Having your home valued at $4,400,000 is what most of us would call a nice problem to have.
Actually it’s a pretty bad problem to have. If you bought an affordable house at the time but gentrification comes for your area you suddenly can’t afford to live in the house you bought and despite whatever roots you’ve put down, now you have to try to migrate somewhere else.
Note that even if your tax assessment says you can get a few million out of your house, it’s likely not that easy, it can take a long time to find a buyer in the best of times, I imagine especially if you are seeking a buyer willing to pay millions…
It’s not as bad as renting in the same scenario, but it’s not great to suddenly have rich person cost of ownership come at you when you bought into a non rich person level house
It’s not so nice if you can’t afford to live in the home you own.
and its not even because you are wasting resources, like water for a large pool, but property tax/land value tax imposed on you.
I remember that last year pro-LVT people were very loud here on lemmy for some fucking unbelievable reason, and they were completely deaf to being called out that this will happen, that rich people will fuck you over in yet another major aspect of your life
I’m not entirely unsympathetic since property values have skyrocketed ridiculously mostly due to the super rich and hedge funds buying up housing like it’s candy.
However, these people got an assessment for doing some renovations without replacing the walls or a major overhaul of the property, then promptly added a whole second floor to the building when they said they were just replacing the roof. They gambled that the assessors wouldn’t take note and lost.
yeah, and the guy was professionally working in the real estate space… feels like they are in the “find out” stage.
What the hell did they even need a house that size for? They look like empty nesters, which means they don’t need that size of a house. They want that size of a house. Since it’s an investment at this point, and they had that monster reassessed at a ridiculous price, they’re better off just selling it and moving somewhere cheap. Well, cheaper.
they should know better if they are building in a disaster prone area.
I’m not entirely unsympathetic since property values have skyrocketed ridiculously
Absolutely.
Where I live here in KC the county was sued over it, and the people won, and they’re still not going to get a reimbursement. Property tax assessments are insane, and millionaire or no, it’s exceedingly unfair and wrong.
Yet another example of how having one party ruling in Washington is screwing all of us over. There’s just largely no real recourse.
So you were house rich but they never reassessed meaning last year you paid 15k on a 3.9m home nicw
Yeah people bitching about the property tax they now have to pay after not paying it for a long time should probably stfu and take the L or W or whatever it is
That doesn’t mean he can afford the taxes?
If you buy an affordable house somewhere and external developments drive the price up, it doesn’t mean that you magically have the means to afford paying 5x as much for something you already own.
Sell it and live somewhere cheaper on your wealth. Oh nos the shitty market gave me 4 million dollars what ever shall I do!
Yeah because people love to be forced out of their homes. Does the amount of money really matter? It’s gentrification, plain and simple.
People don’t see homes as a place to live, they don’t consider community, family, proximity to work as important. Homes are “investments” and being priced out of your home is “good” because you can “sell it and move somewhere cheaper”. The dominant ideas of any era are the ideas of the ruling class.
The homeowners have two options, and both options suck.
- sell
- don’t sell
Both alternatives carry costs. But they own a home worth 4.4mil and have to pay 2% of that each year. That’s pretty low.
Renters have two options:
- get fucked
- move (and get fucked)
At least if the homeowner sells they get the windfall.
Hmm. So if you buy a house in your 20s, by the time you retire, you would have bought the equivalent of 2.5 houses. One for you, one from the government for the privilege of living in the one you bought, and half a house worth of interest to the bank.
That’s an insane amount of money.
Yes. Living in a safe and orderly society has a subscription fee.
I mean, if the US government wasn’t so stingy about, y know, actually spending on it’s people instead of the military, tax cuts for billionaires and buerocracy, it would be fine imo. Here, in CZ, I’m mostly fine with the taxes since we’re a pretty safe country with decent healthcare. Despite the country still having a huge corruption problem and housing market in flames, it still somehow has higher living Ng standard than the US.
100% we should complain about how our money is used, and how much is paid by whom. But that’s a different complaint.
Your property taxes don’t go towards those things though. Maybe a bloated police force, but that’s still usually funded via earned income tax.
Your federal taxes could go towards local governments if we prioritized it. There’s a choice made, and that choice forces cities to adopt as many taxes as they can get away with in order to fund themselves.
American cities must be terribly poor to need to tax houses
We don’t have any rich people to tax.
.
Wait, we do? The fuck is going on then‽
Don’t you pay tax also for the purchase itself? Might be anothe 10%
And the yearly tax, is it based on purchase cost or current value? The later would be harsh seeing how they increase.
