Author Topic: Are these property taxes totally insane? (Buy or rent?)  (Read 12359 times)

sunflower_yellow

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Are these property taxes totally insane? (Buy or rent?)
« on: September 13, 2013, 12:43:39 PM »
My husband and I are considering purchasing our first home.  We live in New York State.  Cost of living index for our area is 112/100.

CURRENT RENTING SITUATION:

1 bedroom apartment, $890/ month includes all utilities, short but difficult (hill) bike commute.
We don't need much space - live comfortably in ~525 sq ft.  Would VERY much like to establish veggie gardens (we are both avid gardeners).  Rent has increased quite a bit in the past few years

POTENTIAL HOME PURCHASE SITUATION:

Option 1 = Live in city:  shorter, easier bike commute.  Housing stock is VERY old and generally in disrepair.
Average cost of typical small home in city:  $160k-200k
Property taxes 1.99%, school taxes 1.7%

Option 2 = Live in suburbs:  similar commute up big hills, housing generally quality better than city, larger yard better for garden
Average cost of typical small house in suburbs:  $180k-200k
Property taxes 1.33%, school taxes 1.7%

Option 3 = Live in rural area:  long commute that will suck in the winter, housing quality highly variable, lots of potential for garden and small livestock
Average cost of typical small house:  $150k
Property taxes ~1%, school taxes depends, say 1.7%

FIRST QUESTION:

I see you people talking about ANNUAL property tax bills being less than $1k.  Where the frick do you live?!?  Our projected MONTHLY tax bill for a 100 year old, falling down house in the city valued at $200k would be $630 or $7.7k per year.  Is this totally insane, or is it just me??

SECOND QUESTION:

Does it make financial sense to buy a house?  By a combination of being fortunate enough to have parents who helped us out with school and being healthy, we have no debt.  We have ~110k saved up for a down payment on a home.  Assuming a $200k home with $90k mortgage, throwing an extra $300 per month at principle, 30 year mortgage at 4.65%, I calculate that we can pay off the mortgage in 13 years (conservatively - we could probably do it much faster).  Majority of the cost would still be taxes and insurance...  and that means, in 13 years, we'd just be paying taxes, home insurance, and home maintenance costs.  Hmmm.

Thanks in advance - I'm really looking forward to getting other perspectives on this question!

kkbmustang

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #1 on: September 13, 2013, 12:51:48 PM »
I've got insanely high property taxes, too. Can't help you out there. We live in a 2650 sf (per tax rolls, plus a ~200sf addition that isn't included in the square footage on the tax rolls for whatever reason - it was that way when we bought it) house, valued for tax purposes at $405k (FMV is much higher) and our property taxes annually are almost $10k.

Another Reader

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #2 on: September 13, 2013, 12:53:57 PM »
Taxes alone on a house are a huge percentage of what you are currently paying in rent.  And that rent includes utilities.  In your shoes, I would rent and see if I could find a spot in a community garden.  Maybe a friend will offer a patch of land in exchange for some of the harvest.  But the value proposition for buying is not there.

Jamesqf

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #3 on: September 13, 2013, 01:53:59 PM »
I see you people talking about ANNUAL property tax bills being less than $1k.  Where the frick do you live?!?

Northern Nevada :-)  My property tax runs about $1000/yr, but the place is realistically valued at something upwards of $300K - current market.

Quote
Our projected MONTHLY tax bill for a 100 year old, falling down house in the city valued at $200k would be $630 or $7.7k per year.  Is this totally insane, or is it just me??

Yes, it's totally insane.  But someone has to pay for all those great city services you get, so I'm not sure whether the insanity is in wanting those services, or expecting to get them for cheap.

I can't really answer your rent vs buy question.  If it's purely financial, I'd say continuing to rent would be best.  It depends on whether the net improvement in your quality of life is worth the extra money.  If it was me, I'd say yes. 

The real decision is between renting and the rural property.  The city or suburban options cost more, and don't seem to offer enough Q of L improvement to justify that cost.  But again, your subjective values may vary.
« Last Edit: September 13, 2013, 07:22:32 PM by Jamesqf »

TreeWeezel

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #4 on: September 13, 2013, 02:03:10 PM »
The thing about gardening is...you can never make that big a dent in your food budget.  Nathan Lewis (btw a very complementary blog to follow alongside MMM) figured the absolute minimum farm area to feed a family of 4 at something like 10 acres, mostly grain.  Typical suburban garden at .01 or less acres reeks of a Mickey Mouse effort.

