even though everyone talks about it no one actually sees it.
-This movie is the origin of "Dueling Banjos". Yes, THE "Dueling Banjos". That is the banjo reference.
-The banjos are played by a protagonist and a kid sitting on the porch at a gas station. No trees.
-Actually it is more of a moral dilemma movie than a scary movie.
-Most of the rednecks are ok. Just 2 bad ones.
If you already saw it, carry on about property taxes :).
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
Oh, OK, I get it now. Thanks. (Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
I think the preferred term is Appalachian-Americans
You say that in jest, but in some circles Appalachian-American is treated like an actual minority group. I know a couple of bright local kids who got full rides to prestigious colleges in part because they come from low-income households in Appalachia.
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Funny enough we are driving through that deep south redneck area right now.
Having lived in Seattle 20 years and lived in this exact area in the south for 20 years, I will admit there are more refrigerators on front porches here, but Seattle has become a trash strewn drug use mecca. 20 to 30 homeless under every bridge in the downtown area with 3 jars of urine for each one.
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So what is wrong with banjo music coming out of the woods?
It's a Deliverance (https://en.wikipedia.org/wiki/Deliverance) reference (and by extension, a reference to the stereotype of people in Appalachia being dangerous rednecks).
Oh, OK, I get it now. Thanks. (Dangerous rednecks ??!! Hahahahahahahahahahaha. Love it.)
I think the preferred term is Appalachian-Americans
You say that in jest, but in some circles Appalachian-American is treated like an actual minority group. I know a couple of bright local kids who got full rides to prestigious colleges in part because they come from low-income households in Appalachia.
Admittedly it was almost 30 years ago, but I got some pretty good scholarships myself being a first-round college kid from rural Appalachia.
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You say that in jest, but in some circles Appalachian-American is treated like an actual minority group. I know a couple of bright local kids who got full rides to prestigious colleges in part because they come from low-income households in Appalachia.
Admittedly it was almost 30 years ago, but I got some pretty good scholarships myself being a first-round college kid from rural Appalachia.
Yeah, the smart poor (white) kids from my less well-known economically desperate area were always jealous of the Appalachian-Americans.
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NJ, 2800 Sq foot home on 1/4 acre in a upper middle class town. Property taxes on a 580,000 home $12,000 Per year. Volunteer fire, first aid good schools.
In NJ the state is forced to send torrents of money to about 33 poor school districts for the last 30 years by the state supreme court. I heard Christie give a talk on this. After 30 years of flowing state funding only 2 of these districts have a graduation rate above the state average. Christie has a new proposal to give aid equal aid to districts. This in theory would reduce property taxes by 2,000 on average in my town.
The other issue is state workers are getting over on pensions and health care benefits. The health car benefits in the state of NJ for state workers are so good that the Obama administration will fine NJ 700 million next year if these benefits are not reduced.
I'm 54 and I see many of my high school classmates who worked for the state are retiring now with full pensions and health care.
NJ also has an underfunded pension plan, by like 40 billion dollars.
State income tax is high so if the sales tax 7 percent going to 6 percent due to a gas tax increase recently passed.
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NJ, 2800 Sq foot home on 1/4 acre in a upper middle class town. Property taxes on a 580,000 home $12,000 Per year. Volunteer fire, first aid good schools.
In NJ the state is forced to send torrents of money to about 33 poor school districts for the last 30 years by the state supreme court. I heard Christie give a talk on this. After 30 years of flowing state funding only 2 of these districts have a graduation rate above the state average. Christie has a new proposal to give aid equal aid to districts. This in theory would reduce property taxes by 2,000 on average in my town.
The other issue is state workers are getting over on pensions and health care benefits. The health car benefits in the state of NJ for state workers are so good that the Obama administration will fine NJ 700 million next year if these benefits are not reduced.
I'm 54 and I see many of my high school classmates who worked for the state are retiring now with full pensions and health care.
NJ also has an underfunded pension plan, by like 40 billion dollars.
State income tax is high so if the sales tax 7 percent going to 6 percent due to a gas tax increase recently passed.
As a fellow MMM fan I also wish my NJ property taxes were lower so I understand your pain however I think you are blaming the wrong people. Schools are primarily where your NJ property tax goes to as you can see from the break-down on your tax bill. I won't comment on your theory about school funding since I haven't done the research on that issue, although I would note that you agree that you are getting "good schools" in exchange for your high property tax bill. I have consistently been impressed with the NJ school districts were my sons have gone to school.
