Property Taxes
#1
Forum Regular
Thread Starter
Joined: Aug 2013
Posts: 47
Property Taxes
We are currently in rented accommodation, searching (for 5 months now) for somewhere to buy in either Westchester NY or Fairfield county CT. We are really struggling to accept property tax levels..... anywhere between $12k to $22k on the houses we have shortlisted. Finding it hard to get the full picture from our realtors (NY and CT), but from what we can gather, any improvements we make to a house will increase the property tax.... replacing a kitchen, building a barn etc, the kind of things we would have done without a second thought in the UK. We seem to be the only people who have a problem with property taxes..... but it really does put us off buying. Just wondered what others thought? Is it just something you accept or if you're house-hunting do you set a strict limit on the property tax you are prepared to pay?? But then of course, the taxes could suddenly increase couldn't they? We are fortunate enough to be cash buyers, so would we pay property taxes as a lump sum once a year? I believe it's tax deductible (?) but in reality that doesn't really make a huge difference. Be really interested in other people's attitudes to this.
#2
Re: Property Taxes
Exactly what you said. We left Westchester and New York because we couldn't find a house with a mortgage + tax cost that was attractive to us, among other reasons. Twelve years ago we were finding that taxes already ran $800-$1,000/ mth on the houses we liked and were otherwise affordable. The taxes shifted the goalposts so far we decided to throw in the towel.
#3
Re: Property Taxes
That's a great question and something we play around with in a "what if" situation. We could sell our UK home and buy a lovely house here for cash, but would have property taxes of around 15-20k! We're in NJ by the way.
I didn't even realise that making improvements could increase your property taxes. Like yourself, making improvements is something that we really don't think about in the UK - we've renovated two houses so far.
When you talk about property taxes being "tax deductible", do you mean from State Taxes? The reason I ask is that we were discussing property taxes with a neighbour and he said that there's some kind of loophole in NJ and that you end up getting most of the property tax back. I haven't looked into this too deeply though as we're not planning on buying.
I was also curious how property taxes were paid in the absence of a mortgage. I just assumed you made quarterly estimated payments, or kept the money to one side to make the annual payment.
The high property taxes are off putting - especially when compared to council tax (although I do realise they are two completely different animals). I would be constantly worried about hubby being out of work and trying to pay for health insurance and property taxes (and fund university!). This is one of the reasons that we would not want to remain in the US. If I'm missing something obvious I'm someone will be along to correct me!
I didn't even realise that making improvements could increase your property taxes. Like yourself, making improvements is something that we really don't think about in the UK - we've renovated two houses so far.
When you talk about property taxes being "tax deductible", do you mean from State Taxes? The reason I ask is that we were discussing property taxes with a neighbour and he said that there's some kind of loophole in NJ and that you end up getting most of the property tax back. I haven't looked into this too deeply though as we're not planning on buying.
I was also curious how property taxes were paid in the absence of a mortgage. I just assumed you made quarterly estimated payments, or kept the money to one side to make the annual payment.
The high property taxes are off putting - especially when compared to council tax (although I do realise they are two completely different animals). I would be constantly worried about hubby being out of work and trying to pay for health insurance and property taxes (and fund university!). This is one of the reasons that we would not want to remain in the US. If I'm missing something obvious I'm someone will be along to correct me!
#4
Re: Property Taxes
Property taxes are high in TX, but we have no state income tax here. I always compare it to what I would be paying in the UK. I don't have 42%-47% taken straight from the majority of my income, but they are going to get it somewhere. And yes, property taxes are deductible, and they are deductible from the highest bracket of federal tax you pay here - you can effectively save around a 1/3 of your property taxes in reduced federal tax, so it's not to be ignored. They get you one way or another I'm afraid.
#5
Re: Property Taxes
Westchester property taxes are out of control, not helped by every second group of houses having their own separate village administration with their own police, fire and sanitation departments, plus town and county administrations on top, not to mention separate school districts, all with taxing powers. Our village taxes are going up by another 5% this year and everyone's pleased that the viallage "managed to avoid" imposing a > 10% hike that they first proposed. And then Cuomo touts his 2% tax cap legislation in his re-election campaign ads. Ahahaha.
You can "grieve" your taxes if you think they're too high but it's all very hit and miss. We grieved our taxes based on the fact that our house purchase price last February was 2/3 of the house's last assessed value done before the property crash. Village accepted this but the town didn't.
If you have improvements done above the (very low) de minimis for a building permit, then when the buildings department "closes" the permit after inspecting the work for code compliance they are supposed to notify the tax inspector of the amount spent. So far the renovations we had done last spring prior to moving in have had no impact on our tax assessments, but I shouldn't be surprised if that was due to the inefficiency of our village administration.
The two sweetners are STAR, which can substantially reduce the headline figure of your school district taxes, and income tax relief on property tax and mortgage interest payments: these two items can be deducted from your taxable income so you don't pay income tax on that chunk of your income, and potentially it can put you into a lower tax bracket overall if you're near a boundary anyway. I think this for federal income tax only.
You can "grieve" your taxes if you think they're too high but it's all very hit and miss. We grieved our taxes based on the fact that our house purchase price last February was 2/3 of the house's last assessed value done before the property crash. Village accepted this but the town didn't.