So to turn that into advice…growing basil, oregano, and mint in containers on your windowsill is the best benefit/$/cost you can do.  Veg is just kinda painstaking if you ask me, plus whatever you harvest will be on sale at farmers markets at the exact same time.  If gardening is a true interest, you can always volunteer somewhere and work on something far nicer than you would have had at home. 

sunflower_yellow

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #5 on: September 13, 2013, 02:09:14 PM »
Thank you all so much for your quick replies.  Lots of food for thought!

Quote
Our projected MONTHLY tax bill for a 100 year old, falling down house in the city valued at $200k would be $630 or $7.7k per year.  Is this totally insane, or is it just me??

Yes, it's totally insane.  But someone has to pay for all those great city services you get, so I'm not sure whether the insanity is in wanting those services, or expecting to get them for cheap.

Ok, I'll bite...  I live in a college town.  The largest landowner in my city doesn't pay any property taxes.  Yet the students who live on university-owned property abuse *ahem* use quite a share of the attention of the local police and firefighters and certainly contribute to the deterioration of the local roads.  Great city services?  Try underfunded and overstretched.  :-/

Quote
The real decision is between renting and the rural property.  The city or suburban options cost more, and don't seem to offer enough Q of L improvement to justify that cost.  But again, your subjective values may vary.

Ah hah.  Yes!  When you put it that way, I do agree.  My husband just came home, and this is exactly what we discussed.

Our city is small enough that you can go from downtown to the middle of the woods with a 15 minute drive.  That puts many rural areas absolutely within biking distance.  We are now leaning toward focusing our search on "rural" properties located along transport corridors that make sense for our current and anticipated future travel patterns.  We have one car (paid off), I absolutely hate driving, and I'm really resistant to getting a second vehicle, so the transport question is huge for us.

sunflower_yellow

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #6 on: September 13, 2013, 02:20:38 PM »
The thing about gardening is...you can never make that big a dent in your food budget.  Nathan Lewis (btw a very complementary blog to follow alongside MMM) figured the absolute minimum farm area to feed a family of 4 at something like 10 acres, mostly grain.  Typical suburban garden at .01 or less acres reeks of a Mickey Mouse effort.

So to turn that into advice…growing basil, oregano, and mint in containers on your windowsill is the best benefit/$/cost you can do.  Veg is just kinda painstaking if you ask me, plus whatever you harvest will be on sale at farmers markets at the exact same time.  If gardening is a true interest, you can always volunteer somewhere and work on something far nicer than you would have had at home.

Totally disagree that you can't make a dent in your food budget with homegrown produce.  While it's true that it would take several acres to grow enough to feed a family entirely, I can pay local farmers to grow grain and raise meat for me.  I can grow a very significant portion of our fresh veggie intake for the summer and autumn months, with additional for preservation, in a relatively small area (I am hoping to establish a 20 x 50 plot, a huge step up from our current 12 x 15 plot at our rental unit).  Chickens are working animals; they can do a great job with pest control and you get some eggs to boot (though small gardens are not large enough to provide enough grub for chickies, so you're not quite getting your eggs for free, plus you have to deal with predators).

The key is to know what you like to eat and whether it's cheaper to pay someone else to grow it for you.  For this reason, I never grow carrots or onions, because carrots are $0.99/pound organic at the local grocery, and onions are mad cheap.  Homegrown tomatoes, on the other hand, are incredibly cheap and plentiful if they come from your own garden, particularly once your garden is established and you are saving your seed from year to year.  Same with fresh spinach.  Fresh kale.  Beets are easy to grow and expensive in stores.  Cucumbers.  Green beans are ridiculously easy, often cheap in stores but not always.  Etc.

The organic v. non-organic question also comes into play.  If you live in California and don't mind conventional produce, for example, then I'm sure your veggie bills are less expensive than living farther down the distribution chain and preferring organic (as I do).

