Property Insurance

[gixxer1000]

Originally Posted by pghsebring

So taxes and insurance in pittsburgh and miami are about the same....huh...who knew...

Houses are probably a little cheaper though...1200 sqft is probably closer to 120k here...up to 140k i imagine...what would be the range down there? I'm trying to compare non "ghetto" areas with solid schools....so like a step below palmetto bay maybe? 50 year old home?

So, in totality, you pay a little more down there, because your mortgage is a little higher, but the taxes and insurance, when you total them up, all the different taxes paid in each place, aren't too dissimilar.

I imagine car insurance is more expensive down there, but what else is more expensive? How much is an AC bill to keep a house around 78 for a 1200 sqft home, about 50 years old? Up here our gas bill to keep it at 71 is about 300 a month for 4 months out of the year...and well over 100 for 4 more months...our yearly gas bill is probably around 2k....plus about 60 in elec a month...

PS. For a 135k house up here you pay about 2700 total taxes and 500 insurance...so 3200...but then you pay 4.5% of your salary on your state/city income taxes...plus we also have the same sales tax as you do...so if you're making over 47k up here, you're losing the battle compared to miami in total taxes/insurance...

To be fair you don't pay 4.5% of you salary to taxes, you pay 4.5% of you taxable income. So if you made $47k you would first take your deductions and exemptions, then you would also deduct property tax and interest on your loan payment. So for you example you state income tax would be 4.5% of $47k - $5,700 (standard deduction) - $3,650 (standard Exemption) - $2,700 (property tax) - $7,000 (interest on loan) = $30k. And that's a single person with no dependents. Most people who own a house have kids which provides for more deductions.

So I wouldn't say you're losing the battle compared to Miami

Miami w/ $150k house and $47K salary.
$2,000 Property Tax
$3,000 Insurance
$0 Sales tax
$5,000 Total

Pittsburgh w/ $135k House and $47k salary
$2,700 Property Tax
$500 Insurance
$1,350 State income tax on $30k (no kids)
$4,550 Total

Also the median sales price for homes in Pittsburgh is $88K while the median sales price for homes in Miami is $195k. Were not really comparing comparable houses.

[harrycrat]

Miami & FL is for high earners with modest housing ambitions...

[pghsebring]

Originally Posted by gixxer1000

To be fair you don't pay 4.5% of you salary to taxes, you pay 4.5% of you taxable income. So if you made $47k you would first take your deductions and exemptions, then you would also deduct property tax and interest on your loan payment. So for you example you state income tax would be 4.5% of $47k - $5,700 (standard deduction) - $3,650 (standard Exemption) - $2,700 (property tax) - $7,000 (interest on loan) = $30k. And that's a single person with no dependents. Most people who own a house have kids which provides for more deductions.

So I wouldn't say you're losing the battle compared to Miami

Miami w/ $150k house and $47K salary.
$2,000 Property Tax
$3,000 Insurance
$0 Sales tax
$5,000 Total

Pittsburgh w/ $135k House and $47k salary
$2,700 Property Tax
$500 Insurance
$1,350 State income tax on $30k (no kids)
$4,550 Total

Also the median sales price for homes in Pittsburgh is $88K while the median sales price for homes in Miami is $195k. Were not really comparing comparable houses.

Um....i'm sorry but you're completely wrong about PA taxes. There are no exemptions, its not like federal taxes. You make 47k you pay 4.57% (3.07% state plus 1.5% local in most cities/suburbs) on that, not a penny less. Also, if you have a business that takes a loss, you can't write that off against your other income either. You can't write off your RE interest, or federal taxes paid, or ANYTHING. Its nothing like federal taxes.

If you want to see the tax form and instructions, its called the PA-40. You want to see the city/local form? Its literally the size of a postcard.

So, the correct numbers for PA:

Pittsburgh w/ $135k House and $47k salary
$2,700 Property Tax
$500 Insurance
$2,150 State income tax on $47k (kids or no kids)
$5,350 Total

As for comparable houses, i am asking how much a certain house cost here and there. Obviously houses in miami are going to be more expensive ON AVERAGE because you have mansions, waterfront homes for millionaires, etc, that do not exist here. Remove fisher island, star island, etc, from the calculations and we'll come up with something different.

Again, i'm asking how much a 1200 sqft home in a sold middle class neighborhood cost, 3/1.5, 50 years old, 10-12k sqft lot. Then let's compare apples to apples. How much does a house like that cost down there?

