city records show what the taxes were on the house last year. it is usually some percentage between 1 and 2 % multipled by the appraised value.
city records show what the taxes were on the house last year. it is usually some percentage between 1 and 2 % multipled by the appraised value.
HeroOfPellinor
Lifer
- Dec 27, 2001
- 11,272
- 1
- 0
Why are you paying $600/month for just insurance and property taxes on a 200k home? That should be $200.
earned income credit for 3 kids is like $6k this year.
that's $6K that they CREDIT back to you to help pay your taxes. it's NOT $6k that you can deduct.
Earned income credit is HUGE.
HomeBrewerDude
Lifer
- Jan 18, 2001
- 14,465
- 1
- 0
some people do act like that, but most people say it all depends on the particulars of your situation.
DT4K
Diamond Member
- Jan 21, 2002
- 6,944
- 3
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All I can say is that for me and many others, buying a house is a great investment.
In many areas of the country, you can buy a house for about the same monthly cost as renting a house of the same size.
In these cases, you are not spending an extra 800 a month like you apparently are. You are spending roughly the same amount of money each month, but you get the advantages of being able to deduct the interest and property taxes from your taxable income instead of your landlord getting those tax breaks. And you get the advantage of any appreciation in value when you are ready to sell.
As I said, in my case, it would have cost me 1200 a month to rent a nice new 3 bedroom 1500 sq. ft. house.
Instead, I am paying 1200 a month to buy a brand new 3 bedroom 1500 sq. ft house.
The only additional cost was the $800 out of pocket that I had to pay at closing and any maintenace that may need done.
And what I have to show for it one year later is that I could sell it right now and walk away with around 20k even after paying real estate commisions, etc.
So for me, it's been a 20k return on an 800 investment. That's what, a 2500% return? Not too bad.
In many areas of the country, you can buy a house for about the same monthly cost as renting a house of the same size.
In these cases, you are not spending an extra 800 a month like you apparently are. You are spending roughly the same amount of money each month, but you get the advantages of being able to deduct the interest and property taxes from your taxable income instead of your landlord getting those tax breaks. And you get the advantage of any appreciation in value when you are ready to sell.
As I said, in my case, it would have cost me 1200 a month to rent a nice new 3 bedroom 1500 sq. ft. house.
Instead, I am paying 1200 a month to buy a brand new 3 bedroom 1500 sq. ft house.
The only additional cost was the $800 out of pocket that I had to pay at closing and any maintenace that may need done.
And what I have to show for it one year later is that I could sell it right now and walk away with around 20k even after paying real estate commisions, etc.
So for me, it's been a 20k return on an 800 investment. That's what, a 2500% return? Not too bad.
Originally posted by: flot
And suddenly all is clear. I had no idea kids could be so lucrative.
ya, i just did my taxes a couple of days ago.
i also have 3 kids.
HeroOfPellinor
Lifer
- Dec 27, 2001
- 11,272
- 1
- 0
Hero, actually you're right - in my pissed-off-ed-ness I said $600 which reflected the change in my payment, but the bank had actually screwed me a couple different ways on that one, so I believe the actual figure was about $500. My property taxes are roughly $4000 and I think insurance is about $1900. (and I have basically no choice on insurance, it is handled through the state b/c I'm in S. Florida and live relatively close to the beach)
DT4K
Diamond Member
- Jan 21, 2002
- 6,944
- 3
- 81
Wow, that sucks.
But I still don't understand why owning is any worse than renting when it comes to insurance and taxes. Apartment owners should be paying the same taxes which means the cost gets passed on to the renter anyway. And the insurance would be only slightly cheaper because it wouldn't cover the contents of the apartment.
This is not my house, but here is an excerpt from someone else's in my neighborhood:
2003
Land Value
$ 83,430
Building Value
$ 91,640
Total
$ 175,070
2003 Taxes
$4,402.98
Edit: Of my $1900 in insurance, I believe $600 or so is for my stuff and $1300 for the house. I have never had, and in fact I don't know anyone who has renter's insurance who lives in an apartment. And considering that there were ~100 units in my previous apartment building, and the building took up maybe 8x as much real estate as my house - I'm guessing the taxes etc for them were similarly lower.
Edit2: I am STILL not saying owning a house is a bad investment. However I am saying that RENTING isn't necessarily so awful, either.
Edit3: Shanti, I agree with you on appraised value - but for a regular homeowner in my area, your land value vs residence value is 50/50, whereas for the apartment complex, each apartment is only paying 1% of the land value, so based on that alone I'm assuming the taxes-per-apartment would be substantially reduced... but honestly I have no idea.
2003
Land Value
$ 83,430
Building Value
$ 91,640
Total
$ 175,070
2003 Taxes
$4,402.98
Edit: Of my $1900 in insurance, I believe $600 or so is for my stuff and $1300 for the house. I have never had, and in fact I don't know anyone who has renter's insurance who lives in an apartment. And considering that there were ~100 units in my previous apartment building, and the building took up maybe 8x as much real estate as my house - I'm guessing the taxes etc for them were similarly lower.
Edit2: I am STILL not saying owning a house is a bad investment. However I am saying that RENTING isn't necessarily so awful, either.
Edit3: Shanti, I agree with you on appraised value - but for a regular homeowner in my area, your land value vs residence value is 50/50, whereas for the apartment complex, each apartment is only paying 1% of the land value, so based on that alone I'm assuming the taxes-per-apartment would be substantially reduced... but honestly I have no idea.
Weigh your benefits:
1st: take your monthly bill for your home and deduct 27%, cuz that's what you'd get back at the end of the year. Now, is that lower than rent?
2nd: Remember that after 30 Years (or 15), depending on your mortgage term, you'd own the home. After 30 years It will probably be worth $800K or more. Now if you were renting, would you have 800K in the bank after 30 years? Probably not.