I also disagree that veggies are painstaking...  there is a decent investment in time first thing in spring as you prepare your garden and tend your seedlings (if you are starting from seed).  After you plant, you have to get up early to tend the garden, but it's less labor.  Labor picks up again during harvest/ preservation time.  And then one last push to put the garden to bed for the winter.  Not a big deal, at least not for me.

Didn't mean to turn this into a thread about gardening, but it's in our bones I guess...  Come from a long line of gardeners, both my husband and I.  I had a little garden patch of my own, next to my mom's, when I was a girl.  Established a container garden on my porch in university.  Have always grown some portion of my food, with breaks here and there.  Not a fan of community gardens; you have to deal with someone else's rampant cabbage beetles and it makes it harder to save seed on certain species when you don't know what's growing around you.
« Last Edit: September 13, 2013, 02:22:20 PM by sunflower_yellow »

electricworm

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #7 on: September 13, 2013, 04:05:31 PM »
I dont understand the math. You say property taxes in the city are about 2%...so for a 200k home it should be 4k per year? How did you get 7.7k?
Doesn't seem all that insane to me and I live in a smaller city in the midwest.

feelingroovy

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #8 on: September 13, 2013, 04:15:33 PM »
Hi Sunflower,

I don't know if you live in the same university town in New York that I do, but everything you describe sounds just like where I live.

And yes, the property taxes are insane.

Ironically, we moved here in 1999 partially because of the low cost of living.  We bought our first house in one of the most desirable neighborhoods downtown for $57k.  (It was old and did need a lot of work, which we did).  Between the increase in assessment due to our improvements, and the property tax RATE doubling in the 5 years we lived there, our property taxes quadrupled in the 5 years we lived there.

That's when we decided that we had to move out of town. 

The only way to cope with the high taxes is to use the college town to your advantage.  It creates many opportunities.

This is what we've done:

1. We bought a simple ranch house in a hamlet 8 miles from the downtown core.  Just beyond the suburbs.  Close enough to bike (though it's all uphill on the way home) and the bus stops at our driveway.  We still have only one car and supplement with bike/bus.  We're still in the college town school district and county, so we didn't give up anything there.

It was pretty ugly when we bought it--paneling, orange carpet, pink walls.  This is what you want--easy to change but keeps the initial price low.  At least here, the county will immediately reassess your house for whatever you paid for it.  Tax-wise, it's much better to purchase cheap and improve than to pay more for pretty upfront.

2. More importantly, our house has an "accessory apartment" over the detached garage.  The realtors here distinguish between a house with accessory apartment" (nice enough to be owner occupied) and a duplex (pure two-unit student rental).  This has made all the difference.  Yes, our property taxes still make up 1/3 our our monthly mortgage payment, but the rents are relatively high.  We're a 10 minute drive (or 15 minute bus ride) from the university.

We really loved being able to walk places and tried to find a two-unit downtown, but the numbers just didn't work, and we were not up for rehabbing a second dump. 

Even so, we would absolutely move to a different state if my kids (now 9 and 12) weren't so attached and my extended family nearby.

mpbaker22

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #9 on: September 13, 2013, 04:30:08 PM »
[quote author=Jamesqf link=topic=8810.msg137152#msg137152

Yes, it's totally insane.  But someone has to pay for all those great city services you get, so I'm not sure whether the insanity is in wanting those services, or expecting to get them for cheap.
[/quote]

Yet walmart around the corner has that 100 year tax abatement ...
Seriously, I'm generally Republican, but this sort of crony capitalism is so common.

Baylor3217

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #10 on: September 13, 2013, 05:14:09 PM »
Living in Texas, those taxes seem ridiculously low.  We, however, aren't shackled with a state income tax to give the the government to mismanage so maybe it evens out.

sunflower_yellow

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #11 on: September 13, 2013, 07:10:57 PM »
I dont understand the math. You say property taxes in the city are about 2%...so for a 200k home it should be 4k per year? How did you get 7.7k?
Doesn't seem all that insane to me and I live in a smaller city in the midwest.

Add in school taxes.  Another 1.7% if you live in the city, higher if you live in the rural areas.  :-)

sunflower_yellow

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #12 on: September 13, 2013, 07:22:15 PM »
Hi Sunflower,

I don't know if you live in the same university town in New York that I do, but everything you describe sounds just like where I live.