There’s no tax on buying property, however, property taxes are a percentage of your property’s assessed value. In my locality, the assessed value has a lot of deductions whereby my 400K house is only taxable as 32K in value, so I pay 3K/year in taxes.
I can’t speak for Florida, but if it’s like Arizona, their property is worth a lot more than 4M if their total tax burden is 90K/year.
Current value, unless you have some exemption. Which is what stung these people.
How were they supposed to know real estate law being… checks notes…
a real estate attorney?
I was going to ask why they didn’t consult a real estate attorney. Apparently they didn’t have a good one…
Working for. That doesn’t mean paralegal. Reception, copy, courier, title clerk, mail room, etc
That’s a fair point. But at the very least it can be said she should have had the resources not to be surprised by this.
Maybe.
Not maybe. Definitely.
She “knew the taxes could go up some”, and they had the resources to basically build an entire house.
This is poor/no planning, and entitlement.
Reminds me of when some dumbass i worked with was ranting about owing the government too much money. Turns out he was borrowing from his 401k to do a home renovation. Which of the 1000 things you have to check as read and agreed didn’t clue you into the fact that you will be penalized for doing that?
Debbie, who had worked for a real estate attorney for nearly 25 years
Lol, a real estate attorney didn’t see this coming? I feel sorry for any clients of hers.
She worked FOR a real estate attorney. And apparently learned nothing.
Fair enough, ya I misread that. But still!
I think I have a limited amount of empathy for the new homeless couple that’s about to have $4.4 million in the bank. -Rarely do cases of eminent domain go so well and unlike eminent domain, this was apparently their own doing.
basically what happens when you create and support a housing system whose goal is to make profit. doesnt matter if you yourself plan on living in it, people voted for the system that approved the nonsense of longterm profiteering of a basic need.
Yearly property taxes never made sense to me. So you supposedly bought and own something, except if you don’t pay the government then they can just take it away.
Taxes are the price of civilization. You pay taxes on your land, because if you don’t, a gang of armed thugs will come and steal it from you and bury you under it.
In China 70% of the population pays no income tax, a very small sales tax, and there’s no property taxes at all. Who you tax is just as important as how much you tax. It is not necessary to tax everyone in a society to maintain a modern civilization.
Your leaving out a critical piece of information…
That you can own the building, but the property is on a 75 year lease that can be extended two times for under a hundred dollars for a total of 225 years of that home being in your family for less than the cost of a single years property tax anywhere in the US?
Uh, yeah, that was on the tip of my tongue. That’s exactly it.
I see your point for general taxes, but if the federal and state government are already taking your income and many other things how come they’re also taking so much in property tax? Many other countries seem to be able to protect you and give you what you need without property tax.
Because collecting only one type of taxes would cause massive economic distortion and would inevitably burden people unequally. Different taxes have different properties. Some hit certain groups harder than others. Some hit certain types of businesses harder than others. Far better to have a whole series of modest taxes than one form of ruinous taxation. Do some countries not have property taxes? Yes, but they’re small tax havens that aren’t really a good model for the vast majority of nations.
But as far as optimization, consider some examples.
Property taxes also work best at the local level because the spending needs of municipalities don’t swing heavily with economic conditions. The federal government has spending needs that vary wildly with the economic cycle. During a recession, the federal government needs to massively ramp up its spending. But at a local level, a recession doesn’t mean you suddenly need twice the number of firefighters. Property taxes are pretty steady over time, so they’re a good match for the needs of local government. The federal government’s income tax revenue goes down during a recession, but that’s ultimately fine, as the federal government controls the currency. They can afford to sustain massive deficits during bad years and make it up with surpluses in the good years. (Well, if the federal government was functioning as designed.)
Income taxes also make more sense for government entities whose jurisdictions are difficult to avoid. If you fund your city entirely with income tax and no property taxes, you may find your community completely overrun by retirees who want services like anyone else, but don’t actually earn much taxable income to pay for them. If you fund your city entirely through a large sales tax, people can just drive and shop outside of city limits. It’s much harder for people to avoid federal income tax simply by moving house. Unless you’re leaving the country entirely, you’re not avoiding the reach of federal income taxes. (And sometimes even that doesn’t cut it!)
But property taxes? The only way to avoid those is to not live in the city at all. Which, from the city’s perspective, is fine. If you don’t live in the city, then you’re not putting much burden on the city’s infrastructure and services. But if you want to live in the city and enjoy all the benefits that come with living in a city, you have to pay the city’s property taxes.
