Paying school tax on 2nd homes?

Geoist · Jan 9, 2018

jaeger19 said:
Yep..

there is a contradiction here. On one hand Geoist argues that the LVT will discourage speculation (allowing land to lie idle), because a higher LVT would incentivize using that land to its higher potential.

then in the next sentence.. he states that the land value will be LOWER.. under LVT.

Our current property tax system has a low enough tax rate so that speculators can sit on a lot for years. A high enough LVT would discourage that practice. LVT may initially lead to lower land values as speculators unload their properties to the market, but I'd imagine the values would go back up as demand increases.

Geoist · Jan 9, 2018

jaeger19 said:
Please explain exactly how you are assessing the value of these semi-rural tracts of open land. (with development slowing coming closer)

Currently they would be assessed a low value because they are unimproved. Explain how their value would decrease further under a LVT...

They would be assessed same as they are now. The only difference would be in what is taxed. Yes, they are assessed at a lower value than suburban/urban land. That is because the demand is much lower.

Curbing sprawl would mean less encroachment on farmland which means small farmers keep their farms. Don't see how anyone can be against that.

Geoist · Jan 9, 2018

jaeger19 said:
No.. there was no current tax incentive to move to the country. In my example.. both vacant land was valued at 100,000 and both were taxed exactly the same. 5,000. there was no incentive to move to the country based on taxes. that's because the tax system is the same.

I've already explained this to you yet it obviously has not sunk in. You can own more land at $100K in the country than you can own at $100K in the city. If I could own the same kind of house and number of acres in the outskirts as I could closer to the city, and pay fewer taxes then I would be strongly tempted to move. Removing the tax on improvements encourages businesses and homeowners to stay closer to the city.

Geoist · Jan 9, 2018

jimbo said:
No it's not. The last bust was created by the belief that everybody deserves home ownership. That coupled with new lowered down payments, credit requirements, lower interest, and lower overall piti payments led to the crisis.

Everything you mentioned is connected to speculation.

Geoist · Jan 9, 2018

Critter7r said:
instead of being based on the value of the property including the improvements, it changes to where it is split equally per square unit of measurement, then the tax burden goes down on the neighborhoods, and up on the vacant lands.

LVT is not split equally per sq unit. For example, a square unit of an oil field is far more valuable than a square unit of rocky soil.

The owners of improved properties would see their taxes cut in half, because they own relatively small parcels, and the owners of a 10-acre field just outside of town would see their taxes increase pretty dramatically.

Owners of large vacant land would bear a bigger burden, generally, which is exactly the point of the tax. It is far more fair as the business-owner contributes more to society than the speculator who sits on his/her site for years.

Critter7r · Jan 10, 2018

Geoist said:
LVT is not split equally per sq unit. For example, a square unit of an oil field is far more valuable than a square unit of rocky soil.

Ok, but in the average, non-oil-bearing, suburban and semi-rural landscape, land parcels (not including improvements, and excepting swamps or otherwise unbuildable land) would be worth roughly the same per unit in a given neighborhood, or town, or township.

Owners of large vacant land would bear a bigger burden, generally, which is exactly the point of the tax. It is far more fair as the business-owner contributes more to society than the speculator who sits on his/her site for years.

So the point of the tax is to guarantee that only the wealthy can own any sizeable property?

jaeger19 · Jan 11, 2018

Geoist said:
I've already explained this to you yet it obviously has not sunk in. You can own more land at $100K in the country than you can own at $100K in the city. If I could own the same kind of house and number of acres in the outskirts as I could closer to the city, and pay fewer taxes then I would be strongly tempted to move. Removing the tax on improvements encourages businesses and homeowners to stay closer to the city.

Sorry.. but your argument simply doesn't fly.

jaeger19 · Jan 11, 2018

Geoist said:
LVT is not split equally per sq unit. For example, a square unit of an oil field is far more valuable than a square unit of rocky soil.

.

why? when the oil field is also a square unit of rocky soil?

See.. I don't think you understand your premise that well.

Tell me how you value that oil field that's rocky with the other square unit of rocky soil adjacent to it?

Geoist · Jan 11, 2018

Critter7r said:
Ok, but in the average, non-oil-bearing, suburban and semi-rural landscape, land parcels (not including improvements, and excepting swamps or otherwise unbuildable land) would be worth roughly the same per unit in a given neighborhood, or town, or township.

Generally, neighbors will pay around the same per parcel, yes. Some people think LVT would just create a fixed dollar amount so just wanted to make sure that was clear.

So the point of the tax is to guarantee that only the wealthy can own any sizeable property?

There are many working class folks who are struggling to pay a mortgage under our current system... but you are worried about whether some guy can buy/keep 10 acres under LVT? Land would still be super cheap in the country compared to the city. If the guy who holds 10 acres cannot afford the tax, then he/she can sell a few to someone else.