And yes, the property taxes are insane.

Ironically, we moved here in 1999 partially because of the low cost of living.  We bought our first house in one of the most desirable neighborhoods downtown for $57k.  (It was old and did need a lot of work, which we did).  Between the increase in assessment due to our improvements, and the property tax RATE doubling in the 5 years we lived there, our property taxes quadrupled in the 5 years we lived there.

That's when we decided that we had to move out of town. 

The only way to cope with the high taxes is to use the college town to your advantage.  It creates many opportunities.

This is what we've done:

1. We bought a simple ranch house in a hamlet 8 miles from the downtown core.  Just beyond the suburbs.  Close enough to bike (though it's all uphill on the way home) and the bus stops at our driveway.  We still have only one car and supplement with bike/bus.  We're still in the college town school district and county, so we didn't give up anything there.

It was pretty ugly when we bought it--paneling, orange carpet, pink walls.  This is what you want--easy to change but keeps the initial price low.  At least here, the county will immediately reassess your house for whatever you paid for it.  Tax-wise, it's much better to purchase cheap and improve than to pay more for pretty upfront.

2. More importantly, our house has an "accessory apartment" over the detached garage.  The realtors here distinguish between a house with accessory apartment" (nice enough to be owner occupied) and a duplex (pure two-unit student rental).  This has made all the difference.  Yes, our property taxes still make up 1/3 our our monthly mortgage payment, but the rents are relatively high.  We're a 10 minute drive (or 15 minute bus ride) from the university.

We really loved being able to walk places and tried to find a two-unit downtown, but the numbers just didn't work, and we were not up for rehabbing a second dump. 

Even so, we would absolutely move to a different state if my kids (now 9 and 12) weren't so attached and my extended family nearby.

I have a feeling that we live in the same town.  Especially the hills getting out of town.  Hi there, neighbor.  :-)

I had no idea that there was a difference between an accessory apartment and a duplex.  That's a really good tip.  Does that make the assessment less?

Like I mentioned above, we're living in a one bedroom quite comfortably right now.  It would be great to find a place with an accessory apartment...  and for us to live in said accessory apartment and rent out the rest for now!  If we decide to have kids in the future, then we could swap the smaller apartment for the larger house.

Thanks for your input.  I'm sorry that you had to leave your first home downtown because you couldn't/ wouldn't afford the taxes.  As much as I'd love to see the institutions of higher learning contribute more, I know that we'd lose some amount of jobs if they did so, and it would probably be the lower to middle income jobs of people who live in your hamlet that they'd chop, not the folks who are already living on the academic's or administrator's salary in certain urban neighborhoods.  Oh well.

AlexK

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #13 on: September 13, 2013, 07:31:26 PM »
In Nevada I paid $614 taxes on a $95k house in 2012. Also there is no state income tax. $7.7k/yr property tax sounds ridiculous to me.

I do like the fact that different locations within the US have such different tax amounts though. That way one can decide where on the tax/services slider they want to be. I imagine as the politicians here hear about the ridiculous amounts people are willing to pay elsewhere, ours will do nothing but go up.

Jamesqf

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #14 on: September 13, 2013, 07:35:56 PM »
I have a feeling that we live in the same town.  Especially the hills getting out of town.  Hi there, neighbor.  :-)

Though I think that applies to a lot of college towns in upstate New York.  But let me guess: Ithaca?

Further on the gardening, it's not really a matter of reducing the cost of one's food, it's the pleasure to be obtained from gardening.  First, through the act of gardening itself (most of my garden is in flowers, not food), and then because what you grow in a garden generally tastes better than the same fruit or vegetable that's been picked days earlier, partly ripe, and shipped in cold storage.  There is NO comparison between say a peach from the store, and one picked ripe & sun-warmed from the tree.  Then there are the things that you just can't get in stores, like quince, mulberries, fresh peas, real sweet corn...

mm1970

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #15 on: September 14, 2013, 01:51:12 PM »
Property taxes in New York State are incredibly high.  Sticker shock high.  My in laws all live there.