I do wish to comment on your lament about "state workers getting over on pensions" as I happen to know a little background that you may not be aware of. The NJ pension system was working fine with contributions being taken automatically from state workers and an annual contribution into the system from the State government. Gov. Whitman decided she would not make the contribution and every governor since her followed suit by either not making or only partially making their contribution into the pension system. As a fellow reader of the MMM blog I know you'll understand how this effect over time has disastrous consequences. Gov. Christie said, hey I inherited this problem let's fix it together, state workers you will contribute more to make up for the years of State shortfalls and I'll resume the annual contributions. Any guesses on what happened next? Yup the state workers had more taken out from their paycheck every week and then Gov. Christie didn't honor his part of the agreement. And now you know the story of why the NJ pension system is currently ranked 3rd worst in the nation for being underfunded. Don't worry I know lots of people who have 1/10 of their salary being taken out to fund their pension while having their wages frozen for years - oh and all by the way being underpaid compared to the private sector to begin with - and whose job description is to literally to try to serve the public interest. So I wouldn't be so quick to blame the "state workers getting over on pensions". I'm sure you'll also be happy to hear its my understanding that the healthcare after retirement is already being phased out.
Finally I'll add that my understanding on why NJ property taxes are so high relative to other states is that NJ has a lot of small individual towns compared to other states. With your tax dollars you might have a local police department that is very responsive and a excellent local public school system - but yes you have to pay for those things with higher property taxes.
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As a fellow MMM fan I also wish my NJ property taxes were lower so I understand your pain however I think you are blaming the wrong people. Schools are primarily where your NJ property tax goes to as you can see from the break-down on your tax bill. I won't comment on your theory about school funding since I haven't done the research on that issue, although I would note that you agree that you are getting "good schools" in exchange for your high property tax bill. I have consistently been impressed with the NJ school districts were my sons have gone to school.
I do wish to comment on your lament about "state workers getting over on pensions" as I happen to know a little background that you may not be aware of. The NJ pension system was working fine with contributions being taken automatically from state workers and an annual contribution into the system from the State government. Gov. Whitman decided she would not make the contribution and every governor since her followed suit by either not making or only partially making their contribution into the pension system. As a fellow reader of the MMM blog I know you'll understand how this effect over time has disastrous consequences. Gov. Christie said, hey I inherited this problem let's fix it together, state workers you will contribute more to make up for the years of State shortfalls and I'll resume the annual contributions. Any guesses on what happened next? Yup the state workers had more taken out from their paycheck every week and then Gov. Christie didn't honor his part of the agreement. And now you know the story of why the NJ pension system is currently ranked 3rd worst in the nation for being underfunded. Don't worry I know lots of people who have 1/10 of their salary being taken out to fund their pension while having their wages frozen for years - oh and all by the way being underpaid compared to the private sector to begin with - and whose job description is to literally to try to serve the public interest. So I wouldn't be so quick to blame the "state workers getting over on pensions". I'm sure you'll also be happy to hear its my understanding that the healthcare after retirement is already being phased out.
Finally I'll add that my understanding on why NJ property taxes are so high relative to other states is that NJ has a lot of small individual towns compared to other states. With your tax dollars you might have a local police department that is very responsive and a excellent local public school system - but yes you have to pay for those things with higher property taxes.
That is quite likely a major part of it. My town is barely over one square mile and has its own mayor, attorney, accountant, complete school system with board, police department (with a ton of cars...15-20 maybe), etc. Duplicity of manpower is a pretty big thing.
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As a fellow MMM fan I also wish my NJ property taxes were lower so I understand your pain however I think you are blaming the wrong people. Schools are primarily where your NJ property tax goes to as you can see from the break-down on your tax bill. I won't comment on your theory about school funding since I haven't done the research on that issue, although I would note that you agree that you are getting "good schools" in exchange for your high property tax bill. I have consistently been impressed with the NJ school districts were my sons have gone to school.
I do wish to comment on your lament about "state workers getting over on pensions" as I happen to know a little background that you may not be aware of. The NJ pension system was working fine with contributions being taken automatically from state workers and an annual contribution into the system from the State government. Gov. Whitman decided she would not make the contribution and every governor since her followed suit by either not making or only partially making their contribution into the pension system. As a fellow reader of the MMM blog I know you'll understand how this effect over time has disastrous consequences. Gov. Christie said, hey I inherited this problem let's fix it together, state workers you will contribute more to make up for the years of State shortfalls and I'll resume the annual contributions. Any guesses on what happened next? Yup the state workers had more taken out from their paycheck every week and then Gov. Christie didn't honor his part of the agreement. And now you know the story of why the NJ pension system is currently ranked 3rd worst in the nation for being underfunded. Don't worry I know lots of people who have 1/10 of their salary being taken out to fund their pension while having their wages frozen for years - oh and all by the way being underpaid compared to the private sector to begin with - and whose job description is to literally to try to serve the public interest. So I wouldn't be so quick to blame the "state workers getting over on pensions". I'm sure you'll also be happy to hear its my understanding that the healthcare after retirement is already being phased out.
Finally I'll add that my understanding on why NJ property taxes are so high relative to other states is that NJ has a lot of small individual towns compared to other states. With your tax dollars you might have a local police department that is very responsive and a excellent local public school system - but yes you have to pay for those things with higher property taxes.
That is quite likely a major part of it. My town is barely over one square mile and has its own mayor, attorney, accountant, complete school system with board, police department (with a ton of cars...15-20 maybe), etc. Duplicity of manpower is a pretty big thing.