In short, different taxes have different properties, different benefits and drawbacks. Funding a society through a diverse arrangement of taxes allows much more efficient optimization of these taxes. It’s a much more intelligent system than just trying to fund it all with one big dumb tax of a single type. That’s more the way of Medieval head taxes, not modern nation states. We used to have simple tax systems. We stopped using them because we realized there were better ways to do it.
Like almost every issue, property taxes aren’t a binary issue - it’s not a matter of either having them or not having them. There’s the sub-issue of how the rates are set. Simply tying property taxes to home value isn’t fair, because the burden a person puts on city services doesn’t increase just because the perceived value of their home rises. You don’t actually receive any of that value until you sell your house and leave, but you’re taxed on it anyway. Being taxed when you sell the house would make perfect sense to me, because that’s when you actually reap the benefits.
The argument that people in high-priced neighborhoods are rich and can afford or deserve to pay higher property taxes is unrealistic. Recent newcomers, yes, but not people who bought homes when they were still cheap because the area wasn’t so desirable. Those people are no different from people who buy cheap houses today, they just did it a long time ago. But they get charged premium rates because the perceived value of their home increased. That way of assessing property taxes isn’t fair, it’s just bureaucratically easy.
I think property tax should be heavily weighted by the original price you paid for your house, and should go up with inflation and the cost of services. It should not be flatly tied to the price you would get for your house if you hypothetically sold it.
I think property tax should be heavily weighted by the original price you paid for your house, and should go up with inflation and the cost of services. It should not be flatly tied to the price you would get for your house if you hypothetically sold it.
That is how you end up with California, where the old generations get wealthy, and the young generations are driven out of the state completely.
Yes, the economic conditions in a state with 40 million people are probably due to one specific factor. Classic meme-level thinking!
Prop 13 is real, yo
They are actually rich. They have earned in many cases more money in real estate than many people have earned working
Uhhh no… the value of your house is what somebody might buy it for IF YOU SOLD IT. Until you actually do sell it, you don’t get that money or “make money in real estate”. As I said, taxing you at the point where you sell the house would make sense to me - because that’s when you’re actually getting money. The way property taxes are now, people are being taxed on money they might hypothetically get in the future.
Now it’s true that you can borrow against your home value - this is known as a home equity loan or a line of credit. So you potentially have that available - but even that is not “making money in real estate”, it’s borrowing money that you have to pay back.
Srsly, what grade are you in?
They are paying money based on wealth they can obtain at any time directly by selling. So if you pay $50k and end with a 4M home you can sell it and live on the millions of dollars.
Now it’s true that you can borrow against your home value - this is known as a home equity loan or a line of credit.
That is literally how every billionaire funds their lifestyle, just borrowing against stocks instead of home equity. If people with $4 million homes are not rich, then neither are most billionaires.
Simply tying property taxes to home value isn’t fair, because the burden a person puts on city services doesn’t increase just because the perceived value of their home rises.
It depends how much home value correlates to house size and lot size. A $1M 1500 sqft bungalow on a 1/4 acre lot in a gentrified neighborhood may not burden city services more than a $100k 1500 sqft bungalow on a 1/4 acre lot in a bad neighborhood, but a $1M McMansion on a 2-acre lot on the edge of the city absolutely will. That’s because the cost of city services scales with things like increasing the length of pavement and sewer pipe across the lot frontage and decreasing the number of homes emergency services can reach within a reasonable distance/time from the station.
Yes, you an come up with edge cases like McMansions next to golf courses, but houses on identical lots right next to each other can have different values and pay different property taxes even though they take the same amount of city services. Remodeling a house, or even just painting it frequently and keeping the yard nicer than others, doesn’t make you consume more city services, but it will raise the home’s assessed value and property taxes. That’s a false link.
Putting a second story on likely includes increasing the number of bedrooms, which theoretically increases the number of people who could be living there and thus increase the burden on city services. Renovating for quality and building additions to the square footage aren’t equivalent.
I think lot sizes are still a much bigger factor, though: a house renovated/rebuilt to max out the allowed FAR (floor-area ratio) on a 1/4 acre lot still ought to get taxed less than a modest-sized house on a 2-acre lot.
China is a small tax haven?
I suppose they haven’t. But they are planning on doing so. And their lack of a property tax is a major reason their cities struggle financially.
Also, the key context here is that land in China is technically owned by the state. It’s leased out on very long term ground leases, but it’s all still owned by the state. In principle, the government doesn’t need to add another property tax, as it’s already leasing out the land. It would be like if a landlord also charged property tax to their tenants.
Most modern nations have higher taxes especially on the rich
Taxes are, but not necessarily property taxes - they’re just one of the many possible ways to tax people.
