Question for retirement saving/mortgage payoff

[Disneybuckeye]

I also won't pay off our main home due to taxes and insurance of $15k a year. Our house is tax valued at about 50-60% of what 2 realtors wanted to list it at.

Our lake house is paid in full but the takes and insurance are less than $3k so much easier to fork over.

Our mortgage is 3.25% so our investments ar doing better anyway.

Every situation is different.

 

[tvguy]

That is interesting to me. Here in Maryland, appraised value (for tax purposes) is pretty close to market value on most houses. Condition, of course will make the values vary, but for a house in good condition, you can almost bank on the assessment.

And, even though we have a cap that keeps our taxes lower, I want your tax bill. Mine is close to double. But I am very close in to our Nation's Capital. Ten miles away, you can find 1/2 the tax for a similar home, but I enjoy my proximity.

And New Jersey residents, I feel your pain!

The inequity here is if I sell for that $400,000, the new owner would pay $4,000 in property taxes.

 

[Judique]

The inequity here is if I sell for that $400,000, the new owner would pay $4,000 in property taxes.

I don't really see that as an inequity. Because if you decide to upgrade in your same area, you will have to find a house that's probably much higher than $400K. I've stayed in my starter home and now I'm happy that I did as it is now big enough, and I have location, location, location. I doubt I'll ever sell my house unless I get to the point that I need in home assistance for health reasons - but I doubt I'll have to worry on that scale for about 20 more years (my eighties).

For a short time a few years ago I had 5 people in my home and I could afford a larger house. I looked around and didn't want to move further out, didn't want to move around the corner into new construction - small yards, little privacy, huge homes. And didn't have the time and energy to rebuild on a lot that I already owned on my own street! Well, finally my daughter and new husband got their own home and son moved also so back to having 2 baths and 2 people - yay!

 

[mjkacmom]

Is there much difference between the appraised value and the market value there? Mine is appraised at $198,557, and the market value per realtor.com and Zillow is about $416,000.

NJ, pretty accurate appraisals, and it appears we have another reassessment coming up in the next couple of years! Lucky us.

 

[tvguy]

I don't really see that as an inequity. Because if you decide to upgrade in your same area, you will have to find a house that's probably much higher than $400K. I've stayed in my starter home and now I'm happy that I did as it is now big enough, and I have location, location, location. I doubt I'll ever sell my house unless I get to the point that I need in home assistance for health reasons - but I doubt I'll have to worry on that scale for about 20 more years (my eighties).

For a short time a few years ago I had 5 people in my home and I could afford a larger house. I looked around and didn't want to move further out, didn't want to move around the corner into new construction - small yards, little privacy, huge homes. And didn't have the time and energy to rebuild on a lot that I already owned on my own street! Well, finally my daughter and new husband got their own home and son moved also so back to having 2 baths and 2 people - yay!

Yup. We've been in our house 34 1/2 years. Our first house, and now clearly will be our last house. We flirted with moving up 10 years after we bought the house to get a 4th bedroom, a 3rd bathroom and a 3 car garage, but that was going to cost $100,000 more than our house was worth. So we spent $24,000 adding the bedroom and bathroom on, and just forgoing the move from a 2 car to 3 car garage. When my mom passed, we had another choice. Her smaller house which was worth twice what ours was worth due to location, or ours. We kept ours, and used a portion of the sale money to remodel our family home in our retirement home.

 

[Grumpy's Gal]

We had a taxpayer revolt here in California in 1978. Proposition 13 limits to property taxes to 1% of what you paid for your house, with increases of no more than 2% of that amount per year.

Fascinating but I have a question. So you have your house and that rule limits your taxes. If you also put your child's name on the deed, after you die, can the child continue to own the house under the same tax rule? And they can put their child's name on the deed and on and on and on forever?

 

[tvguy]

Fascinating but I have a question. So you have your house and that rule limits your taxes. If you also put your child's name on the deed, after you die, can the child continue to own the house under the same tax rule? And they can put their child's name on the deed and on and on and on forever?

I would assume if one person on the deed dies, it would not impact the other, but you probably shouldn't put your child's name on the deed. Better to put it in a revocable trust. My parents house was in a revocable trust and I would have retained their property tax rate if I had kept that house.
And if the house remained in a trust, yes, the tax basis would remain at the adjusted purchase price value, not the current market value. The owner of the house is the trust. Only the owner of the trust changed.
At least here in California, real estate values have soared. The result, you find many long time property owners in homes they could never afford at their current market value. My parents paid $29,500 for this house. They could afford a $29,500 house. The inflation adjusted property taxes were about $1,000. According to realtor.com and zillow, today that house is worth over $900,000. The current property taxes would be $9,000. They could not afford their house or the property taxes at today's market value.