Millennial Moola has an interesting thread on the Pension scenario https://millennialmoola.com/2016/06/28/new-jersey-stole-from-the-police-pension/ (https://millennialmoola.com/2016/06/28/new-jersey-stole-from-the-police-pension/)
I was somewhat amazed at the property taxes in this article http://www.brickunderground.com/buy/NJ-suburbs (http://www.brickunderground.com/buy/NJ-suburbs) Although, it shows how offering what many want...good schools, walk-able downtown, easy access to public transportation...can add value a lot of value in a crowded area, when people want to avoid sprawl.
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NJ, 2800 Sq foot home on 1/4 acre in a upper middle class town. Property taxes on a 580,000 home $12,000 Per year. Volunteer fire, first aid good schools.
In NJ the state is forced to send torrents of money to about 33 poor school districts for the last 30 years by the state supreme court. I heard Christie give a talk on this. After 30 years of flowing state funding only 2 of these districts have a graduation rate above the state average. Christie has a new proposal to give aid equal aid to districts. This in theory would reduce property taxes by 2,000 on average in my town.
The other issue is state workers are getting over on pensions and health care benefits. The health car benefits in the state of NJ for state workers are so good that the Obama administration will fine NJ 700 million next year if these benefits are not reduced.
I'm 54 and I see many of my high school classmates who worked for the state are retiring now with full pensions and health care.
NJ also has an underfunded pension plan, by like 40 billion dollars.
State income tax is high so if the sales tax 7 percent going to 6 percent due to a gas tax increase recently passed.
As a fellow MMM fan I also wish my NJ property taxes were lower so I understand your pain however I think you are blaming the wrong people. Schools are primarily where your NJ property tax goes to as you can see from the break-down on your tax bill. I won't comment on your theory about school funding since I haven't done the research on that issue, although I would note that you agree that you are getting "good schools" in exchange for your high property tax bill. I have consistently been impressed with the NJ school districts were my sons have gone to school.
I do wish to comment on your lament about "state workers getting over on pensions" as I happen to know a little background that you may not be aware of. The NJ pension system was working fine with contributions being taken automatically from state workers and an annual contribution into the system from the State government. Gov. Whitman decided she would not make the contribution and every governor since her followed suit by either not making or only partially making their contribution into the pension system. As a fellow reader of the MMM blog I know you'll understand how this effect over time has disastrous consequences. Gov. Christie said, hey I inherited this problem let's fix it together, state workers you will contribute more to make up for the years of State shortfalls and I'll resume the annual contributions. Any guesses on what happened next? Yup the state workers had more taken out from their paycheck every week and then Gov. Christie didn't honor his part of the agreement. And now you know the story of why the NJ pension system is currently ranked 3rd worst in the nation for being underfunded. Don't worry I know lots of people who have 1/10 of their salary being taken out to fund their pension while having their wages frozen for years - oh and all by the way being underpaid compared to the private sector to begin with - and whose job description is to literally to try to serve the public interest. So I wouldn't be so quick to blame the "state workers getting over on pensions". I'm sure you'll also be happy to hear its my understanding that the healthcare after retirement is already being phased out.
Finally I'll add that my understanding on why NJ property taxes are so high relative to other states is that NJ has a lot of small individual towns compared to other states. With your tax dollars you might have a local police department that is very responsive and a excellent local public school system - but yes you have to pay for those things with higher property taxes.
Decided to start a separate thread for state pension deiscussion.
http://forum.mrmoneymustache.com/welcome-to-the-forum/future-of-state-pension-plans/ (http://forum.mrmoneymustache.com/welcome-to-the-forum/future-of-state-pension-plans/)
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
Sure, that's no mystery to me. They feel entitled to keep things the way they were, rather than as they are now. They don't like change. My own grandfather was priced out of his home in CA.
Some of those same people also feel that America itself has gone to hell, and rising property taxes are just another symptom. "There are darkies at the country club now! Men can't even keep their wives from working!" My grandfather, in addition to being a kind and generous man, was also a raging sexist and a horrible bigot.
His solution to these parallel "problems" was to sell his expensive California home and buy an estate in rural Arkansas, where taxes are low and "people know their place". Good riddance, Grandpa. RIP, but the world is ready to move on without you.
I used to have similar beliefs. I live in a gentrified community. I am one of the gentrifiers. Believe me, there's no question that the neighborhood is 1000 times better than it was before when fully armed marines refused to walk the streets because it was a war zone and now I can walk around at night with little risk. But there were some decent people who lived here before too and as I get to know some of them (some return in subsidized apartments), I'm learning just how much community matters in poorer communities. These communities were a support system for many who didn't have the money to pay for services or the skills or tools to DIY. It's almost halloween, and families that were shipped out of here 15 years ago come back to bring their kids and grandkids to a neighborhood that they thought of as home and to see old friends. The community was scattered, but Halloween seems to be a homecoming for people who were blown away to 3 different states when the deal was struck to move them out.
