Posted on 04/20/2011 8:43:37 AM PDT by library user
I think all money paid as rent should be tax deductible. Not only would people be able to afford nicer places, but they'd have money to spend on other goods.
Yes...renters are being taxed extra to subsidize those with money enough to own. It’s regressive.
It’s rent free. It’s just not tax free.
My taxes are about 2 grand a year for about 20 acres and a house.
That’s far better than a 2000 dollar payment each month.
That said, there should be a law that any homeowner who has continuously lived in his home for a dozen years or more who reaches age 72 should no longer have to pay property tax.
An old person should not lose their dwelling purely because of failure to pay property tax.
I always enjoy your intelligent, well-though-out posts, Charles. And you make a good point, as always. I’m just relieved I bought my house during a slightly depressed market 18 years ago, so I didn’t pay more than it was intrinsically worth.
It’s a great feeling of security to know my house is paid for and can’t be taken from me, and I intend to stay here until I can’t manage the work necessary to maintain it any more. Another 20-30 years, at least!
Ancient Rome coined the word “suburb” when Romans abandoned property to escape onerous property taxes. To illustrate how bad it got, at one point Rome gave condemned men the option of either dying or assuming ownership of property.
I bought a house to live in. I doubt many Americans are qualified real estate investors, so when they lose their ass on property “investments” I couldn’t care less. This idea that a home is an investment is stupid and dangerous.
I couldn't disagree more.
Never buy a home as an "investment". Buy a home because that's where you want to live. The value of a home is dependent on a lot of factors beyond your control. Where are you on the demographic curve when you buy? What are interest rates when you buy? Are jobs plentiful in the area? Are the schools good quality? Also, you never really own it, try not paying the real estate taxes and see what happens.
The Case-Schiller index just showed another 5% decline in median home prices.
The vast majority of the "smart" investors are upside down with the "best investment" they made. One of the key factors in home pricing is the median income in the area. Wages are flat, or declining, which means the % able to buy is in decline as fast as the home values are declining.
IOW, buying a home is a TERRIBLE investment. It's only smart if the monthly cost is 38% or less of your income and it's where you want to live.
Thank you for your kind words.
I bought my first house in 1982, and replaced it in 1996, so I’ve missed all the hoopla. I did refinance late last year to take money out, so I still owe a bit (no more than when I first financed in 1996 though). Essentially I keep paying off my house and then refinancing it again. But this one was only for 10 years, so my end date is still earlier than my original 30-year.
The reason I refinanced was twofold. First, I wanted to populate some college funds to get up-front tax deductions before and in case they decided to terminate the program. Second, I figured if there really was inflation, the money I borrowed but was invested would probably keep up, and I’d be paying back with cheaper dollars.
But my loan is still less than half the current value of the house, because I wouldn’t want to risk being “underwater”.
You forget the simple fact that you have to live someplace, and you are going to be paying the rate someone else needs to make in order for them to pay their bills of owning property.
There’s no getting away from it Wm.
“Investment” in terms of “capital gain” is not the issue. Investment in terms of financial security is something else entirely.
Since people have to have someplace to live anyway, then they will be paying someone for living space. NOT having that expense at all is a whole lot cheaper than having it.
As I said, owning your own home is like having an annuity that pays X amount each month. That’s not to say that your annuity made a good return all those years, but it is saying that at the end of the term, it will be yours.
Property taxes don’t approach the cost of property tax + payment. Rest assured, though, that ANY rent will include all of the costs of the property owner...to include his property tax.
Owning property is security. That’s why the call it REAL estate.
If the term "investment" is being applied it's going to be a capital gain (goes up/down in price) or a cash flow producing asset. The term should never be applied to home ownership. It deludes purchasers into thinking a house is something it's not.
Since people have to have someplace to live anyway, then they will be paying someone for living space. NOT having that expense at all is a whole lot cheaper than having it.
Not true. The loan may be paid off freeing a % of your income for other things. However, you will have property taxes, insurance, maintenance and utilities. Also, as things become outdated they will need to be upgraded in order to maintain value.
The renter is not tied down to a specific property so when the costs go up to pay for the previously mentioned items they can move to a newer property with more amenities.
Property taxes don’t approach the cost of property tax + payment.
It all depends on location and the quality of govt in the area.
All of those thing, no matter where you live, is included in the price that you pay for your dwelling. You are paying for them anyway. (Most places don't include all utilities; you have to pay that separately.)
Any rental business that does not include its costs in its product price is doomed to fail. It's a given, all those taxes, maintenance, insurance, etc. costs are in the cost of your dwelling if you rent. It's just a fact. Unless, of course, you rent from your momma, and she's giving you a deal out of the bigness of her heart.
An investment does NOT have to produce a capital gain in the sense of the market and the tax tables.
Shelter is a necessity. It must be taken care of one way or another.
The same with "investing" in a family garden. You've got to have food anyway. This way you have nothing to report to the tax tables, and you have the cost of sweat equity, but you also have a REAL product you can use to offset what would otherwise be necessary costs.
Not true, I wish it were.
Rent is limited by demand. In large urban areas it's not uncommon for renters to not pay for heat and water. The cost of repair, maintenance, upgrades is typically averaged out over a large number of units.
Any rental business that does not include its costs in its product price is doomed to fail.
It's not that simple. The critical factor is how many units you have to spread the cost over and what the market rent is in the area. Because of the condo conversion boom there are a huge number of rental units (owners can't sell for what they bought them for) that are on the market lowering the net rents that can be charged.
It's like any business that sees the demand for their product less because of over supply. You cut operating costs and wait for the supply to be eaten up.
I would say that RIGHT NOW is a great time to buy a house THANKS TO OBAMA ,, if I could qualify I’d buy a second one with acreage .. Even if it was wildly expensive now ,, with lets say a $5,000 monthly payment ,,, how is that going to feel when a double cheeseburger is $500 .... when the dollar is replaced with the “new dollar” and debts are cancelled because the currency they are written in is obsolete ...
Wm, I know you're not arguing for rental businesses to sell at below their operating costs. Costs is what limits any business. Rental businesses are not in business to provide lower than cost housing they can subsidize at their own expense. That is the limiting factor and not something like demand. Demand might force your price up or down, but if you start selling at less than cost, then you are a dutch uncle and not a business.
Also, an apartment with utilities rents for more than a similar apartment without. Why? Because of higher costs.
Is there competition in the marketplace? Sure. And if they are beating you so badly that you think you need to sell at below cost, then as a businessman, it's pretty clear that you overpaid for your buildings or some other cost(s) that you're covering.
And when push comes to shove, you still have something real and not just a piece of paper. It's like the difference between having gold coins in your safe deposit box at the bank and having gold mutual stocks. The first is real. The 2nd is a piece of paper.
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