Total bills $1k per year, I wish!  Depends on the state.  I live in Cali, so Prop 13 means your taxes are never reassessed - always based on purchase price + a fixed increase allowed.  But that still means my prop taxes are $7k a year.

mm1970

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #16 on: September 14, 2013, 01:53:22 PM »
The thing about gardening is...you can never make that big a dent in your food budget.  Nathan Lewis (btw a very complementary blog to follow alongside MMM) figured the absolute minimum farm area to feed a family of 4 at something like 10 acres, mostly grain.  Typical suburban garden at .01 or less acres reeks of a Mickey Mouse effort.

So to turn that into advice…growing basil, oregano, and mint in containers on your windowsill is the best benefit/$/cost you can do.  Veg is just kinda painstaking if you ask me, plus whatever you harvest will be on sale at farmers markets at the exact same time.  If gardening is a true interest, you can always volunteer somewhere and work on something far nicer than you would have had at home.

Unless you are badass at gardening...like the Dervaes family in Pasadena.

mm1970

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #17 on: September 14, 2013, 02:00:19 PM »
I have a feeling that we live in the same town.  Especially the hills getting out of town.  Hi there, neighbor.  :-)

Though I think that applies to a lot of college towns in upstate New York.  But let me guess: Ithaca?

Further on the gardening, it's not really a matter of reducing the cost of one's food, it's the pleasure to be obtained from gardening.  First, through the act of gardening itself (most of my garden is in flowers, not food), and then because what you grow in a garden generally tastes better than the same fruit or vegetable that's been picked days earlier, partly ripe, and shipped in cold storage.  There is NO comparison between say a peach from the store, and one picked ripe & sun-warmed from the tree.  Then there are the things that you just can't get in stores, like quince, mulberries, fresh peas, real sweet corn...

This was going to be my guess too when they mentioned hills.  My hubby went to Cornell ... so yeah, hills.

Peony

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #18 on: September 14, 2013, 02:54:04 PM »
I live fairly near to New Paltz, NY, which has a desirable SUNY campus, and where taxes are high as well. I sort of like the idea of owning rental property there, but the taxes have been a deterrent to buying. The property values also are high relative to the rest of the county. On the other hand, the quality of life is excellent and apartments do not sit vacant (and if you're in Ithaca, well, that is a *really* nice place to be, IMO). Regarding cost-effective gardening, from the research my SO has been doing, using permaculture techniques can reduce costs and greatly boost yields of small plots. Part of that system is growing things that are native to your area but which are not so commonly known -- for example, pawpaws in New York State. We also had a crazy crop of raspberries and blueberries in our urban garden this year and did practically zero work to get them. When I realized what we would've spent to buy that much of that kind of produce I was kind of shocked. I think if you strategize carefully you *can* make a dent in your food budget.

feelingroovy

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #19 on: September 14, 2013, 05:01:13 PM »
@Jamesqf, yes, I'm in Ithaca. Ithaca is hills. :)

It's true, the taxes are a New York thing, not just an Ithaca thing. It's just in Ithaca, the property values are higher than most of upstate, but the rents will more than cover for it.

And Ithaca is very mustachian in general, once you get past the taxes.  It's very normal to meet people with one old, or even no, car.  There are tons of free things to do, and the general culture is one that puts quality of life over standard of living.

Sunflower, if you are happy living in a one bedroom, you could easily come out *way* ahead if you lived in the accessory apartment and rented the 3 bedroom unit.  The rents on a 3 br would come out just about equal to the PITI on a 200k house with 20% down.  With your down payment, you could actually have negative house costs.  :)

Even downtown, you'd come out ahead of what you're paying in rent. 

We didn't *have* to move.  We had actually paid off our mortgage downtown, and that's when the property taxes became really obvious--we were still paying $500/month on a paid-off house (and we were underassessed!).  The numbers just worked so much better, and we're too frugal to ignore them.

We have a similar house as a rental, and we're considering whether to get another.  We were actually thinking of renting this one and moving to a similar house.  Still trying to decide. :)



Jamesqf

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #20 on: September 14, 2013, 10:58:42 PM »
Part of that system is growing things that are native to your area but which are not so commonly known -- for example, pawpaws in New York State. We also had a crazy crop of raspberries and blueberries in our urban garden this year and did practically zero work to get them. When I realized what we would've spent to buy that much of that kind of produce I was kind of shocked.