If you have any understanding of the benefits of diversity, you should remember that diversity is not just about race -- it's also about age and economics. I believe that living among people who are unlike you in terms of race, finance, background opens you up to a world of new thoughts and understanding. I bought into this dream -- I hope it works. I realize it's still an experiment. All I can say is that for me, it's working and making me more open-minded. I hope it works on the other side of the equation so that seeing my example will help to uplift some of my neighbors out of poverty. Only time will tell.
But my point is, don't be so quick to forget that your grandpa had value to the neighborhood even though he couldn't afford to keep up with the neighbors.
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
How does this work?
Traditionally rich people don't seek out paying higher taxes and most of my property tax goes on schools and transit - something rich people don't use.
Is raising property taxes typically just to build fancy municipal fitness centers and golf courses or is it a deliberate gentrification plan to remove poor people?
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
How does this work?
Traditionally rich people don't seek out paying higher taxes and most of my property tax goes on schools and transit - something rich people don't use.
Is raising property taxes typically just to build fancy municipal fitness centers and golf courses or is it a deliberate gentrification plan to remove poor people?
It is very simple. You put a politician near money, they spend it.
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
How does this work?
Traditionally rich people don't seek out paying higher taxes and most of my property tax goes on schools and transit - something rich people don't use.
Is raising property taxes typically just to build fancy municipal fitness centers and golf courses or is it a deliberate gentrification plan to remove poor people?
It is very simple. You put a politician near money, they spend it.
In fixed tax rate areas, rising property values simply mean more property taxes for local politicians to spend. I had never heard of Washington's method for determining tax rates before (total funds needed/total assessed value). Unlike areas with a fixed tax rate, it means that only appreciation relative to the rest of the tax district would increase the share of taxes paid by a property owner. It still has the power to displace old residents in a gentrifying neighborhood by increasing the share of the tax district's costs which they would be responsible for. (However, I imagine that most people displaced by gentrification are renters rather than homeowners, so any property tax increase would directly impact them.)
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I can see your point but also understand how pissed off some people would be if they have lived in a home their entire life of 70 years only to be priced out because some dot com millionaires decided that area would be a cool place to build 12,000sq ft homes.
How does this work?
Traditionally rich people don't seek out paying higher taxes and most of my property tax goes on schools and transit - something rich people don't use.
Is raising property taxes typically just to build fancy municipal fitness centers and golf courses or is it a deliberate gentrification plan to remove poor people?
It is very simple. You put a politician near money, they spend it.
Ha Ha! So true. But I think the poster wasnt talking about what the prop tax money is spent on, but more how property values increase so much and so fast when old homes are razed and new behemoth mcmansions are built. So that now grandmama, in her tiny house and living on her tiny fixed income and no way to earn more money, is forced to sell the home she's lived in for decades because she can't afford the cost of increased prop taxes. When you live where house values can increase by 30% or more a year for several years (Cali in the early to mid 2000's) it would be hard for an older low infome retiree to stay in their homes.
That doesn't make sense as a response nobodyspecial's question---it still implies increased spending. Realistically, the "rich" people moving to an area may only be better off than the earlier inhabitants---still demanding public schools in lieu of Exeter and clamoring for more roads rather than flying their helicopters---and have costlier expectations.
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In my (Canadian) small town the property tax is the assessed value * tax rate.
The assessed value goes up each year with property market but the tax rate goes down to give roughly the same amount of tax take - except for general inflation.
Most of the money is spent on things the rich don't want more of so a rise in prices doesn't mean a rise in tax demand. In fact a bunch of $M McMansions would lower the property taxes of existing home owners.
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So most states will raise them when property values increase and often lower them when property values decrease.
I've seen the exact opposite situation, here. When property values decline, the city is forced to RAISE tax rates because the city infrastructure requires relatively constant spending. They try to even out their income stream by raising rates when values go down, in order to make up the shortfall.
Sadly, they never seem to lower the rates again when property values go back up.
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So most states will raise them when property values increase and often lower them when property values decrease.
I've seen the exact opposite situation, here. When property values decline, the city is forced to RAISE tax rates because the city infrastructure requires relatively constant spending. They try to even out their income stream by raising rates when values go down, in order to make up the shortfall.
Sadly, they never seem to lower the rates again when property values go back up.
Same thing here but most tax increases are only done if voter approved first. And then not for property taxes. But they'll try to raise sales taxes or other taxes or increase school bonds to cover shortfalls. There's always a measure up to increase various taxes or school bonds. Sometimes they're approved, sometimes not. If not I guess they cut funding for programs. The town next to mine has a measure on the ballot to increase sales tax to cover the shortfall for police services. If approved it'll be one of the highest dales taxes in Calif. If not they'll cut police and 911 services. Of course the fact that they just bought a fleet of new Dodge Charger Pursuit model police cars and Chevy Tahoes police models has nothing to do with the shortfall. Nope...nothing ;-).