If you have improvements done above the (very low) de minimis for a building permit, then when the buildings department "closes" the permit after inspecting the work for code compliance they are supposed to notify the tax inspector of the amount spent. So far the renovations we had done last spring prior to moving in have had no impact on our tax assessments, but I shouldn't be surprised if that was due to the inefficiency of our village administration.
The two sweetners are STAR, which can substantially reduce the headline figure of your school district taxes, and income tax relief on property tax and mortgage interest payments: these two items can be deducted from your taxable income so you don't pay income tax on that chunk of your income, and potentially it can put you into a lower tax bracket overall if you're near a boundary anyway. I think this for federal income tax only.
#6
Re: Property Taxes
Finding it hard to get the full picture from our realtors (NY and CT), but from what we can gather, any improvements we make to a house will increase the property tax.... replacing a kitchen, building a barn etc, the kind of things we would have done without a second thought in the UK. We seem to be the only people who have a problem with property taxes..... but it really does put us off buying. Just wondered what others thought? Is it just something you accept or if you're house-hunting do you set a strict limit on the property tax you are prepared to pay?? But then of course, the taxes could suddenly increase couldn't they? We are fortunate enough to be cash buyers, so would we pay property taxes as a lump sum once a year? I believe it's tax deductible (?) but in reality that doesn't really make a huge difference. Be really interested in other people's attitudes to this.
#7
BE Enthusiast
Joined: May 2008
Posts: 572
Re: Property Taxes
I pay them at city hall and the court house, once a year, generally in February.
#8
Re: Property Taxes
In Texas you can claim 'Homestead Exemption' on your main property, this reduces the amount owed a bit, and then there is another deduction when you reach 60 or 65, not sure of the exact age.
#9
Re: Property Taxes
Could this be why I see houses in the $800-900k price bracket with the most hideous 1980's kitchens and bathrooms? I'm mentally adding another 40k to replace them
#10
Lost in BE Cyberspace
Joined: Jan 2008
Posts: 41,518
Re: Property Taxes
It varies. Around here, the tax is based on the value, usually the purchase price, and goes up 2% a year. Improvements don't affect it.
I found it annoying because neighbours in the same street who bought a long time ago pay very little due to 'Proposition 13'.
I didn't understand it when we moved and was a little shocked by the amount and the fact that it keeps rising unless your home is reassessed.
If you can buy outright though, I guess it's not too bad.
I found it annoying because neighbours in the same street who bought a long time ago pay very little due to 'Proposition 13'.
I didn't understand it when we moved and was a little shocked by the amount and the fact that it keeps rising unless your home is reassessed.
If you can buy outright though, I guess it's not too bad.
#11
Lost in BE Cyberspace
Joined: Jan 2006
Location: San Francisco
Posts: 12,851
Re: Property Taxes
It's insane. There are mansions in SF that pay less tax than one bedroom apartments purchased more recently. Prop 13 is a terrible solution to a real problem of out of control increases in taxes. Any solution that doesn't tax like property the same is unacceptable imo, although a supreme court challenge to it failed.
#12
Re: Property Taxes
I sort of wish my property taxes had gone up this year. They actually went down because "the people" voted against a school bond override. Guess what now has a budget shortfall and is considering half days on Wednesdays.
#13
Forum Regular
Joined: Dec 2010
Posts: 168
Re: Property Taxes
Here in CA, substantial improvements (increase of square footage, or addition of a pool) DO increase the taxable base of the house, however, only by so much as the added value of the improvement. That's important as it interacts with Prop 13 in CA, where your property value takes it's starting point from your purchase price, which establishes its 'base' - that base is then increased 2% each year. If the value of your home decreases, you can apply for a temporary reduced assessment, but the State will still maintain an increase of 2% to your base annually - therefore, when house prices recover from a period of depression, you could see an increase substantially higher than 2% as your tax returns to its annually 2% increased base rate. This is likely something many CA homeowners will experience this year, as many CA homes have increased substantially in the last 18months after a number of years of falling prices.
#14
Lost in BE Cyberspace
Joined: Jan 2008
Posts: 41,518
Re: Property Taxes
It's insane. There are mansions in SF that pay less tax than one bedroom apartments purchased more recently. Prop 13 is a terrible solution to a real problem of out of control increases in taxes. Any solution that doesn't tax like property the same is unacceptable imo, although a supreme court challenge to it failed.
If you just finished paying off a mortgage I'm sure the bank would be willing to keep the escrow account open, likewise if it was a cash purchase I'm sure a bank would set up an escrow account for you if you didn't trust yourself to set aside the money and send it in on time.
I sort of wish my property taxes had gone up this year. They actually went down because "the people" voted against a school bond override. Guess what now has a budget shortfall and is considering half days on Wednesdays.
I sort of wish my property taxes had gone up this year. They actually went down because "the people" voted against a school bond override. Guess what now has a budget shortfall and is considering half days on Wednesdays.
Our schools are underfunded partly due to Prop 13, mentioned above. The 'solution' seems to be soirees for fundraising.
#15
BE Forum Addict
Joined: Apr 2011
Location: Ohio
Posts: 1,834
Re: Property Taxes
Our property taxes are smaller than ones mentioned here ($4,200 last year on a $600k house) and our mortgage is smallish so I'm coming up to the edge of shall I/ shan't I itemize or take the standard deduction; apparently some people alternate paying their property taxes in full one year, and then in halves the next, so they can pay 18 months' worth in one calendar year, and then deduct that year. I'll have to run some numbers, and see whether it's worth the hassle.