Too much house too soon???

[White.Beard.Doc]

The White Coat Investor wrote:

It’s like you’re on another planet, or at least another country.

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If the divisiveness of our current politics continues to build, we may end up being another country.  We could have the United States of Flyover Country, and the United States of Bicoastiality.  One would be low tax, you're on your own.  And the other would have high taxes with more of a socialist bent.

[CM]

The White Coat Investor wrote:

White.Beard.Doc wrote:

jz wrote:

@mamaham,   As per the proposals, most taxpayers will become standard deductors; the number using  schedule A will be diminished.  Potential and current homeowners will no longer think in terms of property tax deductions nor mortgage interest deductions. The housing market will be much less distorted by tax laws. Owners and potential owners will think less in terms of the distorting tax deductions.  The    rent<—–>own  balance will tilt slightly toward renting and against owning.

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This tax reform will certainly make living in a high tax state with high property taxes much less desirable from a financial perspective.  In our area, the cheapest property taxes are well over 10k, and a typical doctor house carries an annual property tax bill of 25 to 35k.  So this area is going to get a huge tax increase from the loss of deductibility of state and local taxes.  The counterpoint is that there are so many high paying jobs.  It will be interesting to see how this all plays out over the next few years.

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$30K in property taxes seems so insane to me. Mine are $3660 on my 4400 sq ft monstrosity in the best school district with a 100 mile view. My entire 15 year mortgage, when I had it, was about $30K a year. It’s like you’re on another planet, or at least another country.

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[Lithium]

The White Coat Investor wrote:

mamaham wrote:

jz wrote:

2) The tax reform proposals will eventually drop all home values.  Wait 5 years to watch housing deflation in action. 

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why?  I have not hear this mentioned yet as part of the tax reform discussion and haven’t thought about it.  interested to hear why you think it will affect home prices in 5 years?

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In some areas, only some of your property taxes will be deductible. Also, many people will no longer itemize at all thanks to the higher standard deduction. This essentially increases the costs of ownership, providing downward pressure on house prices since the government is not subsidizing them as much.

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The other big factor is that new buyers have to live in a house for 5 years instead of 2 to avoid a capital gain penalty.  Although you generally should live in a house for 5 years to make it worthwhile instead of renting, that is enough of a disincentive to deter some people from buying who would otherwise be comfortable with the risk of needing to sell/move after the purchase.

Not a great time to be a realtor.  I wonder how much of an effect this will have on prices of rentals?

[Lithium]

I am also curious regarding how most doctor homes in an area can have a $30k property tax.  From one source, here, only 3 states have property taxes above 2%.  Maybe some places exceed 3% including municipal/county property tax?  An average doctor home would have to be worth well in the seven figure range to result in a tax bill that large.

[Dreamgiver]

In 2012 I sold my 1500 sq ft house in southern NJ for 185k. Property taxes were $5800. Northern NJ is way worse. So there you have it.

[SPlum]

If you buy, make sure that you have a good understanding of your non-compete. Two physician couple here. We loved our first jobs, then one of them went sour with a bad partnership track. We had already bought a house by that point but had an unexpected job change 2 years in- fortunately had a small radius for the non-compete.

[White.Beard.Doc]

Lithium wrote:

I am also curious regarding how most doctor homes in an area can have a $30k property tax.  From one source, here, only 3 states have property taxes above 2%.  Maybe some places exceed 3% including municipal/county property tax?  An average doctor home would have to be worth well in the seven figure range to result in a tax bill that large.

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Houses in reasonably good condition in a desirable school district in this VHCOL area cost $500/sq. foot.  Property taxes are around 3.3% of market value.

Typical doctor house in this area:

2000 square foot house, 3 or 4 BR, 2.5 baths = 1 million dollars = $33,000/year property taxes

[jz]

@White.Bear.Doc,   It could be worse. My city has THE WORST prop. tax/ value ratio in the country.  WSJ has profiled our city, when even our mayor had a upside down mortgage resulting from depreciation of home values.  My prop. taxes = $12k. Home value has depreciated to $200k. $12/200=0.06.

[Kamban]

White.Beard.Doc wrote:

2000 square foot house, 3 or 4 BR, 2.5 baths = 1 million dollars = $33,000/year property taxes

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I currently live in one such house in a medium COL. Cost to purchase it now would be $225-250K. Annual property taxes as primary property is $1600.

[CM]

White.Beard.Doc wrote:

Typical doctor house in this area: 2000 square foot house, 3 or 4 BR, 2.5 baths = 1 million dollars = $33,000/year property taxes

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jz wrote:

My prop. taxes = $12k. Home value has depreciated to $200k. $12/200=0.06.

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My condolences. That is just awful.

[White.Beard.Doc]

The loss of deductibility of personal property taxes in the proposed tax reform legislation is going to make our expensive home prices and expensive property taxes even more burdensome, despite other great things about living here.

[Decapolis]

I can't believe how little some of you pay in property tax. I live in a LCOL Midwest town and I pay 14k a year on a 3500sqft house worth about 450k.

[The White Coat Investor]

Decapolis wrote:

I can’t believe how little some of you pay in property tax. I live in a LCOL Midwest town and I pay 14k a year on a 3500sqft house worth about 450k.

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It wouldn't be so bad if it's a state without income taxes. I'd rather pay $30K in property taxes than what I pay in income taxes.

[CordMcNally]

Man, this thread has given me a better perspective. A few days ago I was upset because our property taxes went UP to $5500. $5500!, I thought. How could they do that?! The fair market value is about $400k according to the county which is actually pretty fair. I'm still going to contest it...because, you know, I always do. But, I guess I won't feel as bad when they deny me.

[q-school]

CordMcNally wrote:

Man, this thread has given me a better perspective. A few days ago I was upset because our property taxes went UP to $5500. $5500!, I thought. How could they do that?! The fair market value is about $400k according to the county which is actually pretty fair. I’m still going to contest it…because, you know, I always do. But, I guess I won’t feel as bad when they deny me.

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i always get denied when I contest.  you got any tips?