But they won't raise property taxes for that stuff. When the housing market crashed in 2007 lots of people got their prop taxes lowered by quit a bit. To function on the lower revenue they laid off hundreds of teachers and school employees and shut down a bunch programs and schools.
ETA this has been my experience but maybe some towns in Cali do raise prop taxes to cover shortfalls. Some towns have special taxes called Mello Roos that add an approx. 1/2% to prop taxes to cover the cost of infrastructure like parks, street lights, etc... Those are usually in new master planned communities and eventually end once those things are paid off.
In our town they just try to pass propositions to issue bonds to pay for school infrastructure. "I already pay enough taxes!!" Dude, I looked, and you paid $1000 last year on a $1.3M home.
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^oh yeah - lovely prop 13. Even if those school bonds pass it won't cost that dude with the $1000/year taxes on his $1.3 mm house much because the amount he'll pay for the bond will be based on his house's property tax basis rather than its current assessed value. So if his property tax basis is $100k he's going to be paying MUCH less for the bond than if it was based on the current market value.
Has anyone proposed extending this to income tax?
You pay income tax based on what your ancestors paid when they first came to America (in unadjusted $)
So all those real Americans (the 100Million that were on the Mayfower) will pay a few groats and newcomers will pay $$$$$
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I thought California had a crazy rule where the tax assesment was whatever the house was last sold for?
So if you had managed to keep grandfather's farm in a family trust for a few generations you could have a dozen acre mansion estate in the middle of Beverly Hills with a tax value of $100.
Has that gone away ?
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Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I've taken the same attitude toward Prop 13. I think there are more problems with it in areas with the highest property values than there are in moderately priced markets.
I'll have to take this attitude when I buy (SF Bay Area for me, so the very top of the market, alas) just so I'm not super pissed every time the tax bill comes, but prop 13 is seriously one of the stupidest things ever and royally screws anyone who is not a highly paid tech worker (or equivalent). I get why it was passed and certainly no one foresaw the insane housing situation that would eventually develop, but man does it annoy me that after I finally save an absurdly large down payment to buy a thoroughly underwhelming SFH, my reward will be subsidizing services for thousands of millionaire Gen Xers and baby boomers who have no problem droning on about entitled millennials, or how they worked their own way through college and still saved enough to buy a house 3 years after graduating, or complaining about their supposedly high tax rates.
Unfortunately for me, there is no place on earth I would rather live than Northern California, but man does prop 13 grind my gears :)
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This is what I mean by getting over, "As 2014 ended, 1,988 retirees were collecting state pensions in excess of $100,000 a year — the elite “1-percenters” among New Jersey’s 285,000 retirees. (Click here for the list) That number has grown quickly since 2010 when the count was 971.
http://watchdog.org/200210/nj-100k-pensions-double/
•Of those PFRS pensioners, nearly 93 percent — 873— took advantage of “special retirement,” a provision in state law that enables police and fire officials, but not other public employees, to collect full pensions at relatively young ages.
Under special retirement, Joseph Blaettler was able to step down as Union City deputy police chief at age 46 to start pocketing roughly $135,000 a year for life.
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I was wrong NJ is 200 billion in the hole for State Pensions
Taxpayers beware! NJ debt nears $200 billion for benefits
http://watchdog.org/237832/nj-benefit-debt-200b/
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Double-dipping tricks cost millions in NJ’s Essex County.
http://watchdog.org/236163/nj-double-dipping-tricks/
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^oh yeah - lovely prop 13. Even if those school bonds pass it won't cost that dude with the $1000/year taxes on his $1.3 mm house much because the amount he'll pay for the bond will be based on his house's property tax basis rather than its current assessed value. So if his property tax basis is $100k he's going to be paying MUCH less for the bond than if it was based on the current market value.
Has anyone proposed extending this to income tax?
You pay income tax based on what your ancestors paid when they first came to America (in unadjusted $)
So all those real Americans (the 100Million that were on the Mayfower) will pay a few groats and newcomers will pay $$$$$
Well Calif does have a 2% annual increase in prop taxes so they do go up. I think when prop 13 was enacted (mid 1970s) the logic was to set the prop taxes the same for everyone (1% of the purchase price) and add in a 2% increase on that amount each year for inflation, and that 10 years down the road a new buyer will probably be paying prop taxes somewhat close to what a long term buyer was paying. But then property values went wacko and far out paced that 2% annual increase - especially in the late 1990s and early 2000s. Median price for a house in my hood in 1996 was under $150k. 10 years kater median price was around $700k. Don't think the framers of prop 13 saw that coming. Don't think anyone saw that coming.
They made a huge mistake to set it at 2% instead of CPI, too. Many, many years inflation on city services has been more than 2%. I think if it had been set to inflation, it would not be so severe as today.
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Okay, I checked inflation.CPI US calculator says.. CPI 1975 to 2016 ==4.49
2% increase over 41 years = 2.25
So, the California prop 13 set the 2% rate way too low, and those on it, for a long time are paying about half of the property taxes they should be paying, in a world where the intent of prop 13 matched the actuality of execution.
