Yea - even higher proerty taxes !! [Archive]

pinkytoe

5-21-14, 12:16pm

This past year, the appraised value of the dirt beneath the homes in our neighborhood went up almost $100,000. I have been attending local meetings trying to find out how we can fight back and what the heck is going on. Turns out that all the speculators and flippers have driven up the land values to preposterous rates. They buy the dirt, scrape the house and then put up huge houses which then sell to newcomers who can afford them. Many long time residents are just deferring their annual taxes as they have no place else to go. Last night, an elderly woman began sobbing. I hear this is happening in "hot" cities all over the country. In theory, it is a wonderful thing to have your house value appreciate but unless one sells, it has no worth. I am hopeful that we can hang on for one more tax payment and that we can find a place where houses are still somewhat affordable.

awakenedsoul

5-21-14, 12:33pm

Oh, that's too bad. My house has been going up in value, too. I live in a state where property taxes can only go up 2% a year. Right now my property taxes are $1,400. a year. When I bought the house in 1998, they were about $1,200 a year. Maybe that's why some of the people in our neighborhood kind of trash their front yards. When I've made improvements they've said to me, "Your property taxes are going to go up."
I hope you find something affordable soon.

Teacher Terry

5-21-14, 2:29pm

That's so sad. I have known of people with paid off homes that can't afford to keep living there because they can not afford their taxes. This happened when I lived in Wi.

catherine

5-21-14, 2:36pm

Yes, I live in a state for notoriously high property taxes. I'm VERY lucky mine are still in the high four figures. I was proud of DH because he was commissioned by the AARP a couple of years ago to produce a video to help repeal a bill in legislation that would remove property tax increase protection from senior citizens. Not sure if it was his video, but Christie did back off on that bill. However, I think more should be done to help seniors stay in their homes--in NY State, my MIL got a huge tax discount because she was a senior.

I just got off the phone with my brother who lives in Florida, and moving there for 6 months + 1 day, and then moving to VT in the summer seems very, very appealing to me.

Teacher Terry

5-21-14, 2:43pm

Our property taxes are low in Nevada. They are based on age of home among other things. so even if you have a very expensive, beautiful home that is old in a great neighborhood you will pay far less then someone in a new home.

ApatheticNoMore

5-21-14, 2:56pm

Super low property taxes don't actually work as policy either. They lead to housing prices being incredibly bubble prone with all the chaos that implies (do you ever notice CA and Nevada catch every housing bubble that goes around, FL too - incredible instability), plus really no break on housing prices in a bubble (so housing is unaffordable). Plus the state gets financed entirely on sales and income taxes which are both high and violatile. Of course taxing people out of their home so seniors must sell their homes doesn't work either, and it's why nutty solutions (prop 13) arise in the first place. There may be a happy medium, some states probably have it figured out. Of course the root cause may be an economy built on bubbles ... (the results of the all the Feds QE - entire housing market turned over to speculators again). It stinks.

sweetana3

5-21-14, 4:34pm

This is an issue with Habitat for Humanity houses all over. Once an area becomes even slightly remodeled or popular, the taxes go up. Some markets were so hot the taxes caused the owners to lose the houses. The owners have limited equity for 20 years so a crisis is caused. Some areas have managed to change their tax systems to accomodate but it is not national.

sweetana3

5-21-14, 4:36pm

Lainey

5-21-14, 7:59pm

pinkytoe,
is there any relief in your state for the senior citizen homeowners? AZ has that, but I can't recall if it's at a county level or state-wide. An elderly person should definitely not be forced to sell strictly for the property taxes.

That said, I agree with ANM that very low property taxes are likely to be offset by high sales taxes, hidden fees, etc. The government has to make its money somehow, so when the real estate market tanked, AZ state budget was particularly hard it when their income from property taxes suddenly dropped due to the new valuations. Next thing you know fees were being tacked on to all kinds of things.

awakenedsoul

5-21-14, 8:21pm

We have to pay an extra $120. a year now for fire protection. It's a separate bill from our property taxes. My brothers and SIL's bought homes at the height of the market for close to $800,000. Their property taxes are unreal. These are just small, simple two bedroom homes in Northern CA and in FL. They've had job losses. I don't know how they've been able to keep their homes. I think by maxing out credit cards. I'm so glad I bought when the market was down. My parents have had their home in the Bay Area for over thirty years and only pay $3,000. a year in property taxes. If you time it right, it can work in your favor.

