The truth about property taxes
I know taxes are everyone's least favorite subject, but this needs to be said. This doesn't just apply to Americans, but pretty much any country where property gets taxed and is rented. So it applies to the entire First World and a lot of the Third World as well. As for those of you in the Second World, your life sucks, so can't help you.
There's been a lot of talk around here of raising property taxes. They say it will only affect the rich, because only the rich own property. Nothing can be further from the truth. For one thing, in America at least, more than half of both the middle classes and the working class now own (or have mortgages on) their homes.
We all know the middle and the working classes are burning the candle at both ends to make ends meet as is. Raising property taxes for a lot of these families might be the straw that broke the camel's back.
For another, if they raise property taxes, landlords and landladies will take it out on their tenants. Here's how.
I'm a landlord. Own several properties that we rent out. Most landlords recognize the difference between an asset and a liability. An asset puts money into your pocket. A liability takes money out of your pocket. I make money by buying assets and dumping liabilities.
If one of my homes was a liability, I'll either raise the rent or I'd sell it and buy another property. This is how I compute rent. I'm sure most landlords have a similar system.
mortgage + property taxes + insurance + repairs + enough profit to equal the crap I have to put up with being a landlord = what I charge for rent
If one of those goes up, I raise the rent or sell the house. So needless to say, if property taxes raise, take one guess who gets affected the most? Yup, that's right. Renters and the middle and working classes who own their homes.
Yes, there is a conspiracy when it comes to how much landlords charge for rent. It's called capitalism. So the next time you hear talk of raising property taxes, it really won't bother me. I'll just raise the rents when the leases expire. My tenants however will be bummed. And so will millions of other renters.
Now, don't get me wrong. I'm not a cold-hearted bastard. I don't enjoy raising the rent, especially if I like the tenant. I actually take good care of my tenants and make sure everything works and nothing leaks. But I have to do what I have to do to make my properties profitable or else I sell them, and my tenants just may end up with a cold-hearted bastard as their next landlord.
UPDATE: I completely forgot about fixed income folks. If anyone will be slammed by property tax increases, it will be folks on fixed incomes (mainly retired people, but also includes injured vets, widows, etc.). Thanks Laura.
posted by The Zombieslayer @ 9:50 PM
26 Comments:
Chicago was toying with capping property taxes on properties that have had the same owner for a certain number of years (i.e. people who are likely older and retired). My parents tax assessment went up something like 40% last year (the assessment, not the taxes) - they're getting close to retirement. They might not be able to keep their house if it keeps up.
The one thing I hope for is that the bottom finally drops out of the housing market - then John and I might actually afford a house in the city. I can't stand the suburbs...
Oh, yeah, and the other thing that I forgot is that I don't like the way we use property taxes to fund schools - this will always mean that the rich neighborhoods will have the best funded schools, when all children deserve decent schools.
Laura - I completely forgot mentioning folks with fixed incomes (retired folks mainly). Yes, they get screwed big time.
As for the housing market, I'm predicting a correction. Homes here are disgustingly overpriced, and I'm wondering how normal people could afford houses. We're going to see a lot of foreclosures.
As for property taxes & schooling, that's a good topic for a future post.
I fucking love government!! Sorry.
Okay, on your last post, you said, "Jenn, you question answered below." But, I saw nothing below. Or did I look in the right below? Sorry for bothering!
the middle class is disappearing under Bush..its becoming two classes..the have and havenots..
Isn't it ironic that the Revelutionary War was started mainly because our Founding Fathers thought taxes were unfair? (Taxation without representation) Now, our taxes are 500% higher than what they were burdened with. I'm not into killing people over this, but it is detremental to the economy to suck up our money so we can't spend and invest.
Hey, Laura, I agree with you about the money going to schools. The entire time I've paid property taxes, I've taught my kids at home. Doesn't it seem like I should get some kind of break?
Michele - you misunderstood what I meant about schools. I meant that the taxes used toward education should be more evenly distributed. We all pay taxes for services that we might not use - that's life. I don't have kids, yet lots of my taxes go towards giving breaks to families with kids. That's not my point. Education is a social institution from which everyone benefits. We have a social, political, and economic stake in ensuring the best education for all our citizens. I didn't mean it to mean we should gripe about paying taxes for things we don't use.
I agree with you. I do wish we had more choices however, on how they're distributed. I know this could be divisive, and may end up making it so nothing is done well, but there are some things that my monies go to that I hate. (Public Ed. NOT being one of them.)