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Okay, I checked inflation.CPI US calculator says.. CPI 1975 to 2016 ==4.49
2% increase over 41 years = 2.25
So, the California prop 13 set the 2% rate way too low, and those on it, for a long time are paying about half of the property taxes they should be paying, in a world where the intent of prop 13 matched the actuality of execution.
I think a lot of Californians would be OK with aa annual % increase higher than 2% - which I agree is way too low. What most don't want is to be reassessed each year like they do in many other States, and see tax rates go up by huge amounts each year during bubbles.
In the two states in which I own real estate, housing values only apportion among properties the total tax to be raised (e.g., the city council and budgeting office have determined the budget, and now X percent of it needs to be apportioned among the taxed real property). From your post, it seems like you're suggesting that if there's a run up in property values generally, the total tax revenue just goes up as a consequence---does the city or county just get more revenue than it budgeted for? What happens to the excess? I don't mean in the flippant "they find a way to spend it" sense.
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Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I've taken the same attitude toward Prop 13. I think there are more problems with it in areas with the highest property values than there are in moderately priced markets.
I'll have to take this attitude when I buy (SF Bay Area for me, so the very top of the market, alas) just so I'm not super pissed every time the tax bill comes, but prop 13 is seriously one of the stupidest things ever and royally screws anyone who is not a highly paid tech worker (or equivalent). I get why it was passed and certainly no one foresaw the insane housing situation that would eventually develop, but man does it annoy me that after I finally save an absurdly large down payment to buy a thoroughly underwhelming SFH, my reward will be subsidizing services for thousands of millionaire Gen Xers and baby boomers who have no problem droning on about entitled millennials, or how they worked their own way through college and still saved enough to buy a house 3 years after graduating, or complaining about their supposedly high tax rates.
Unfortunately for me, there is no place on earth I would rather live than Northern California, but man does prop 13 grind my gears :)
Come on now.
I'm an X-er who paid my way through college with loans and the military.
I was still not able to buy a house in CA until I was in my mid-30s.
Alas, it was on the way UP, so my house is FINALLY worth what it was 12 years ago when we bought it. The silver lining of the crash was that my prop taxes went down from $8400 to $5500 at the bottom. (They are now back up around $7k).
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This is what I mean by getting over, "As 2014 ended, 1,988 retirees were collecting state pensions in excess of $100,000 a year — the elite “1-percenters” among New Jersey’s 285,000 retirees. (Click here for the list) That number has grown quickly since 2010 when the count was 971.
http://watchdog.org/200210/nj-100k-pensions-double/
•Of those PFRS pensioners, nearly 93 percent — 873— took advantage of “special retirement,” a provision in state law that enables police and fire officials, but not other public employees, to collect full pensions at relatively young ages.
Under special retirement, Joseph Blaettler was able to step down as Union City deputy police chief at age 46 to start pocketing roughly $135,000 a year for life.
In many states property taxes do not go to fund state pensions. Here in Calif all property tax money goes to fund local government and education, with the bulk of the money going to fund public school from K on up. The money stays within the county.
But the money that goes to "local government and education" pays for pensions, too. Fire dept, sheriff's dept, teachers, water district, etc...they all have very rich pension schemes. An example in Orange County: The city of Anaheim owed CalPers $56million in FY2015-2016 for their city workers' pensions.
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Okay, I checked inflation.CPI US calculator says.. CPI 1975 to 2016 ==4.49
2% increase over 41 years = 2.25
So, the California prop 13 set the 2% rate way too low, and those on it, for a long time are paying about half of the property taxes they should be paying, in a world where the intent of prop 13 matched the actuality of execution.
I think a lot of Californians would be OK with aa annual % increase higher than 2% - which I agree is way too low. What most don't want is to be reassessed each year like they do in many other States, and see tax rates go up by huge amounts each year during bubbles.
But its not 2%, anytime a house is sold or improved the taxes are reset to current rate - so when the house transfers it could be far more than 2% and usually is. Its not a perfect law but it is better than people losing their houses because property taxes increase too much/too fast.
I had a house in NJ and my taxes doubled in the span of 6 years, the increase worked out to be about a $500 per month. I managed due to living well below my means but that is a meaningful increase that put strain on a lot of people in the community. Since then NJ has enacted legislation to cap increases to 2% but unlike CA, each town can go beyond that with voter approval. Also, the cap doesn't apply to capital expenditures, debt service changes, pension costs, health care costs - some pretty big items.
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Originally, for CA, (60's and 70's) the increase in property values led to a direct increase in property taxes, which were assessed at a percentage (e.b., 1%) of property value.
Through the 70's of course, this would mean huge 20% increases every year for property taxes, for people living in existing homes. (it was not adjusted). A second problem was with some assessments that were artificially low, being suddenly corrected in one year.
The extra money went to the city budget. Big money rush for the city, likely resulting in spending on improvements with fire, police, roads, libraries, and sewers, water, etc.