Spartana

5-21-14, 8:57pm

Oh, and beware when your whole state changes their method of taxing real estate. There was a time when some taxes went up 300% over two years due to the change. And the people who originally complained found out theirs went up as well and were complaining again.This is what would probably happen if Calif eliminated Prop 13. Many elderly homeowners who have had their homes for decades and have low property taxes could possibly see increases of over 300% too. I know that when I bought my Mom's house back in 1996 for $120K I was able to transfer her tax rate of approx. $300/year to me (another benefit of Prop 13 - tax rates can be transferred between parents and children). That rate today would probably be less than $500/year (not counting all the other stuff they put on tax bills) because it can't increase by more than 2% a year even if the house was valued much higher than what I had bought it for. If I had kept that house and all of a sudden they did away with Prop 13, I woul dhave been looking at going from less than $500/year to many thousands per year - probably $10K or more depending on what % of the houses market value was taxed. Right now it's only 1% of the purchase price (a $500K house has $5000 prop taxes), if that changed it could be 5% of the market value for that year. And in a state where houses are expensive, prop taxes could be in the tens of thousands.

Spartana

5-21-14, 9:02pm

In other states besides Calif, what ARE prop tax rates and how do they figure them? Do they establish a new market value for your house every year and then tax you a certain percentage of that value? If so, what kind of % is it? I'm curious because, as always, I would like to live in a different state someday but for someone who is on a fixed income, Calif prop taxes are a good deal.

JaneV2.0

5-21-14, 9:28pm

Here's the formula for King County, WA:
You can estimate what your property taxes will be if you know the "assessed value" of your property and the tax levy rate. For example, if the assessed value of your property is $200,000 and the levy rate is $13 per thousand dollars of value:
VALUE 200 ($200,000 divided by 1,000)
x LEVY RATE x $13
----------------- ---------------------------
TAXES = $2,600 estimated tax

Of course, you'd be hard-pressed to find many $200K properties. We have kind of a bubble-icious housing market and high taxes. They aren't sky-high like some back east, though. I like to say we pay extra for the views...

iris lilies

5-21-14, 10:05pm

I completely disagree that elderly person "should" be exempt from paying for the services that they use. But then, in the State of California where public finances are held up as a system to emulate, I guess it's working in a hunky dory way. Oh, wait...

The second issue is that elderly persons often cannot afford the maintenance of their big houses where they rattle around in the huge spaces that once suited their family lifestyle. We see that here, huge city houses going downhill, 4,000 sq feet occupied by one person for decades. Really, how sensible is that? It is not. And by the time the elderly person dies or is carted off to a senior residence center, the house requires much more $$$ to fix up than if it had had regular maintenance throughout.

As a house hugger, I am more concerned with preservation of historic homes than I am with touchy-feely issues best left to social workers.

pinkytoe

5-21-14, 10:20pm

People always tout moving to states with no income tax but forget to mention that your property tax will be much higher without it. Our houses here in Austin are appraised yearly based on area sales. Yet we are a non-disclosure state meaning the appraisers don't get sales figures. They have to search out enough house sale amounts in an area to base their appraisals on so it is all very arbitrary. I believe the rate is around $2.50 per $100 valuation which is $10K for a $400K house. They can only raise it 10% a year and they always do. As I do my research on where to move, the tax situation will be one of my first priorities.

awakenedsoul

5-21-14, 11:32pm

JaneV2.0, Wow! Mine would be much higher there. Zillow says my cottage is worth $260,000. now. In my budget, property taxes are my biggest expense, after food. Looking at pinkytoe's figures, my taxes would be much higher in TX. Cars eat up a lot of money in this area, too. I read that many people in LA spend $10,000. a yr. on car expenses. (maintenance, gas, payments, etc...) I've been able to cut my driving down to one day a week. I replaced my engine in my 2004 Kia. All those decisions really affect your budget. I guess that's why some people plan to downsize and rent in their old age. Am seeing from this thread that I am in a good place to retire, unless something changes. I'm a block from the bus line, too. Plus, having the land and fruit trees really helps me to save money on produce.
The older people that I know who have nice homes maintain them really well. My home was built in 1944, and I budget in $3,000. a yr. for repairs, appliance replacing, etc. When I had my house on the market, the realtors seemed surprised at all the work I'd had done: new heater, new water heater, nice tile in the shower, new carpeting, vintage stove, and Big Chill fridge. This area is eclectic, and a lot of the little houses are neglected and they just tear them down.

ApatheticNoMore

5-21-14, 11:36pm

I completely disagree that elderly person "should" be exempt from paying for the services that they use. But then, in the State of California where public finances are held up as a system to emulate, I guess it's working in a hunky dory way. Oh, wait...

kind of the point I was making, be careful what you wish for ... but the property taxes are so low if you bought years ago (yea and a 10% marginal state income tax kicks in at a very middle class income and sales taxes approach 10% and state services are long since so polorized that people with kids obsess on buying in a good school district, and the states revenue sources collapse in every recession).

iris lilies

5-21-14, 11:38pm

My taxes on my house went down from $2,787 in 2012 to $2,512 in 2013. And then we pay a couple of hundred for the vacant lots attached to our property.

The "Total Value" in the tax records went down from $36,870 to $32,700.

JaneV2.0

5-22-14, 12:00am

iris lilies

5-22-14, 12:08am

Mine are $5400 or so. I'd love to downsize, but I have about a year and some home rehab before that's a go. And then there's finding just the right place, which is proving well nigh impossible. Meanwhile I'm schlepping things to the thrifts.