Lol
The alternative is banks hoarding real state without any need to rent it out or sell it soon. They can just wait until prices get higher.
That’s why in most countries people pay way less property taxes in the house they live in.
maybe there is a middle ground? tax for the 3rd owned land, and increasing for any additional ones?
I don’t know about where you live, but here the property taxes pay for the locality’s services: streets, parks, city employes salaries, snow removal, garbage removal, summer camp, community center, etc. So this taxe is very useful. Now, it needs to be well managed and it’s a whole other topic.
House tax I understand, there is a finite limited of land.
Vehicle tax however can go fuck itself.
Gotta maintain the roads somehow. Vehicle and gas taxes mean that only those using the are paying.
I disagree, mostly due to i pay vehicle registration and tax when I buy it. VA does vehicle property tax, MD does not. How are they surviving?
update: so I just checked Virginia’s property tax rates and apparently we are one of the lowest in the country at like .76%. so maybe the vehicle property tax makes up for that since most states are just a bit under 1% at around .9. MD is higher, 1.02%
I think it would help if they called it something else also just to clear it up.
I’m surrounded by multimillion dollar homes and $100,000 cars on the road. Just feel like you’re getting fucked left and right all the time.
I disagree, mostly due to i pay vehicle registration and tax when I buy it.
then exactly that is what needs to go away, not vehicle tax, because this won’t fund road maintenance for however many years
This is what is needed.
My property taxes, largely, go to support public schools.
I’m fine with that.
Doesn’t mean I should be exorbitantly overcharged.
It’s depressing that we can never truly own even the land we live on. How many seniors lose it all over property taxes? FFS, we have auctions to rape these poor people.
The alternative is much higher income tax.
It’s always funny when looking at the tax-system in the US from an EU perspective. Americans looking at any receipt they get in an EU country and immediately pointing out the huge VAT tariff.
Then one only needs to point to the property tax in the US.
Sales taxes are regressive. People who spend more money on services and less on goods are typically wealthier. Sales taxes hit the poor the hardest. Whereas the property tax on a multi unit building is typically a better rate for each family than a single family home.
If you read the article these people tried to abuse a loophole that had kept their propery taxes capped for years and they failed miserably. They tried to keep just enough of the home to avoid the value of the home being reassessed for taxes. But they added an entire second story and that triggered the reassessment. Essentially they thought they could cheat and build more home than they could afford to pay for.
Which country doesn’t charge VAT on services?
Some US states don’t have sales taxes
If you hire a nanny do you pay VAT?
Not sure over here in Germany. Plenty of services are exempted from VAT.
The EU has standardized what is tax exempt though. You can read everything which falls under VAT here. The word “service” appears 472 times by the way.
These states in the US have zero sales tax: NH, OR, AK, DE, MT
True they abused the system. That wasn’t my point, which is that these high property taxes have a tendency to give high quality services to affluent neighbourhoods and low cost housing get low quality services.
America also has sales tax
You’d think a real estate attorney would know better.
Anyway, property –with the improvements they made, has appreciated over $163,000 on average every year since they bought it. Ya, $75k more than they planned on sucks, but they can take it from the value of the house no?
I don’t know. I mean, there’s a good chance that the original purchase price of the house is almost paid off, but having a sudden $76,000 increase in your bills is going to be tough on anybody. Unless they have made some very bad financial decisions outside of this, that probably is more than double their monthly mortgage.
And as somebody who has an inordinate amount of equity in a house they purchased far too recently for the amount of equity that I have, it is not exactly easy to pull money out of a house as a homeowner, And even if they do take loans to pay the tax burden, that doesn’t mean that the money has been handled. It just has taken today’s problem and pushed it off for tomorrow.
I’m not attempting to justify them. I’m just examining their side with the slightest benefit of the doubt.
They just did an expensive Reno…. None of your comment makes any logic given that they just did an expensive Reno, they could afford to throw money around.
Maybe, maybe not.
Renovation loans exist, and are often secured against the property (backed by the increased value or against equity).
So there’s a real possibility that they only increased their debt and monthly expenses without having the liquid capital for the unexpected tax payments
Sucks to suck if that’s the case. If they truly couldn’t afford this, they should have been more diligent about researching the potential ramifications of making these renovations. That goes even more so for someone with experience in the field of real property.
Land Value Tax would solve this.
Also they live in Florida where there is no income tax so got to tax something.
Fuck off and sell the home. Why is this a sob story.
Only if you’re a boomer.
Sure must be nice having a house to remodel.
Every think about downsizing?