The population became upset at rampant increases and expanding city budgets, and Prop 13 was passed by a 65% approval vote of 70% the population in 1978. A main change of Prop 13 was to limit the annual property tax paid by an individual, on an existing property, to 2% per year. (NOTE, not to CPI, but to a named 2%). Other changes were to revert to market assessment in purchase year as the basis of pricing, and to limit overall property tax rates and require 2/3 vote to pass future changes in taxation rates (making it hard to change in future).
The average home price in 1975 was close to 50,000, for example. That home would have paid a maximum of 1% or $500/year in 1978, and would therefore pay a maximum of $1060 per year in taxes today... and be worth >$350,000, with neighbors in identical property paying $3800/yr.
So -- Today, nearly 40 years later --
Yes, the extra increase goes to the bottom line of the city, BUT, because Prop13 has been around so long, using 2% instead of the actual city expenses increase (approx 3.9%/yr), the average property tax paid by homeowners NET over the entire group, is actually quite low.
I calculated that the average property tax in California Alameda Country, across all households new and old was $692/yr, (I am still not sure how it gets to be so low, maybe because of defaults or zero taxed homes? This is total revenue / number of households) but that the average property tax when buying a home today is $3800...
So, today, the extra money obtained would simply go to shore up underfunded programs due to the very low average tax rate, and reduced transfers from State funds. Note that property tax is only 14% of the total budget that the Alameda County administers, they also get transfer funds from the state, and in-area revenues.. which may be driving up state taxes to cover it all.
Meanwhile, when a decrease in net property values (2008/9) reduces many homeowners' tax, the city again is short of money.
This was a very interesting updated look at property taxes for me, I had not revisited these numbers since 2007, when I recall that the average property tax paid was a $400 per property, yet new owners (me looking for a home at that time) would be paying $8k/yr...
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Come on now.
I'm an X-er who paid my way through college with loans and the military.
I was still not able to buy a house in CA until I was in my mid-30s.
Alas, it was on the way UP, so my house is FINALLY worth what it was 12 years ago when we bought it. The silver lining of the crash was that my prop taxes went down from $8400 to $5500 at the bottom. (They are now back up around $7k).
Didn't say all Gen-Xers. I have no inherent age bias, just observing a trend. At 33, I don't even consider myself a millennial although I technically am. The point more was that there are a lot of people in the 40+ category who benefited from way cheaper college, way lower housing prices, and an unprecedented period of economic growth, so it's hard not to be annoyed when individuals from that demographic complain about millennials and/or their tax burdens, when in fact their fair share of the latter is subsidized by people like me. If that behavior doesn't apply to you then I have no beef :)
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Come on now.
I'm an X-er who paid my way through college with loans and the military.
I was still not able to buy a house in CA until I was in my mid-30s.
Alas, it was on the way UP, so my house is FINALLY worth what it was 12 years ago when we bought it. The silver lining of the crash was that my prop taxes went down from $8400 to $5500 at the bottom. (They are now back up around $7k).
Didn't say all Gen-Xers. I have no inherent age bias, just observing a trend. At 33, I don't even consider myself a millennial although I technically am. The point more was that there are a lot of people in the 40+ category who benefited from way cheaper college, way lower housing prices, and an unprecedented period of economic growth, so it's hard not to be annoyed when individuals from that demographic complain about millennials and/or their tax burdens, when in fact their fair share of the latter is subsidized by people like me. If that behavior doesn't apply to you then I have no beef :)
Man, Prop 13 was passed before any Gen Xer could vote, and it's still our fault!
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Didn't say all Gen-Xers. I have no inherent age bias, just observing a trend. At 33, I don't even consider myself a millennial although I technically am. The point more was that there are a lot of people in the 40+ category who benefited from way cheaper college, way lower housing prices, and an unprecedented period of economic growth, so it's hard not to be annoyed when individuals from that demographic complain about millennials and/or their tax burdens, when in fact their fair share of the latter is subsidized by people like me. If that behavior doesn't apply to you then I have no beef :)
It's not just that Gen-X had it easier than millennials, deficit spending in the US has been placing increasing burdens on future taxpayers for most of the last century (eased somewhat by monetary inflation).
I calculated that the average property tax in California Alameda Country, across all households new and old was $692/yr, (I am still not sure how it gets to be so low, maybe because of defaults or zero taxed homes? This is total revenue / number of households) but that the average property tax when buying a home today is $3800...
Not all the property taxes in a county go to the county government, so I think your $692/yr may just be the portion of the property that the county government gets.
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I calculated that the average property tax in California Alameda Country, across all households new and old was $692/yr, (I am still not sure how it gets to be so low, maybe because of defaults or zero taxed homes? This is total revenue / number of households) but that the average property tax when buying a home today is $3800...
I don't have a problem with that, it promotes stability for homeowners and requires government to be fiscally responsible.
Meanwhile, when a decrease in net property values (2008/9) reduces many homeowners' tax, the city again is short of money.
