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Who pays for residential tax?

Who pays for residential tax?

Old Jan 3rd 2021, 8:24 pm
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Default Who pays for residential tax?

I’m about to become a landlord for the first time, anyone wondered, that IN GENERAL (not always but normally), in the UK it’s the tenant who pays for council tax whereas in the US, it’s the landlord that typically pays for property tax, why is that?? Shouldn’t the tenant always be responsible for paying all residential tax (call it UK council tax or US property tax), because the tenant actually live in the property not the landlord lol
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Old Jan 3rd 2021, 9:26 pm
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Default Re: Who pays for residential tax?

As a landlord you will have enough trouble collecting your rent. Best not to depend on tenant to pay your property tax. Property tax is usually paid thru mortgage or as a yearly lump some if no mortgage on the property.
Of course the renter will pay the tax indirectly thru the rent. I would never trust a renter to have a few extra thousand at end of year to pay the tax.

Last edited by ddsrph; Jan 3rd 2021 at 9:33 pm.
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Old Jan 3rd 2021, 10:16 pm
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Default Re: Who pays for residential tax?

Never have a renter pay your taxes unless you want to lose your house. You could end up in arrears and have your property sold in a tax lein sale.

Property tax is based on the owner of the property, not necessarily the resident in the US. You can, of course, include the cost of the tax into your rent, but trying to add it as an extra charge will have people walk out on the lease.

I think the reason is the leasehold vs. freehold system. In the US the property owner owns the land and the house, and in the UK the leaseholder is technically the owner of the land (and sometimes the house on the land). Maybe the UK wanted to protect the wealthy landowners so they pushed the responsibility for paying the tax down on to the end-users? (not sure--just speculating as I didn't really follow the debate).
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Old Jan 3rd 2021, 11:02 pm
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Default Re: Who pays for residential tax?

Originally Posted by Peter.st.giles View Post
I’m about to become a landlord for the first time, anyone wondered, that IN GENERAL (not always but normally), in the UK it’s the tenant who pays for council tax whereas in the US, it’s the landlord that typically pays for property tax, why is that?? Shouldn’t the tenant always be responsible for paying all residential tax (call it UK council tax or US property tax), because the tenant actually live in the property not the landlord lol
No, the tenant shouldn't pay the tax, other than the amount that the landlord figures into the tenant's monthly rent to cover the portion that goes for the property tax. The property tax is based on property ownership, not property occupancy.

Why would you presume that the customary procedures in the UK should be the standard procedure for other countries?
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Old Jan 4th 2021, 4:26 am
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Default Re: Who pays for residential tax?

I wonder how many renters could afford to pay the property taxes without rents decreasing as well?

Its based on assessed value of the property where I am, my last apartment was assessed at 650,000. I certainly could not afford the taxes on top of my rent without my rent going down a comparable amount.
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Old Jan 4th 2021, 4:37 am
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Default Re: Who pays for residential tax?

Originally Posted by Peter.st.giles View Post
Shouldn’t the tenant always be responsible for paying all residential tax (call it UK council tax or US property tax), because the tenant actually live in the property not the landlord lol
Your property, your asset, your taxes. You need to factor the taxes into your decision as to whether or not property investment is financially viable for you, just as you need to factor in maintenance and repair costs, insurances, complying with residential landlord legislation, vacancy periods and any rental management costs.
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Old Jan 4th 2021, 9:30 am
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Default Re: Who pays for residential tax?

Originally Posted by Peter.st.giles View Post
I’m about to become a landlord for the first time, anyone wondered, that IN GENERAL (not always but normally), in the UK it’s the tenant who pays for council tax whereas in the US, it’s the landlord that typically pays for property tax, why is that?? Shouldn’t the tenant always be responsible for paying all residential tax (call it UK council tax or US property tax), because the tenant actually live in the property not the landlord lol
My understanding is that ad valorem property taxes are common in many countries. As these things go, the UK Council Tax is somewhat unique and is of fairly recent origin.
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Old Jan 5th 2021, 1:30 pm
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Default Re: Who pays for residential tax?

I have ZERO experience in properties for investment, however, anecdotally a friend of mine who does suggests having at least 3+ properties to spread risk.

Any thoughts on this?
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Old Jan 5th 2021, 2:00 pm
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Default Re: Who pays for residential tax?

Originally Posted by PetrifiedExPat View Post
I have ZERO experience in properties for investment, however, anecdotally a friend of mine who does suggests having at least 3+ properties to spread risk.

Any thoughts on this?
I would think quality is more important than number. Appreciation potential, rent ability, cash flow etc. Being a landlord has good potential for return but it can also be a giant headache with deadbeat renters which are not that rare.
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Old Jan 5th 2021, 5:02 pm
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Default Re: Who pays for residential tax?

Originally Posted by ddsrph View Post
I would think quality is more important than number. Appreciation potential, rent ability, cash flow etc. Being a landlord has good potential for return but it can also be a giant headache with deadbeat renters which are not that rare.

And for the love of god run all the numbers double to make sure its financially feasible.

