Comment by tkfu
5 hours ago
> property taxes and HOA fees alone
I feel like HOA fees have to be doing most of the damage there. AFAIK the highest property taxes in the US still top out around 2%, so for a "multiple thousands per month" property tax bill it has to be a house worth more than $1.2 million. I'm not sure what the line is for what level of housing expense is reasonable for society to subsidize housing security for, but I'm pretty sure $1.2 million is well past it.
True but imagine you're in the same home for 30 years. That home with somewhat affordable property taxes could double in value and now you owe double the tax. With no real increase in useable income unless you sell
That's just property taxes in a nutshell, though. We periodically see discussions about land value taxes and it's a feature of those as well; proponents shrug and point out that you didn't do anything to earn that extra value so it doesn't belong to you anyway.
I'm not taking a position here other than to say I don't believe there is a universally acceptable tax. Every tax I've ever read about or experienced personally, someone has made a valid argument for why it leads to a bad outcome or is otherwise unfair. You have to decide what gets priority, pick the system that matches that, and then be honest about where you're making tradeoffs and why.
But property tax is just absurd.
The property was purchased with "after tax" money. So at purchase date the value was already taxed.
If one sells, and make a profit, we tax that profit. Why ask for a tax on the value of the property, each year.
There should be local taxes, and there are. To fund services and whatnot of course. But taxing a percent of the current value of a property is unfair as the owner may live in there with no intention to sell and potentially no revenue whatsoever.
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I haven't researched national stats, but from the experience of having lived in two states, one blue and one red in case that's important to a counter-argument, both limited property tax to 3% annual growth, even if the valuation is higher, preventing that exact scenario. It only jumped to tax on the correct valuation when the property exchanges owners.
Sure this doesn't prevent issues if someone is stuck on savings/Social Security, etc., but it prevent surprises, such as a boom in your area causing sudden explosion of equity and taxes due.
The cap required it be your residency, i.e. you aren't renting it out and you are a citizen.
3% yearly compounds to doubling the value in 24 years.
So even with the cap, it's more than likely the property tax costs a typical owner more than double what it did 30y ago.
Not a big deal if you bought at age 20 (unlikely) and still receive some work income. But if you are retired, it stings harder each year.
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Property taxes are not that simple, usually. E.g caps on growth of total property tax receipts or on increase per year, rebates, other schemes.
The typical way property taxes are done in the US is that the local government first sets a revenue amount, then a tax rate is determined which produces that much revenue. You don’t have a situation where property values double and the local government automatically ends up with double the tax revenue.
The government should need to accept its 2% in kind. I guess by the time people cannot pay these taxes any more they are much closer than 50 years to their eventual death. Thus it only reduces eventual inheritance. Problem solved
Most of the problem solved, but does mean that generational wealth transfer stops being a way to climb out of instability. Just another chip in American class mobility.
you could rent out a room though?
but you also have a much improved quality of life as a result of that property value going up, because theres more desirable stuff around
Being stressed about finding the money to make your payments is probably not a much improved quality of life. And they probably picked the place cause they liked it as it was, so don't be so sure about appreciation of those new developments anyway...
Why should I get to have that sort of externality on others just because I have more money than them?
People refinance all the time.