MN property taxes have skyrocketed as a result of our idiot governor's politics.
Pawlenty's campaign promise was to not raise taxes. To balance the budget, he cut state aid to schools and communities. In order to have frivolous things like education and fire and police protection, local gov'ts were forced to raise property taxes. BUT, Pawlenty wasn't responsible for raising property taxes. Not him, uh-huh, nope!
where i live used to be rural PA. now we are basically a NYC commuter community. the influx of NY/metroNJ folks has ratcheted up drastically every year since 9/11. they move out here to feel safe or have 'the good life' but they keep their high paying jobs in the city. they have driven the real estate prices through the roof! oh, and did i mention the schools growing even faster because lots don't move here. one family member moves here and all the cousins and whatnot come live with them. there is a new school built somewhere in this county every year and the day a new school opens it is too small because the state says they will only fund for a certain amount of growth which may be accurate for the rest of the state but is way outta whack for our area.
so what happens? the property taxes go through the roof. people who have lived and worked here for generations suddenly can't afford to live in their own hometown anymore. we need some real property tax relief around here for the sake of the working and middle class people.
what solution has been offered? well our cheesesteak sucking monkey of a governor decided that even though every previous governor has vetoed laws opening up gaming and slots and all manner of other gambling, and even though gaming has been defeated on more than one referendum he is going to make it happen and then tie property tax relief to gaming revenue. he convinced enough of the state assembly tpo pass act 72. as per act 72 it was an optional program for each local school board to decided to participate in or not. gaming revenues are mere projections that i am pretty sure he pulled right out of his ass. oh, and local boards had to cut taxes by a certain amount and continue cutting each year before they ever saw a cent of these revenues-to-be. the overwhelming response was 'thanks but no thanks, gov.' i thnk it was less than 20% of school boards opted in. so now he is trying to make it mandatory.
yes there needs to be relief, but can ya tell i get seriously riled about tying it to gambling revenues?? can ya? btw, i have registered my opinion with my state rep. he is an acquaintance so he has heard my unvarnished opinion.
My comment was the best. No, really. It was way deep compare to these others.
It's 'cause I'm all smart 'n stuff!
Slayer! Where you at?
Ha! Timely subject...have you been reading my mail? lol I go to close on a house hopefully Friday or Monday. Geeesh! I've got a lot to look forward to I'm sure.
I hope they don't raise property taxes here. I don't know why they would, there's a depressed housing market here due to high unemployement as a result of outsourcing textile jobs. Heck, they just sold Dan River textile industies to Pakistan, jussst great! :( Ah, but that's a totally different post...I know. ;P
a quote for you:
My Economics teacher quoted this quite often:
"If you don't pay your liabilities then your assets in jail." heheh
Unfortunately, in CA, it seems that raising property taxes will not necessarily mean an increase to public school funding. Where the hell is all the money going? /sigh
You got that right Zombie. Raising property taxes hurt all of us. I live in Delay’s country, and Sugar Land has just annexed several communities, and we are renters. We already pay out the nose to live in this area. Now we got to look else where because these folks are not having any mercy on anyone. They want to raise our rent by $200 bucks per month! Can you believe that shit! We thought we would be looking at a fifty dollar increase, but two hundred .. no way!
We had planned on getting a RV when Bob retires, we been saving every penny for it … living on chicken and rice … but the gas prices are so bad, and diesel cost more then regular gas now. Our only other alternative is to commit suicide because that what we will do if we have to go live with any of our children!
I hate any and all forms of tax, but property taxes piss me off the most, by far. And if you are ever unfortunate enough to run into me on the 15th of January, April, June, or September you'll know that's saying a lot.
Jenn - I'm losing my mind. Sorry. I forgot to post it. Here it is:
You'll have to change all []'s to those greater than and less thans. Blogger won't allow that. This is the code:
[a href = "http://www.jenn.com/song.mp3"]say whatever you want about the song[/a]
Of course, change the http address accordingly. Whomever goes to the link will get a streaming mp3.
ZS--
Great post! Dan and I get hit pretty hard with property taxes. We live in a gated community and the association charged all the home owners a disgusting amount of money to improve our old, dated sewer syestem.
On top of that was the new Fire Tax and on top of all of these additional charges was the property tax it's self, which was honestly, one of the biggest checks I have ever written.
*sigh*
taxes make renting look a whole lot more attractive than owning.
sidenote:
Is there any way to get your email address? I have to tell you something thats annoying me...(privately)
Dusty - I won't put all the blame on Bush. Keep in mind Clinton and Bush Sr also helped outsource the middle class. It all came crashing down under Bush though.