This is a contender. It's right around the corner from my old condo, but it's slightly bigger. The drawback is that it's on a fairly high-traffic corner, just like my current abode. http://www.johnlscott.com/Home/14404669/RTR/5155-SW-NORMANDY-PL-Beaverton-OR-97005/

That's really nice! I am getting back to loving 1960's ranches especially when they have original kitchen cabinets like this one. This is a very attractive property.

But sorry, I'm not buying into an HOA. But then neither are they common around here with that type of property. 1960's ranches are never in an HOA around here.

Spartana

5-22-14, 12:20am

Mine are $5400 or so. I'd love to downsize, but I have about a year and some home rehab before that's a go. And then there's finding just the right place, which is proving well nigh impossible. Meanwhile I'm schlepping things to the thrifts.

This is a contender. It's right around the corner from my old condo, but it's slightly bigger. The drawback is that it's on a fairly high-traffic corner, just like my current abode. http://www.johnlscott.com/Home/14404669/RTR/5155-SW-NORMANDY-PL-Beaverton-OR-97005/Very cute! But once you add in the HOA dues of $220/month to the $2681 annual taxes you will probably still be paying around $5400 per year. But then the HOA covers a lot of stuff you probably have to pay for now so would be lower overall. Washington's prop tax rate doesn't seem too bad (not like Catherine in NJ) but prices are likely to rise so taxes will too. That would suck having to get re-appraised every year. Renting is looking better all the time. Like Pinkytoe, prop tax rates would be a big factor on where I purchased next.

JaneV2.0

5-22-14, 12:37am

That property's in Oregon, and it's been pointed out to me that the lawns will be mowed on schedule, and I can flee for the duration. A selling point! I'm very wary of condos--I don't want my life run by other people--but it will come to that soon enough, I suppose. And I appreciate someone else doing the bulk of the outside work. I'd really like something more like the Kaczynski retreats from another thread, but located in a cluster. I'm impossible to please.

rodeosweetheart

5-22-14, 7:15am

Spartana, it's never just state by state, either. When we lived in suburban Chicago, we lived in a town that straddled three different counties. We lived in suburban Cook county, had taxes of about 3500 a year on a house that was worth around 350000. If we had been in Lake County, it would have been about 5000 in taxes. Not sure how much more in McHenry--Cook was the cheapest. That was all in the same town! Currently the house is probably worth a million, and the taxes are probably around 12000 a year.

I've looked at foreclosures in Kane country, another Chicago suburban county, lately and they are running around 3000 taxes on a house you pay 75000 for (a really, really small 2-3 bed/1 bath kind of house that sell around 150000 if not in foreclosure.

So yeah, the taxes are pretty discouraging, and I've lived places where you get more services for your tax dollar.

awakenedsoul

5-22-14, 1:13pm

ToomuchStuff

5-22-14, 10:29pm

Wow! I'm learning a lot from this thread. The other expense that can get expensive is repairs. I've got a plumber here now and will be spending $438. on fixing the toilet. Glad I have that emergency fund!
I've read about elderly people in CA with no heirs who just stop paying their property taxes. On frugalvillage.com, there's a guy there who is staying in his home. They put a lien on his property, but he doesn't have to move. Kind of interesting...sort of like a reverse mortgage.

Here, you can not pay your taxes for three years (interest acrues though), and the fourth year (takes about a year for them to do it), it goes up for sale for back taxes. The buyer will have to deal with the then squaters (eviction) and any mortgage/lien, but the taxes take first priority. Surprised there isn't something like that, there.

Spartana

5-22-14, 10:58pm

I think in Calif you can stop paying your taxes and it'll take awhile before you are kicked out of your home or required to repay all the taxes in a lump sum with penalities and interest. But I think the point is that elderly people who want to stay in their homes, want to stay in it until they and their spouse dies - which could be years. So that really wouldn't work for most people who want to stay put in their homes.

However I have heard that some towns (and maybe my own) will allow a senior to forego paying their property taxes while they live in the home - how ever long that is - and then the back taxes will be re-paid from the estate once the owners die. That would mean less to leave your heirs, but someone could continue living in their home until they die and not have to worry about how they will pay for the increase. Of course the taxes are still going to be going higher, so there is no reduction - just defraying the amount owned.

OK I checked it out and here is what we have in Cali: http://www.cga.ct.gov/2000/rpt/2000-R-0836.htm

California has three senior citizen property tax relief programs:

● the property tax assistance program provides qualified low-income seniors with cash reimbursements for part of their property taxes;

● the property tax postponement program gives qualified seniors the option of having the state pay all or part of their property taxes until the individual moves, sells the property, or dies; and

● the replacement housing program allows seniors to sell their residence, buy a new one of equal or lesser value, and transfer the old residence's assessed value to the new home (this enables them to keep the property tax ceiling obtained under Proposition 13 that is normally lost when purchasing a new home).