Yeah.  Last year I must have had over 50 pounds of cherries.  Was eating all I could fresh, freezing them, giving them away to friends & neighbors... when they were about $4/lb in the stores.  (Of course this year I got about a handful...)  And pine nuts run about $10/lb in the shell, yet if you know where to go you can pick up pounds of them for nothing.

MrsPete

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #21 on: September 15, 2013, 10:19:56 AM »
Taxes are low here in the South.  I pay about $700/year taxes on a brick ranch on a one-acre lot in a neighborhood.  This includes school taxes; we don't separate those things here.  I pay $427/year for my 45 acres of farm land upon which I will build a retirement home; I have a lower tax rate on that land because it is actively farmed. 

Of course, our salaries are also lower here in the South.  I really don't know how y'all can afford to live in the northeast. 

Growing your own food is not hard, but it does take significant time and manual effort to do it.  You save nothing your first couple years because you need hoes and other gardening implements.  Plus an extra freezer, canning jars, whatever.  Composting and worm farming are worthwhile.  You become more efficient as the years go on.  The easiest things to grow are fruit trees and bushes, though they won't pay off for several years. 

Dicey

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #22 on: September 15, 2013, 07:50:15 PM »
Sunflower_yellow: We just bought a new house and the property taxes are going to be 12k per year! Shit! We are still not comfortable with the idea, but it is what it is. Crap, my first salaried job paid 13k per year! Fortunately, we've been in the real estage game for a long time and were able to pay cash for this house, so can actually "afford" it.  That's just background info, so you know that I'm speaking from experience.

Here's the thing: renting or buying, you are always paying property taxes. You either pass it on to the landlord via your rent, or you pay it yourselves. I'd suggest buying a fixer with 20-25% max down. Use the some of your savings for smart improvements and invest the rest.

Blasphemy warning: As to the transit thing, not all cars are bad. Some people are lucky enough to be able to ride or even walk to work. (Our new house is 3 1/2 blocks from DH's office, yippee!)
If your situation requires that you MUST drive, then do it, but be smart about it. Not driving will be a minority position for most people in the US for a long time to come. So keep driving without guilt, but make sure you don't spend a penny more than you have to and try not to make unnecessary trips.

Disclaimer: We bought a bigger house so we could take care of DH's mother, who has Alzheimer's. Neither of our old houses (we're newlyweds and each had one) had a downstairs bedroom. We live in CA and because of the way the property tax laws work, we were paying fewer tax dollars on our two original homes, which combined were worth the same as the new house, but the taxes will be more than double on the new one. Fortunately, our ability to manage our needs has put us in a position to help his mother without hardship. A lot of money, yes, but it won't kill us financially or derail our retirement plans.

skinnyninja

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #23 on: September 15, 2013, 08:04:15 PM »
I think those taxes are insane. 

You just have to do your math with property taxes......(as someone said already): whether you rent or own, you are paying property taxes.

Another way to say it is this:

You are always paying "rent," even if you own your home, because property taxes are like the rent payment that never goes away.....

Right now I rent a one bedroom apt in Michigan for $425/month.  That includes heating and cooling, among other things. 

I could go pay cash for a cheap house (no mortgage) and probably still lose money due to maintenance + property taxes.  That seems to be how they fund the schools around here.....most homes in my area are looking at about $2,000/year or so in property taxes.  Add on maintenance costs and owning doesn't seem so great any more. 

Just have to do your math, and know what you want (some people just want to paint the walls, etc.)

I prefer renting (and investing).  Definitely not "throwing my money away".....

ZiziPB

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #24 on: September 18, 2013, 02:09:21 PM »
One additional item to consider the fact that property taxes (as well as interest on your mortgage) is generally tax deductible.  If you are in a high tax bracket, it does make a difference when you do your rent v. buy calculation.  If you rent, you are paying property taxes and potentially your landlord's interest on the mortgage but cannot deduct it beyond taking a standard deduction.  If you buy, you are paying property taxes and interest that are tax deductible (so you get a discount equal to your marginal tax rate). 

seattlecyclone

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #25 on: September 18, 2013, 03:54:31 PM »
One additional item to consider the fact that property taxes (as well as interest on your mortgage) is generally tax deductible.  If you are in a high tax bracket, it does make a difference when you do your rent v. buy calculation.  If you rent, you are paying property taxes and potentially your landlord's interest on the mortgage but cannot deduct it beyond taking a standard deduction.  If you buy, you are paying property taxes and interest that are tax deductible (so you get a discount equal to your marginal tax rate). 