Michele - Amazing. We put up with too much here. The Revolutionaries wouldn't have put up with half of what we put up with. I've seen that stat too that we pay more in taxes than our Founding Fathers. That's pretty bad.
Tshsmom - That's pretty bad, and it's really going to hurt the middle class once again.
Lime - I'd love to see a law enacted that property taxes can only be raised 1% a year.
Jenn - I was at work. :p
Moni - Heh. Good joke.
Yeah, outsourcing needs to be taxed. It's killing both the working classes and the middle classes.
Notta - It's going everywhere here in California. We pay high property taxes and state income tax on top of that.
LP - Texas has no state income tax, so they actually have higher property taxes than California does. it's pretty bad. Rents in Texas are very high compared to what the properties are worth, and that's 100% because of high property taxes.
I have a few rentals in Texas. For the record, I've never raised the rent on a tenant if they pay their rent and don't trash my houses. It's out of general principle. But when property taxes go up, I have no choice but to raise the rent on the next incoming tenant.
That's why I think property taxes need to be capped, so protect renters.
I'm currently on both sides of the coin. I rent in the San Francisco area while being a landlord in two states (Texas and California), so I sympathize with both.
Okie - Yup, we pay property taxes twice a year. Those are my two least fav days of the year.
Bridget - Yeah, I agree with Laura and Lime too.
Lime's situation sucks because those were nice areas she's talking about before all the NY/NJ people ruin them. They had a lot of flavor to them. That will be gone within a decade.
Taxing outsourcing would just create more paperwork for the importer (Your former Boss) who would pass the tax on to the consumer(you). the bloke at the end of the line cops the lot.
Dusty--Had to get this in first. While the middle class may be disappearing faster under Bush it has been doing so for years. I am not a big Bush fan but you can't blame it all on him.
Zombieslayer--Oh man, Oh Man, OH MAN, you hit on one of my pet peeves, property taxes. The other is vehicle registration fees.
I understand the need for property taxes but there are a few things I don't understand or like about them. I don't understand why if you improve your home they raise your property tax. They need the money for funding a multitude of things but you would think that they would want to keep communities looking nice. I guess some people, like me, go ahead and improve their homes no matter what the taxes do, but the opposite could be true. Some people might say screw it, why fix up my place if the taxes are only going to go up?
I own my home, not the bank. I paid it off years ago and since then I have been paying the taxes on it personally, not out of the mortgage payment. It hurts to pay that money every year even though we begin saving for it start January.
I would honestly like to see all taxes abolished on all things for one year until December. Then the government could mail a bill to everyone in the country for all the taxes due on everything from vehicles, gas, consumer products and everything else that is taxed. Then FINALLY, the people might wake up and realized that we are being taxed to DEATH!
Well I am rambling again. Just lucky you didn't mention vehicle registration fees.
On a side note, hope that rain storm didn't bother you too bad. I live betwee the Yuba and Feather Rivers and both of them were up but we styed relatively dry.
Sadie Said: taxes make renting look a whole lot more attractive than owning.
Yeah, I think about that a lot when I think we want to own a place. We rent and it has it's benefits. But you also have less control over what you can do with your home... I'd love to do improvements on our apartment - but it's not mine. I think about property taxes and home repair costs and I flip back the other way... they both suck equally in the end I think ;)
Vest - Outsourcing goes untaxed, and it's one idea of getting jobs back to the U.S. We're in a situation now where the middle-class is in real bad shape because of outsourcing. There's no job security anymore. It's an idea that I'm toying with, that I'd like to bring up with some economists.
Neal - Taxes and spending need to be cut drastically. We're getting taxed at a higher rate than our Founding Fathers were.
As for vehicle registration fees, yeah, that's another can of worms. It was even worse in Washington state, which I guess is one way they made up for not having a state income tax.
Laura - The thing is, when your landlord or landlady's taxes go up, she'll pass them on to you. That's one serious drawback of renting. Plus, owning has huge tax benefits. I'm sure you could use a little tax relief.
ZS--
one word
Thanks.
:)
MN has state income tax, sales tax, property tax, and vehicle registration. We used to get a good standard of living out of our taxes; we don't anymore.
We need more accountability on how our money is spent!
Sadie - You're welcome. :)
Tshsmom - They taking lessons from the Socialist Republic of California? :(
Post a Comment
<< Home