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Old 08-22-2008, 03:42 PM
 
26 posts, read 19,147 times
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Quote:
Originally Posted by impala666 View Post
My point is why go governments have to make thing so complicated for people.
So tax attorneys can afford to live in LA.
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Old 08-22-2008, 03:54 PM
 
Location: Malibu/Miami Beach
1,070 posts, read 2,883,783 times
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Quote:
Originally Posted by moose31 View Post
So tax attorneys can afford to live in LA.
The ones that work for me can,for sure!
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Old 08-22-2008, 09:41 PM
 
Location: So Cal
38,762 posts, read 37,938,490 times
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Quote:
Originally Posted by EscapeCalifornia View Post
Does she really need to buy a $9.2M house? Can't she slum it in a little $3M house, invest the difference, and earn enough off the investments to pay the property tax?
No doubt, I agree, seems like finance 101, but what do I know.
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Old 08-23-2008, 01:44 AM
 
619 posts, read 1,906,982 times
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Quote:
Originally Posted by impala666 View Post
A friend of mine has just gone back to England after a short vacation. The reason for the vacation was a job interview for the post of Consultant Anesthetist(Anesthesiologist) in a top LA Hospital.
The hospital let her know that she was successful within three days and as you can imagine she was filled with excitement at the thought of starting a new life in California. Especially as she has just gone through a divorce the idea of setting up in a new place with her eight year old daughter was very appealing.
You would think this would be simple,sell one house buy another and move on with her life,not so.
She owns outright (inherited from parents)a house in a very smart area of St Johns Wood (London) current value around 5 Million nothing extraordinary for London and wants to buy a house of similar value here in California,we even drove around and looked at a couple in Malibu with tennis court,pool and a sea view.
Until she understood that the Property tax on this house would be over $100,000 per year this equates to around one third of her new salary.
How ridiculous is that a professional who would be an enormous asset to California is prevented from buying the house she can afford (no mortgage) by stupid property tax laws.
Until I thought about this situation I had never realized how anti wealth California actually is.
warren buffet lives in omaha nebraska in a 250k house and that man really has money.....if she`s got the $ to pay cash for the estate in malibu she thinks that she should spend all of it on that house...oh boy!
with that thinking she could easily lose all of it really fast!
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Old 08-23-2008, 08:16 AM
 
Location: Malibu/Miami Beach
1,070 posts, read 2,883,783 times
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Quote:
Originally Posted by flo2900 View Post
warren buffet lives in omaha nebraska in a 250k house and that man really has money.....if she`s got the $ to pay cash for the estate in malibu she thinks that she should spend all of it on that house...oh boy!
with that thinking she could easily lose all of it really fast!
When WB brought his house in 1958 for $31,500 the average house price in the UK was 2000 as of 2007 the average house price in the UK was 200,000 an increase of 100X. If the price rises in the USA have been similar that would make WB`s house worth around $3,000,000.
The point is that this guy was rich in 1958.
My motives for starting this thread was to inform people in the UK,who may be considering the move to the US that practices are different.
It is not considered unusual or risky in the UK to have almost all of your accrued wealth tied up in property as you can see from the property price rises from 1958 to the present it has been a very lucrative thing to do.
However if WB`s house has risen from $31,000 to $250.000 in 50 years the relative profit in the two markets is markedly different.
I just wanted to point this out to my fellow countrymen who maybe sitting on a couple of million pounds in the UK and believe it will buy them the Bel Air lifestyle in the US,that it will but at a price!
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Old 08-23-2008, 11:06 AM
 