True enough, though it's worth reminding people that these items are only deductible to the extent that they cost more than the standard deduction. The standard deduction for a married couple is $12,200. If your mortgage interest, property taxes, state income (or sales) taxes, charitable contributions, and other deductible expenses come out to less than $12,200, you save precisely zero dollars on your taxes from spending this money. I've only itemized once in my life, the year we bought our house. Even then the itemized deductions were only slightly higher than the standard deduction. The next year we had paid our mortgage down enough that our itemized deductions were just under the threshold, and we haven't itemized since. We do live in a low-tax state though. Your mileage will definitely vary.

adesertsky

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #26 on: September 18, 2013, 08:46:14 PM »
Since you live in a college town, the demand for rentable places must be high (and maybe confirmed by your rising rent?).  So, what about a home in the city or nearby suburbs that has a rental unit?  It would take the pressure off the property taxes and maybe even help with the mortgage.  Then you could have your garden and save on groceries!

Jamesqf

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #27 on: September 18, 2013, 09:05:33 PM »
The standard deduction for a married couple is $12,200.

But only half that if you're single.  I certainly couldn't itemize if I was married...

ZiziPB

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #28 on: September 19, 2013, 07:28:30 AM »
The standard deduction for a married couple is $12,200.

But only half that if you're single.  I certainly couldn't itemize if I was married...

That is so true.  As others pointed out, your mileage may vary depending on your particular financial and tax situation, but as a single high earner in a high tax state, my state income tax alone exceeds the standard deduction.  So my property tax (to the tune of $8,200 per year for a modest townhouse), car tax, interest on my mortgage, charitable donations, etc, are deductible and definitely result in significant federal income tax savings.  Considering that my mortgage payment also includes around $1,000 per month being applied to the loan principal (and I am planning to sell my house when I retire, so I view this as a form of saving), buying made a lot more financial sense in my situation than renting.  My true out of pocket cost to live in my brand new townhouse is around $1,000 per month, taking into account tax savings and not counting the principal payment.  Similar places rent for about $2,400 in my area....

jrhampt

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #29 on: September 19, 2013, 08:06:34 AM »
Those taxes do seem high for an older, smaller property.  I live in CT, and my property taxes are about 6.6k annually, but my property is newer and the house is 2400 sq ft, valued at around $250k. 

Mr.Macinstache

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #30 on: September 19, 2013, 08:21:55 AM »
Of course that is insane. One of MMM's basic rules is live in a place where property taxes are LOW. It goes without question, its a rent to live in a certain location.

thisyearmodel

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #31 on: May 01, 2015, 02:45:09 PM »
New to the boards but jumped on to find people living near me. Saw there are a couple of Ithaca folks on this thread. My wife, daughter and I will be moving to Ithaca this summer to actually begin our mustachian living plan. We're the only ones we know leaving NYC and getting a smaller apartment. Would love to meet up with like minded folks. One of the main reasons we're leaving is to find people who's outlook is a little closer to ours. Let me know if you're interested. I'll try to post something in the meetup thread as well. Looking forward to hearing from other mustachians!

Chris

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #32 on: May 02, 2015, 11:21:11 PM »
Part of that system is growing things that are native to your area but which are not so commonly known -- for example, pawpaws in New York State. We also had a crazy crop of raspberries and blueberries in our urban garden this year and did practically zero work to get them. When I realized what we would've spent to buy that much of that kind of produce I was kind of shocked.

....  And pine nuts run about $10/lb in the shell, yet if you know where to go you can pick up pounds of them for nothing.
Pine nuts have shells?

Exflyboy

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Re: Are these property taxes totally insane? (Buy or rent?)
« Reply #33 on: May 03, 2015, 12:02:54 AM »
My idea of buying a new(ish) van and living in it is sounding better and better....:)