EDIT:

When we add them all up, a 47k salary and 135k house around pittsburgh pa is equivalent in taxes and home insurance as a 47k salary and 160k house in miami. So can you find a 160k house that is 1200 sqft in a solid middle class safe area of miami or surrounding suburbs?

[mjh81]

I read a little while ago that Marco Rubio had a plan to get rid of homestead property taxes and in exchange the sales tax will go up two cents. That'd bring the sales tax to 9% in Miami. I think that'd be a great solution for the high property taxes. Have the tourists and the underground economy pay a greater share of the state.

[pghsebring]

Yeah, that's probably a terrible idea. Harms the worst off people the most - a millionaire doesn't care if he pays 2% more. Instead you're taking 2% of money from people that can least afford it.
Also, with how the economy is now, you can order things out of state, etc, to avoid the sales tax - and that's only going to increase with time. Plus it costs a ton to enforce sales tax compliance, and increasing it is just going to increase the "underground" economy that you rail against.

A progressive income tax is the best idea - money tourists pay into businesses gets paid to workers and owners in the form of "salary" and "profits" and would be subject to the tax. A progressive income tax is the best way to go, but unfortunately florida doesn't have one, which is probably one of the reasons the middle class is getting killed down there. How about having a progressive income tax and getting rid of the sales tax and increasing the exemptions on homestead property, or eliminating it altogether? That way the middle class doesn't get hammered anymore and the rich pay their fair share...

I could go over the math here and show how the middle class and lower classes will be better off in total tax burden if necessary in this case....

Real quick, here's the info now:

Sales tax: $28 billion
Property tax: $41 billion
Corp tax: $2 billion
Total: $71 billion

Now, the per capita income is 28.5k, which is a total of $550 billion to tax. Increase the corporate tax to $2.5 billion. I'll assume that increasing the sales tax like rubio claimed to do by 2.5% would cover the cost of eliminating homestead property taxes, which would be about $10 billion per year. So, instead of raising the sales tax 2.5% to 9.5% total, have a state income tax at a 6.8% rate.

Therefore,

Income tax: 6.8% - $37.5 billion
Sales tax: 0%
Property tax - 0% on homesteads, same as it is now on other property, $31 billion (using Rubios math)
Corp tax: $2.5 billion

Total: $71 billion, same as before.

There are a few tweaks you could make, for example, an exemption to income tax for poor people, still have *some* amount of property tax for people, like maybe half as much - so everyone gets their homestead property taxes cut in half and doesn't pay any tax on the first 20k of income, etc.

I'd be hardpressed to find out how the gross majority, and especially the middle class, would be worse off with this situation...

From the example above -

Miami w/ $150k house and $47K salary now...
$2,000 Property Tax
$3,000 Insurance
$0 Income tax
$2,000 Sales tax (assuming you only spend 28k a year of your salary...you'd have to spend less than 11k to come out ahead)
$7,000 Total

Miami w/ $150k house and $47K salary (27k taxed) with new tax plan...
$1,000 Property Tax
$3,000 Insurance
$1,800 Income tax
$0 Sales tax
$5,800 Total

Renters wouldn't get killed....millionaires wouldn't free-ride anymore...etc...

What's really funny is the property taxes aren't the problem down there...its the home insurance and the fact that millionaires get to free-ride on everyone else...

[mjh81]

One other question: if I would buy a condo in say South Beach or Brickell, instead of a house, is the properly insurance included in the monthly homeowner fee, like it usually is. Thereby, I would only have to buy coverage for my personal belongings. If anyone has experience living in a condo in Miami/Miami Beach, I would love to know. Thanks again.

[bale002]

Originally Posted by mjh81

One other question: if I were to buy a condo in say South Beach or Brickell, instead of a house, would the property insurance be included in the monthly homeowner fee, like it usually is?

Thereby, I would only have to buy coverage for my personal belongings. If anyone has experience living in a condo in Miami/Miami Beach, I would love to know. Thanks again.

Yes it is. It also usually includes water, sometimes hot water, often cable TV, sometimes internet, in a few cases electricity, waste removal services, parking, security, often recreational facilities, pool, and other maintenance.

Though condo fees may seem high, if you crunch the numbers, it may be the case that you save in the neighborhood of 40% by living in a condo compared to a SFH.

Make a side-by-side comparison for your case. Use a spread sheet.

[mjh81]

bale002--thanks, that was very helpful!