Geoist · Jan 11, 2018

jaeger19 said:
Sorry.. but your argument simply doesn't fly.

If you aren't going to debate it then there is no need to respond. Saying "your argument doesn't fly" without backing up the claim is completely pointless.

Geoist · Jan 11, 2018

jaeger19 said:
why? when the oil field is also a square unit of rocky soil?

See.. I don't think you understand your premise that well.

Tell me how you value that oil field that's rocky with the other square unit of rocky soil adjacent to it?

It is based on market value. Properties are already assessed for the property taxes we already pay. LVT only changes what part/percent of what is assessed we end up paying for.

Critter7r · Jan 11, 2018

Geoist said:
There are many working class folks who are struggling to pay a mortgage under our current [tax] system... but you are worried about whether some guy can buy/keep 10 acres under LVT? Land would still be super cheap in the country compared to the city. If the guy who holds 10 acres cannot afford the tax, then he/she can sell a few to someone else.

Those are two separate issues though. If you can't afford the mortgage because of the property tax, you can't afford the mortgage. That's like buying a new car and saying you can't afford to pay for the car because of the current insurance requirement ... you knew you had to have insurance going into it..

The tax system you crave would probably have the unintended consequence of raising home prices because people would feel that they could afford more when purchasing a home and ask more when selling, because the tax burden would be less.

Also, an area whose land is already (or mostly) built out would see no reduction, because the municipality wouldn't suddenly require less dollars to run the city, yet there would be no (or little) vacant land upon which to jack up the tax rate.

Geoist · Jan 11, 2018

Critter7r said:
Those are two separate issues though. If you can't afford the mortgage because of the property tax, you can't afford the mortgage.

Our current property tax artificially drives up land costs because it encourages speculation and discourages the utilization of what we've already built around.

The tax system you crave would probably have the unintended consequence of raising home prices

Disagree.

Dozens of studies in dozens of cities have shown that most home owners pay less under land value tax than under property tax, and much less than under income taxes. The only exceptions we have seen are where only a small minority of residents can afford home ownership or where businesses have been so overtaxed that demand for business properties has been discouraged.
Land Value Tax: Saving Communities

Also, an area whose land is already (or mostly) built out would see no reduction, because the municipality wouldn't suddenly require less dollars to run the city, yet there would be no (or little) vacant land upon which to jack up the tax rate.

NYC, alone, has over 22 square miles of vacant land.

Critter7r · Jan 11, 2018

Geoist said:
Our current property tax artificially drives up land costs because it encourages speculation and discourages the utilization of what we've already built around.

Disagree.

Dozens of studies in dozens of cities have shown that most home owners pay less under land value tax than under property tax, and much less than under income taxes.

Pay less "what"? Taxes? I don't doubt that. But that leaves room for the price of the house to go up, because people will take advantage of the opportunity to highlight the lower taxes. Kind of like how car salesmen try to get you to a specific monthly payment. They'll charge the most they can that their base can afford. If the price of Scotchgard goes down, he'll charge a little more for the extended warranty.

The only exceptions we have seen are where only a small minority of residents can afford home ownership or where businesses have been so overtaxed that demand for business properties has been discouraged.
Land Value Tax: Saving Communities

NYC, alone, has over 22 square miles of vacant land.

NYC is a total of 305-325 square miles (depending on which source you use).

jaeger19 · Jan 18, 2018

Geoist said:
It is based on market value. Properties are already assessed for the property taxes we already pay. LVT only changes what part/percent of what is assessed we end up paying for.

And how does that differ from how properties are assessed now.

If it has an oil rig already on it.. then its market value just went up. basically you are being taxed on "improvements" because the improvements increase the market value.

As soon as you say.. market value.. then you are taxing on improvements (hence IMPROVEMENTS) that increase that market value.

Waddy · Jan 27, 2018

lefty louie said:
I/e own a 2nd home we use on weekends and summer vacation, we don't rent it out so there is no possible way of us ever using the school district, yet we pay about 50% of or $3,000 property tax towards the school district.

It's gotten to the point we're thinking about listing the house and spending that 6K on a summer rental for 6 weeks, we'd still save thousands over the course of a year and not have the headache of homeownership.

I hear you. Here was my situation;

I owned four rental homes (which I sold a few years ago) and here's why;

They were located in a very "working class" part of town. Not in the ghetto, but not far from it. All were small three bedroom, one bath ranch style homes with a one cart garage.

I bought them each at various tax sales cheap. Fixed them up. That was a nice tax write-off. So for a while it was a good deal.

Rented each for around $650 per month.

My property taxes were almost $200 per month. (second highest in the nation).