I never understood this part of it. Homeowners shouldn't get protection from rising property taxes combined with downside benefits. This part should be changed so that both the homeowners and the towns benefit from the stability argument.
Yes, the extra increase goes to the bottom line of the city, BUT, because Prop13 has been around so long, using 2% instead of the actual city expenses increase (approx 3.9%/yr), the average property tax paid by homeowners NET over the entire group, is actually quite low.
Maybe, but argument loses a little when property tax revenue increase by 4.11% over the same period.
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I calculated that the average property tax in California Alameda Country, across all households new and old was $692/yr, (I am still not sure how it gets to be so low, maybe because of defaults or zero taxed homes? This is total revenue / number of households) but that the average property tax when buying a home today is $3800...
I don't have a problem with that, it promotes stability for homeowners and requires government to be fiscally responsible.
Meanwhile, when a decrease in net property values (2008/9) reduces many homeowners' tax, the city again is short of money.
I never understood this part of it. Homeowners shouldn't get protection from rising property taxes combined with downside benefits. This part should be changed so that both the homeowners and the towns benefit from the stability argument.
Yes, the extra increase goes to the bottom line of the city, BUT, because Prop13 has been around so long, using 2% instead of the actual city expenses increase (approx 3.9%/yr), the average property tax paid by homeowners NET over the entire group, is actually quite low.
Maybe, but argument loses a little when property tax revenue increase by 4.11% over the same period.
Homeowners with upside protection still have 2% tax applied until they match market rates, aren't protected by the downfall.
Property tax increases by 4 % a year, by increases taxes on new homes and resale of existing homes to new buyers by much much more than 4%. Some think that is fair but I would rather everyone pay close to their share of actual services, and have deferment options for those on fixed incomes if needed.
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Homeowners with upside protection still have 2% tax applied until they match market rates, aren't protected by the downfall.
Property tax increases by 4 % a year, by increases taxes on new homes and resale of existing homes to new buyers by much much more than 4%. Some think that is fair but I would rather everyone pay close to their share of actual services, and have deferment options for those on fixed incomes if needed.
Why does a fixed income matter - so you mean retired or poor? So it is ok for someone who has a certain income to be forced out of their house because property taxes rise too much? You (the buyer) 100% controls whether or not to buy the house with said property taxes....don't think its fair then don't buy the house. Or buy and take comfort that when the neighbors move then the next buyer will likely be paying more than you.
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Homeowners with upside protection still have 2% tax applied until they match market rates, aren't protected by the downfall.
Property tax increases by 4 % a year, by increases taxes on new homes and resale of existing homes to new buyers by much much more than 4%. Some think that is fair but I would rather everyone pay close to their share of actual services, and have deferment options for those on fixed incomes if needed.
Why does a fixed income matter - so you mean retired or poor? So it is ok for someone who has a certain income to be forced out of their house because property taxes rise too much? You (the buyer) 100% controls whether or not to buy the house with said property taxes....don't think its fair then don't buy the house. Or buy and take comfort that when the neighbors move then the next buyer will likely be paying more than you.
Sure, from a mindset standpoint for those like me who can manage to save up a down payment, that's fine, but that doesn't mean Prop 13 was a good idea. And why should my neighbor paying more taxes than me on a house with the same value be a comfort? Why is an elderly person being "forced" to sell their house for hundreds of thousands, or even $1m+ in profit (because reverse mortgages aren't a thing?) intrinsically worse than younger generations being potentially unable to ever buy property because the taxes are so grossly disproportionate?
I'm no policy expert but there has to be a better way to serve both purposes. We can protect house-poor seniors with low fixed incomes through laws specifically designed for them. I see no reason why the generally wealthy should benefit just as much purely because they were lucky with their timing when buying a home.
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I personally like the idea that the total property taxes to be raised divided by the total assessed value is used to determine the tax rates (as one poster states Washington does). I also like the option some jurisdictions have for seniors to defer property taxes until they move out of the house (accruing interest equal to cost to the jurisdiction of raising funds by selling bonds). While I do expect that I will benefit from Prop 13's property tax structure, I can see why it can cause problems.
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I personally like the idea that the total property taxes to be raised divided by the total assessed value is used to determine the tax rates (as one poster states Washington does). I also like the option some jurisdictions have for seniors to defer property taxes until they move out of the house (accruing interest equal to cost to the jurisdiction of raising funds by selling bonds). While I do expect that I will benefit from Prop 13's property tax structure, I can see why it can cause problems.
Here's the Q&A on the approach in washington, which keeps stuff from growing much more than 1% per year unless your house appreciates a lot faster than others in the same tax district: http://dor.wa.gov/content/getaformorpublication/publicationbysubject/taxtopics/propertytax/onepercentqna.aspx
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Here's the Q&A on the approach in washington, which keeps stuff from growing much more than 1% per year unless your house appreciates a lot faster than others in the same tax district: http://dor.wa.gov/content/getaformorpublication/publicationbysubject/taxtopics/propertytax/onepercentqna.aspx
I think Washington's system makes much more sense than California's.