3rd: rent goes up year after year. You can pay $900 for rent now, but probably $1800 for rent in 10 years. That's just stupid.
4th: When you own your home, you can decide what you can do with it. For example, with renting, the landlord can say, no hanging things on the walls, no pets etc. You can say yes to any of those things when its your home.
There's plenty more reasons. Renting sucks.
1st: take your monthly bill for your home and deduct 27%, cuz that's what you'd get back at the end of the year. Now, is that lower than rent?
2nd: Remember that after 30 Years (or 15), depending on your mortgage term, you'd own the home. After 30 years It will probably be worth $800K or more. Now if you were renting, would you have 800K in the bank after 30 years? Probably not.
3rd: rent goes up year after year. You can pay $900 for rent now, but probably $1800 for rent in 10 years. That's just stupid.
4th: When you own your home, you can decide what you can do with it. For example, with renting, the landlord can say, no hanging things on the walls, no pets etc. You can say yes to any of those things when its your home.
There's plenty more reasons. Renting sucks.
I'll say owning a house and move away after only 1-2 years is a financial loss, unless you happen to live in some of those house with super high appreciations (NJ, LA, etc).
OTOH, staying in apartment for 10yrs is not exactly a wise decision other, provided that you don't rent in one of those rent-protected states (again, NJ, LA, etc)
As for flot, considering everything, I think you'll still come out ahead in owning that house.
OTOH, staying in apartment for 10yrs is not exactly a wise decision other, provided that you don't rent in one of those rent-protected states (again, NJ, LA, etc)
As for flot, considering everything, I think you'll still come out ahead in owning that house.
Oops, Shanti I'm dumb - I actually looked UP the tax for my previous apartment complex - $265,000 a year / 100 apartments = $2600 per apartment. Not cheap, but not $4000 either!
No wonder they sold them off!
No wonder they sold them off!
Where I live, the city figures how much tax you are going to pay by how much the house was appraised for the last time it traded hands, then cut that value in half.
So if his neighbor bought the house 10 years ago for $50,000, he is paying taxes on $25k. Of course now, 10 years later, the houses in the neighborhood are worth $125k, so the new guy moving in is paying taxes on $62.5k....
Thats why taxes are cheaper for the guy who lived there longer. It is all figured on the last time the property changed hands.
So if his neighbor bought the house 10 years ago for $50,000, he is paying taxes on $25k. Of course now, 10 years later, the houses in the neighborhood are worth $125k, so the new guy moving in is paying taxes on $62.5k....
Thats why taxes are cheaper for the guy who lived there longer. It is all figured on the last time the property changed hands.
DT4K
Diamond Member
- Jan 21, 2002
- 6,944
- 3
- 81
True.
I hadn't thought about number 3, but that is a really big advantage.
The OP was talking about how much money he could save up if he kept renting. But in a couple years, the rent will be higher than the mortgage. From that point on, you will actually have more extra money left by owning instead of renting. So you will have more money that you can invest or save up.
HeroOfPellinor
Lifer
- Dec 27, 2001
- 11,272
- 1
- 0
Looks like you've got a 2% property tax! And home owners insurance should only be like $40 a month for everything. You may want to explore options for insurance.
Anyway, you're paying double the property tax most of us are paying, so, yes, YOU are getting screwed by buying a house and not renting, but the rest of us are making a great deal of money.
Also your original 10K savings would drop by $1200 a year every time they raised the rent which would have been 3-4 times over 10 years likely.
It also sounds like the home is in a higher property tax zone than the apartment which doesn't make it a fair comparison.
When you factor in the 10K in deductions that come along with the house you're really only saving probably $50-60k more over 10 years and should you desire or NEED a house for the space or privacy at some point, you're looking at paying well over that $60k you saved more for the same house in 10 years that you could have bought today.
It's never a bad decision and it's frequently a very good decision. According to our real estate agent our house has appreciated almost $90k since we bought it less than two years ago. I could have saved probably $6000 in this time by renting. You do the math. We didn't just buy a house though...we spent six months of hardcore searching for the perfect house.
Anyway, you're paying double the property tax most of us are paying, so, yes, YOU are getting screwed by buying a house and not renting, but the rest of us are making a great deal of money.
Also your original 10K savings would drop by $1200 a year every time they raised the rent which would have been 3-4 times over 10 years likely.
It also sounds like the home is in a higher property tax zone than the apartment which doesn't make it a fair comparison.
When you factor in the 10K in deductions that come along with the house you're really only saving probably $50-60k more over 10 years and should you desire or NEED a house for the space or privacy at some point, you're looking at paying well over that $60k you saved more for the same house in 10 years that you could have bought today.
It's never a bad decision and it's frequently a very good decision. According to our real estate agent our house has appreciated almost $90k since we bought it less than two years ago. I could have saved probably $6000 in this time by renting. You do the math. We didn't just buy a house though...we spent six months of hardcore searching for the perfect house.
He also lived in S.Florida, near the beach. I would expect the house to get a nice appreciation rate every year. As for the high tax, I guess thats the price of having no state income tax
I just thought I would add...my parents bought their house at 70k. It is now worth 350k. Thats after 25 years, and its going up more and more with the neighborhood becoming better and better. Not to mention it is a corner property. I really dont think you could rent and save up that much.
DT4K
Diamond Member
- Jan 21, 2002
- 6,944
- 3
- 81
Oh, I see.
In Oregon, property values are reassesed every year whether the property changed hands or not. So it doesn't really matter how long you have lived in a house. You are still taxed on the present value. Due to a ballot measure initiated by petition a few years ago, there are limits to the tax rate and to how much the assessed value can be raised each year.
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