One issue in my part of the world is people thinking they can cash in by buying a condo to rent out, but then fail to properly run all the numbers and then act all surprised they can't rent the property out for enough to even cover the mortgage... A mortgage on a typical condo in Vancouver + taxes + strata fees will on most units exceed what one would be able to ever get rent wise, the value of the condos have just gotten too high, same with houses, your not going to be able to mortgage a low end house in Vancouver and rent it out for enough to even cover the mortgage most likely.

Our last building for example, a 1 bedroom rents for 1,950 but assuming 20% down payment, the mortgage + taxes + strata fees on that unit will be almost double what the realistic rent could be.



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Old Jan 6th 2021, 3:21 am
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Default Re: Who pays for residential tax?

Originally Posted by S Folinsky View Post
My understanding is that ad valorem property taxes are common in many countries. As these things go, the UK Council Tax is somewhat unique and is of fairly recent origin.
I am going to bet that the uncollected rate of Council Tax in the UK is a lot higher than the uncollected rate of Property tax in the US (and elsewhere). When you can put a lien on a property there's rather more leverage to get it paid.
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Old Jan 6th 2021, 4:24 am
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Default Re: Who pays for residential tax?

Originally Posted by Jsmth321 View Post
And for the love of god run all the numbers double to make sure its financially feasible.

One issue in my part of the world is people thinking they can cash in by buying a condo to rent out, but then fail to properly run all the numbers and then act all surprised they can't rent the property out for enough to even cover the mortgage... A mortgage on a typical condo in Vancouver + taxes + strata fees will on most units exceed what one would be able to ever get rent wise, the value of the condos have just gotten too high, same with houses, your not going to be able to mortgage a low end house in Vancouver and rent it out for enough to even cover the mortgage most likely.

Our last building for example, a 1 bedroom rents for 1,950 but assuming 20% down payment, the mortgage + taxes + strata fees on that unit will be almost double what the realistic rent could be.

Except that most people renting as an investment should be looking at capital appreciation and not just rent amounts.
I started looking into trading my family house in the suburbs for a downtown hi-rise condo. Dear GOD - property tax on a 1 bed would be about $1500 and then HOA fees would be another $1500. I'd be lucky to get $2500 in rent if I decided to rent it out and the properties downtown are not appreciating in value anything like the houses in the suburbs. So, in the suburbs of Austin I pay $1k in property tax, no HOA and thanks to Apple building a huge new campus a few miles away, my house is appreciating in value quite nicely. Burbs it is for the time being.


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Old Jan 6th 2021, 5:48 am
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Default Re: Who pays for residential tax?

Originally Posted by petitefrancaise View Post

Except that most people renting as an investment should be looking at capital appreciation and not just rent amounts.
I started looking into trading my family house in the suburbs for a downtown hi-rise condo. Dear GOD - property tax on a 1 bed would be about $1500 and then HOA fees would be another $1500. I'd be lucky to get $2500 in rent if I decided to rent it out and the properties downtown are not appreciating in value anything like the houses in the suburbs. So, in the suburbs of Austin I pay $1k in property tax, no HOA and thanks to Apple building a huge new campus a few miles away, my house is appreciating in value quite nicely. Burbs it is for the time being.

Condos have been meh the last year appreciation wise, I wouldn't buy one at the prices they go for, sure it would be nice to own something, but a mortgage on a condo is almost double the rent on same size unit, so makes more sense at this point to rent than buy a condo as condos are not appreciating much, and condos here tend to after 10 years old, slowly begin to depreciate, you can get 15-20 year condos for under 300,000 but they tend to have crazy high strata fees, and often have special assessment galore.

Best time for condo buying where I am was 2010-2015 era, our old building sold when new in 2013 for 210k to 220k so those who bought then at presale prices can make a 400k profit, but if you buy at 650,000 you may never see enough appreciation to make it worthwhile.

Condos are a tricky little beast.

Property tax is pretty low though, a 650,000 condo in our last building annual property tax was 1,800-2,000 per year which is pretty reasonable in my book. Its the high purchase costs that make entry difficult and the 40k-50k down payment......
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Old Jan 6th 2021, 2:41 pm
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Default Re: Who pays for residential tax?

Originally Posted by Giantaxe View Post
I am going to bet that the uncollected rate of Council Tax in the UK is a lot higher than the uncollected rate of Property tax in the US (and elsewhere). When you can put a lien on a property there's rather more leverage to get it paid.

Probably right. It's a domino effect as Councils have money withdrawn from them, they pass expense on to the residents in order to pay for services.

"Council tax debts in England have soared by nearly 40% in six years, Guardian research has found, with charities warning these arrears now rival credit card debts as their biggest concern. Amid warnings that “heavy-handed” collection tactics are putting severe pressure on those already in financial difficulty, households face a fourth consecutive year of above-inflation council tax rises as local authorities attempt to recoup money cut from their budgets by central government."
https://www.theguardian.com/money/20...arning-arrears
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Old Jan 7th 2021, 4:56 pm
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Default Re: Who pays for residential tax?

I rented when I first moved here and it was nice having just one bill from the landlord to worry about.
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