 

[starry_solo]

We had a taxpayer revolt here in California in 1978. Proposition 13 limits to property taxes to 1% of what you paid for your house, with increases of no more than 2% of that amount per year.
But back in 1978 there were actually senior citizens who had been in their houses 40 or 50 years, whose property taxes were more than they paid for the house. The houses had soaring in value, so much so, most could not afford to buy them at their current value.

That's base taxes. Then add all those Mello-Roos because the developers are too cheap to pay for it themselves, they stick it in a 30-40 year bond

 

[starry_solo]

Fascinating but I have a question. So you have your house and that rule limits your taxes. If you also put your child's name on the deed, after you die, can the child continue to own the house under the same tax rule? And they can put their child's name on the deed and on and on and on forever?

In CA, we have what is called the parent-child exclusion, which will preclude the reassessment of property transferred from parent-to child, up to $1,000,000

http://www.boe.ca.gov/proptaxes/faqs/propositions58.htm

https://assessor.lacounty.gov/proposition-58-and-proposition-193/

 

[tvguy]

That's base taxes. Then add all those Mello-Roos because the developers are too cheap to pay for it themselves, they stick it in a 30-40 year bond

No Mello-Roos bonds in my subdivision, it was built in 1976, but I hear new subdivisions have them. We did have a ballot measure to charge everyone $100 a year to help redo the parks. It got over 50% of the vote, and the park district started to collect the tax, but Prop 13 says those have to have 2/3 of the vote, so the park district had to refund all that money.

 

[mjkacmom]

I would assume if one person on the deed dies, it would not impact the other, but you probably shouldn't put your child's name on the deed. Better to put it in a revocable trust. My parents house was in a revocable trust and I would have retained their property tax rate if I had kept that house.
And if the house remained in a trust, yes, the tax basis would remain at the adjusted purchase price value, not the current market value. The owner of the house is the trust. Only the owner of the trust changed.
At least here in California, real estate values have soared. The result, you find many long time property owners in homes they could never afford at their current market value. My parents paid $29,500 for this house. They could afford a $29,500 house. The inflation adjusted property taxes were about $1,000. According to realtor.com and zillow, today that house is worth over $900,000. The current property taxes would be $9,000. They could not afford their house or the property taxes at today's market value.

My parents bought their house for about $50,000 50 years ago. It’s now worth around $650,000, taxes are $16,000.

 

[cedricandsophie]

Evanston IL here. Our property taxes for our 140 plus year old house, three stories on 3/4 acre in town with estimated value over 1mil are over $32000 a year. We are about a mile from Lake Michigan. If we were on the lake our taxes would be well over that because our house value would probably increase by 50%. Mortgage paid off years ago. I’m blessed we can afford it without trouble but we will be looking to sell in about 4 or 5 years to cut our home ownership costs for taxes, insurance, lanscaping, utilities, security, etc so we can make our investment retirement income last as long as possible. My goal is a condo.

 

[platamama]

How we look at mortgage interest and property taxes is going to change significantly with the GOP tax bills in consideration.

With both the House and Senate tax bills removing state income taxes, property taxes (House: 0 allowed, Senate: 10K cap) and mortgage interest as itemized deductions (House: in excess of 500K mortgage disallowed, Senate :1M) as well as personal exemptions being eliminated in both bills, homeowners are going to be facing a different math question than we have before. They are also changing the tax-free capital gains on selling your house to be more onerous. You have to live there 5 out of 8 years for tax-free capital gains, currently it's 2 out of 5 years.

Those moves will make homeownership a less desirable goal in the future, most likely decreasing your home's value, especially in states with high property taxes. This will impact public education as well since funding for schools comes mostly from the state's tax revenue (property taxes, income taxes).

Whether you benefit from the proposed bills depends on your individual situation. My family is going to be hosed.

 

[tvguy]

My parents bought their house for about $50,000 50 years ago. It’s now worth around $650,000, taxes are $16,000.

FAINT! If they still owned it in California their property taxes would be about $1,000. If someone bought it today for $650,000 their property taxes would be $6,500.

 

[georgina]

There is a lot more to consider than just the property tax rate though. PA funds its schools largely through property tax, other states don't necessarily. In Allegheny County we pay about $4750 on a house valued around $250,000 (bought 30 years ago for $60,000), but $3500 of that goes to the schools. 10 miles away in another county, property taxes are much lower. I think it is really unfair the way CA does it, where your taxes stay low while your neighbors pay much more for the same services.