I paid almost 30% federal income taxes on my profit, around $125 per month.

State tax was about 7%, so about $50 per month.

All other fees, like landlord permits, inspections, building permits, etc. ran another $25 per month average.

After deducting my other costs; cleaning, repairs, remodeling, legal fees, etc. I was clearing about $150-200 per month on each home., after paying all my various taxes and expenses.

However, the government was clearing about $275-400 per month on each home. It's like I had a silent partner who did nothing but collect their checks each month. I finally said screw it and sold the homes.

I got out of paying capital gains. But that's a different story. They will tax the hell out of ya'....

OpportunityCost · Jan 27, 2018

Waddy said:
I hear you. Here was my situation;

I owned four rental homes (which I sold a few years ago) and here's why;

They were located in a very "working class" part of town. Not in the ghetto, but not far from it. All were small three bedroom, one bath ranch style homes with a one cart garage.

I bought them each at various tax sales cheap. Fixed them up. That was a nice tax write-off. So for a while it was a good deal.

Rented each for around $650 per month.

My property taxes were almost $200 per month. (second highest in the nation).

I paid almost 30% federal income taxes on my profit, around $125 per month.

State tax was about 7%, so about $50 per month.

All other fees, like landlord permits, inspections, building permits, etc. ran another $25 per month average.

After deducting my other costs; cleaning, repairs, remodeling, legal fees, etc. I was clearing about $150-200 per month on each home., after paying all my various taxes and expenses.

However, the government was clearing about $275-400 per month on each home. It's like I had a silent partner who did nothing but collect their checks each month. I finally said screw it and sold the homes.

I got out of paying capital gains. But that's a different story. They will tax the hell out of ya'....

2nd worst in the US is Illinois. In any town over 50k you should be getting at least $800/month. I don't know your exact town and the neighborhood but $650 for a 3bdrm is dirt cheap.

Critter7r · Jan 27, 2018

OpportunityCost said:
2nd worst in the US is Illinois. In any town over 50k you should be getting at least $800/month. I don't know your exact town and the neighborhood but $650 for a 3bdrm is dirt cheap.

I live in a small, less-than-median-income, rural township of about 12,000, and any 1,000+ square-foot 3bd/1ba house would easily rent for $1,000 or more. 3bd/1.5ba would easily go for $1,200.

Nilly · Jan 28, 2018

lefty louie said:
I/e own a 2nd home we use on weekends and summer vacation, we don't rent it out so there is no possible way of us ever using the school district, yet we pay about 50% of or $3,000 property tax towards the school district.

It's gotten to the point we're thinking about listing the house and spending that 6K on a summer rental for 6 weeks, we'd still save thousands over the course of a year and not have the headache of homeownership.

If anything there needs to be even higher taxation rates on second/third/un-lived in/rented out homes. We have a whole generation who are unable to buy their own houses whilst the second homers and buy-to-let market push prices further and further out of reach.

Waddy · Feb 1, 2018

OpportunityCost said:
2nd worst in the US is Illinois. In any town over 50k you should be getting at least $800/month. I don't know your exact town and the neighborhood but $650 for a 3bdrm is dirt cheap.

As they say in real estate; location, location, location. Bad part of town; $650...... great part of town; $2000........

Neomalthusian · Feb 10, 2018

lefty louie said:
What I'm saying is, I pay a school tax within the state on 3 properties I own, the rental units could easily have children in them so I don't mind paying school taxes on them even if kids don't currently occupy the property, however taxing me twice for something is overboard. A good retort to paying the extra school tax is this. We lost our 2nd home to super storm Sandy, my insurance paid a certain amount, but FEMA gave us nothing (I'm not saying they should, but FEMA paid to every other home owner if it was their first home), because it was a 2nd home. If I can pay taxes like everyone else, why don't I get the full benefit like everyone else?

I would be very surprised if your property taxes went directly into a school fund. Property taxes usually go into the government's general fund, which helps pay for government services generally, and some of those expenditures are for the school. So to even pretend your property taxes are "for schools" is probably overly simplistic and not technically accurate.

Further, if let's say there were these exemptions and carve-outs for people claimed to not be "getting the benefit" out of school funding and they could avoid those taxes, and it caused the quality of the schools to plummet, people with families would flee the area, which would really depress your home values, and the more homes you own, the bigger the bite that would take out of your net worth. Alternatively, if the taxing authority did not allow the schools to drop in quality so that it could retain its families, it would simply involve shifting the tax burden to something else, like sales or income.

Either way, you're not getting out of it. Even if you thought you were, you wouldn't be, because your property values depend heavily on people wanting to live in that area where you own property.

