In Texas property tax functions as an income tax by proxy, as the state lacks an income tax but redistributes property tax monies from rich school districts to poor ones. Therefore property taxes are high. Well, high compared to many other states, though not compared to, say, New Jersey. This is not really healthy.
High property taxes are good
391–400 of 620 posts
Re: High property taxes are good
#392I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high propert…
What author is saying is that if a property has a high yearly ongoing costs, it becomes tougher to just hold onto it and not put it into the market i.e. this causes increase in supply. If I have a $10k/year expense on a property, I am forced to at least generate a yearly $10k+ from the property. This would keep the rentals and property prices in the area in check
That can be right in the short term, but in the long term you'd expect developers to stay out of the market, so how is it that Chicago has a "glut of high quality housing at very low prices"?
Re: High property taxes are good
#393Earlier quoted context omitted.
> It forced a reduction in the out-of-control government spending No, it didn't. California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there. > It saved seniors from losing their houses Why are seniors magically allowed to be immune to basic market forces when no one else is?
> Why are seniors magically allowed to be immune to basic market forces when no one else is? Because they have fixed incomes (generally). This income is immune to market forces. That's why. While many elderly invested wisely (and at the right time) to become wealthy, especially when leveraging dips (like during the 80s), it doesn't change the average case. Living month to month on a fixed income is the norm after ret…
I do not think elderly invested wisely. Cities grew. They got lucky. It's as simply as that. The remote working is taking pressure off the cities. And you can see many crying about return to office, who have multi year leaseholds or own the buildings.
Re: High property taxes are good
#394Earlier quoted context omitted.
The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments t…
Proposed mechanism: You declare the value of your land, but the government can buy it at the declared price if they want to. This also makes land acquisition for infrastructure straightforward and transparant. There is a risk that the government will increase taxes such that people can't declare high land prices, which allows the government to buy up land for cheap. I haven't found a mechanism for that yet.
How would that work if you build a house on your land that you cannot just move to a different lot?
Re: High property taxes are good
#395I'm struggling to make sense of the cause and effect in the article: "The high cost of property taxes have long pushed away speculative investors as it has pushed the carrying cost beyond what is profitable to hold as a passive investment long-term." Alright, so now the speculative buyers are gone and we're dealing with ordinary home buyers that actually occupy their home. These genuine owners are paying high propert…
I doubt speculator demand has anything to do with anything in the long term.
I also doubt that developers would bother with a market like the one described. Why not go to some other state/city where construction costs are low and property taxes are also low?
Re: High property taxes are good
#396Earlier quoted context omitted.
Outside of California "you paid $500k for your house, so we're gonna tax you on $500k" is not how property taxes work. The town/city/county typically does property assessments on regular basis (usually annually). These are based on doing comparisons with like houses in your neighborhood and are equal prone to "2 blocks over is way more desirable".
This happens in California to. When you buy the state still decides the value of the land (else people would do under the table cash deals like they do with cars). Usually the assessment and sale price are not far off.
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Re: High property taxes are good
#397This is one area where (I hate to say it) the red states have tended to do a better job than the blue states.
Take Texas as an example. Up until this last year at least, Texas had relatively low property values but high property taxes. But high property taxes on a $200,000 house aren't the end of the world.
But here's a big one: in Texas, seniors (65+) can defer their property taxes to be settled upon their death. This allows seniors to stay in their house if they really want but incentivizes seniors to downsize to avoid passing on that liability onto their children.
This is exactly what you want.
Compare that to California, for example. "But what about the Seniors?" led to Prop 13, which was a massive tax giveaway to Disney and affluent property holders. Capping property taxes deprives the state of taxes to fund services for no good reason.
Even worse, when your children inherit that house, they inherit the house on a stepped up basis (meaning they pay no capital gains tax and the capital tax base gets reset to the market value so if you sell immediately you won't pay any CG tax) and children and grandchildren can inherit the artifically low property tax rates.
New York has a different set of problems. A big one is that single family homes are subsidized. A $1m SFH will pay less than half the property tax of an equal value condo. And there's all sorts of caps on property taxes on SFHs too.
Additionally a $100m condo only pays about 10-15x the property tax of a $1m condo in NYC.
I'm a big fan of making property speculation less lucrative. High property taxes are a good thing. We need to stop giving away money under the auspices of "but what about the Seniors?"
Re: High property taxes are good
#398Earlier quoted context omitted.
You might be surprised just how profitable those parking lots can be. Putting in a 10 to 25+ million dollar multiple level parking garage can pay off, but only if there is enough demand for it and you can get zoning permission.
We aren’t talking multi-level though we are talking about an actual flat parking lot in the middle of a downtown core which is what speculators do and have done in my city while they wait to sell expensive land.
To be more clear. Depending on the location, those flat parking lots can be pulling in 1+ million per year in profit.
That doesn’t mean building a multi level parking garage in that same space is actually a good investment because demand isn’t unlimited. What you see as wasted space can therefore actually be a highly efficient business.
Re: High property taxes are good
#399Earlier quoted context omitted.
The biggest problem (IMO) is that it's not so simple to value land. Where I live, being two blocks over can make a huge difference. It's easy to say "you paid $500k for your house, so we're gonna tax you on $500k". It's much harder to accurately say what someone would have paid for the land were it not developed. I understand the benefits of LVT, but how do you solve this? Are there any good examples of governments t…
It will be interesting to see if Texas ends up with some sort of Proposition 13 equivalent given property values and property taxes have been increasing a pretty significant rate. Fight over increased property taxes in Texas becoming political https://www.youtube.com/watch?v=gzUwoFVUc_I Texas voters to decide on 2 propositions that could impact property taxes https://www.youtube.com/watch?v=Nz67VXkjRfg It seems like…
Texas already has a homestead exemption.
Re: High property taxes are good
#400I always thought the low property taxes in NYC were twofold:
1. The absolutely staggering incomes at the top top end in NYC make income taxes a more effective revenue source.
2. In addition to property taxes, if you own an apartment in a building, there are a lot of other monthly costs. As I’m writing to this, it occurs to me that they may be completely equivalent to the maintenance costs on a house, but I suspect that condo and co-op boards are not nearly that efficient.