980 posts, read 2,569,745 times
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Quote:
Originally Posted by impala666 View Post
She owns outright (inherited from parents)a house in a very smart area of St Johns Wood (London) current value around 5 Million nothing extraordinary for London and wants to buy a house of similar value here in California,we even drove around and looked at a couple in Malibu with tennis court,pool and a sea view.
Until she understood that the Property tax on this house would be over $100,000 per year this equates to around one third of her new salary.
How ridiculous is that a professional who would be an enormous asset to California is prevented from buying the house she can afford (no mortgage) by stupid property tax laws.
Your friend isn't "too rich for LA". Here is the thing: property taxes have a dramatic effect on property values. If you live in a high property tax state (like Texas), it puts a cap on how high property values can get since the carrying costs are so high. If you live in a lower property tax state like California, the property values for a similar property will naturally go higher since the yearly carrying costs are lower. If California had the same property taxes as London, all the property prices would be higher (like they are in London) since the yearly carrying costs would be lower. If London had the same property taxes as California or Texas it is most likely that property values would never have gone as high as they are now since the yearly burden would be too high for most to carry.

So, if your friend wants to move to LA, she needs to buy a house she can afford to carry. Keep the leftover money in property in London or move it into a different asset class with less of a yearly tax burden.

Anyhow, I agree with your overall thesis that property taxes are ridiculous, but California actually has one of the lower property tax rates in the USA.
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Old 08-23-2008, 02:03 PM
 
Location: Malibu/Miami Beach
1,070 posts, read 2,883,783 times
Reputation: 427
Quote:
Originally Posted by AustinGuy View Post
Your friend isn't "too rich for LA". Here is the thing: property taxes have a dramatic effect on property values. If you live in a high property tax state (like Texas), it puts a cap on how high property values can get since the carrying costs are so high. If you live in a lower property tax state like California, the property values for a similar property will naturally go higher since the yearly carrying costs are lower. If California had the same property taxes as London, all the property prices would be higher (like they are in London) since the yearly carrying costs would be lower. If London had the same property taxes as California or Texas it is most likely that property values would never have gone as high as they are now since the yearly burden would be too high for most to carry.

So, if your friend wants to move to LA, she needs to buy a house she can afford to carry. Keep the leftover money in property in London or move it into a different asset class with less of a yearly tax burden.

Anyhow, I agree with your overall thesis that property taxes are ridiculous, but California actually has one of the lower property tax rates in the USA.
I agree I should have called the thread "too greedy for LA".
I still think that US Tax laws are driving out the entrepreneurs and as they go the rest of the population will have to "carry the can", if you loose that 1% at the top the tax burden falls to the rest and this 1% does not contribute 1% of the taxes, it`s more like 30%.
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Old 08-23-2008, 02:52 PM
 
4,182 posts, read 5,660,148 times
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Where I live in Illinois, most of the property taxes are used to fund the local public schools. I assume the same is true for California. The better the schools, the higher the value of the surrounding real estate. Homebuyers often look at the quality of the schools in their buying decisions. To the extent that higher property taxes improve the local schools, the homeowners benefit due to the higher values of their homes. So you do get something in return from paying such taxes.
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Old 08-23-2008, 03:04 PM
 
4,182 posts, read 5,660,148 times
Reputation: 1719
Quote:
Where I live in Illinois, most of the property taxes are used to fund the local public schools. I assume the same is true for California. The better the schools, the higher the value of the surrounding real estate. Homebuyers often look at the quality of the schools in their buying decisions. To the extent that higher property taxes improve the local schools, the homeowners benefit due to the higher values of their homes. So you do get something in return from paying such taxes.
Also, if the property tax rate is 1%, but your property appreciates even conservatively at 3% per year (simply matching inflation), you should still be ahead by 2%.
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Old 08-23-2008, 03:08 PM
 
Location: The Miami Of Canada
1,044 posts, read 3,349,882 times
Reputation: 285
Quote:
Originally Posted by ndfmnlf View Post
$100K on a $9.2 million house is a property tax rate of 1%. In Illinois, the property tax rates range from 2 to 3%. So she'd be paying $200K to $300K if she moved to Chicago.

Property Tax Rate (http://www.retirementliving.com/RLpropertytaxrate.html - broken link)
Thanks for pointing that out! I suffer twice a year here having to come up with that 3% (I've tried appeals but they never work!).

To the OP, couldn't your friend from London look at buying a cheaper home with less property taxes?
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