Critter7r · Feb 10, 2018

Neomalthusian said:
I would be very surprised if your property taxes went directly into a school fund. Property taxes usually go into the government's general fund, which helps pay for government services generally, and some of those expenditures are for the school. So to even pretend your property taxes are "for schools" is probably overly simplistic and not technically accurate.

Further, if let's say there were these exemptions and carve-outs for people claimed to not be "getting the benefit" out of school funding and they could avoid those taxes, and it caused the quality of the schools to plummet, people with families would flee the area, which would really depress your home values, and the more homes you own, the bigger the bite that would take out of your net worth. Alternatively, if the taxing authority did not allow the schools to drop in quality so that it could retain its families, it would simply involve shifting the tax burden to something else, like sales or income.

Either way, you're not getting out of it. Even if you thought you were, you wouldn't be, because your property values depend heavily on people wanting to live in that area where you own property.

As to your first sentence ...

Here's the breakdown for property taxes in the Village (city) I live in, and for the Township. Note the last line, which I've highlighted. Also note the other school funds, which I've put in bold.

2017 Tax Rate Breakdown for Properties in the Holly School District as follows:

County 4.0400
State 6.0000
School Debt 8.5000
Township 1.0000
Library 0.9783
Park 0.4891
Fire and Emergency Services – Outside of the Village only 3.2400
Oakland County Parks and Recreation 0.2368
Oakland Intermediate Schools 3.3079
Oakland Community College 1.5555
Huron – Clinton Parks and Recreation 0.2146
Zoo Authority 0.0980
Art Institute 0.1981
Homestead Rate Total 29.7283
Non- Homestead Rate Total 47.7283
Village Homestead 39.6228
Village Non Homestead 57.6228
Village – add additional for Garbage Pick-up Services $178.23 a year

Non Homestead rate adds additional 18.0000 mills for School Operating to the Homestead rate

Neomalthusian · Feb 10, 2018

Critter7r said:
As to your first sentence ...

Here's the breakdown for property taxes in the Village (city) I live in, and for the Township. Note the last line, which I've highlighted. Also note the other school funds, which I've put in bold.

2017 Tax Rate Breakdown for Properties in the Holly School District as follows:

County 4.0400
State 6.0000
School Debt 8.5000
Township 1.0000
Library 0.9783
Park 0.4891
Fire and Emergency Services – Outside of the Village only 3.2400
Oakland County Parks and Recreation 0.2368
Oakland Intermediate Schools 3.3079
Oakland Community College 1.5555
Huron – Clinton Parks and Recreation 0.2146
Zoo Authority 0.0980
Art Institute 0.1981
Homestead Rate Total 29.7283
Non- Homestead Rate Total 47.7283
Village Homestead 39.6228
Village Non Homestead 57.6228
Village – add additional for Garbage Pick-up Services $178.23 a year

Non Homestead rate adds additional 18.0000 mills for School Operating to the Homestead rate

Education costs what it costs. If you stopped saying property taxes paid for education, the cost of education would still have to be paid significantly by Michigan taxpayers. If you're overspending on education (statistically), that's its own problem, not inherent to property taxes or trying to avoid them. You definitely don't want to overpay for education, but defunding it by simply excusing people from taxes is a joke, and doesn't even accomplish anything for the taxpayer, ultimately.

Critter7r · Feb 12, 2018

Neomalthusian said:
Education costs what it costs. If you stopped saying property taxes paid for education, the cost of education would still have to be paid significantly by Michigan taxpayers. If you're overspending on education (statistically), that's its own problem, not inherent to property taxes or trying to avoid them. You definitely don't want to overpay for education, but defunding it by simply excusing people from taxes is a joke, and doesn't even accomplish anything for the taxpayer, ultimately.

I was addressing only your statement about you being very surprised if someone's taxes went "directly into a school fund", and showing that in my township, specific portions of one's property taxes do exactly that. And even more specifically, in my township, the ENTIRE amount of the non-homestead tax goes to that fund. (The additional taxes that are paid by owners of non-homestead properties was what the OP was complaining about).

Nickyjo · Feb 12, 2018

lefty louie said:
I/e own a 2nd home we use on weekends and summer vacation, we don't rent it out so there is no possible way of us ever using the school district, yet we pay about 50% of or $3,000 property tax towards the school district.

It's gotten to the point we're thinking about listing the house and spending that 6K on a summer rental for 6 weeks, we'd still save thousands over the course of a year and not have the headache of homeownership.

Response to this comes under “No Man is an Island” by John Donne. I too had a second vacation home, and paid taxes for education in another school district. But I could also deduct mortgage interest. Why did I get that subsidy?

My heart bleeds for you nevertheless. Count your blessings instead of sheep, as the late Eddie Fisher sang. You’ll sleep better.

Paying school tax on 2nd homes?

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