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Seriously it isn't. It's included in the rent in the sense your paying for shelter (and shelter is MARKET PRICED - not whatever the owner has to pay to maintain cash flows).
Realistically, who's liable for all these taxes? The owner has to pay for them even if there isn't a renter... the owner has to pay for them even if the renter ditches the rent. So no, the renter isn't directly paying for the taxes... but they fully benefit off of the owner's property taxes (schools, roads, library, police, fire, public services, etc. etc.).
If the owner is renting out the place bellow the cost of ownership.. the owner Still has to pay the taxes. The renter actually is mooching off the owner in this case.
I don't really see why renters feel they should have so much entitlement. Really, renters pretty much take on ZERO risk in the game but complain about pennies on the dollar that owners pay in taxes. Maybe cities should charge renters for public service use.
-chuck22b
if the landlord has a brain his units are almost always full
if these property taxes etc didnt exist the rents would be a lot lower
if the landlord has a brain his units are almost always full
if these property taxes etc didnt exist the rents would be a lot lower
It's not about BRAINS... it's about supply and demand.
the second part... may or may not be true... it'll still depend on supply and demand. If there is limited supply and a lot of demand... hey, charge as much as they are willing to pay. Taxes would have nothing to do with it.
if the landlord has a brain his units are almost always full
if these property taxes etc didnt exist the rents would be a lot lower
If a landlord has a brain, then they would have gotten property at a lower tax level. There are many places in California where the place next door pays 1/5 the tax as the next door neighbor. This is why some places can rent for a lot less, but they generally rent around market price.
If you stop and think for just one second, without the mortgage deduction, there wouldn't be a housing "crisis" right now.
I think people haven't bothered to see what the numbers are. For a 100k loan amount, the deduction is about $2000 in savings (per 100k). Not a whole lot, and it decreases over time. So this is very small relatively speaking, nothing to cause the crisis. The crisis is when people don't pay what they owe.
Wealth and property are not exactly the same thing.
And the "imbalance" you refer to has always existed, in every society, and always will.
There are many sources of information, but I don't have the time to find the exact details. Suffice it to say, people with the majority of the wealth can easily invest and purchase property in proportion to their "wealth," (i.e. they pick up property when they see a deal). I know many people like this, it is far easier for them to buy another property with the leverage they have already owning other properties. The average family cannot do this.
I think people haven't bothered to see what the numbers are. For a 100k loan amount, the deduction is about $2000 in savings (per 100k). Not a whole lot, and it decreases over time. So this is very small relatively speaking, nothing to cause the crisis. The crisis is when people don't pay what they owe.
I don't know what this example is, but it doesn't jive with my taxes.
Are you saying that if my loan is 279K I would save 5600? Because I didn't save anywhere near that on my taxes!
The government DOES have an interest in encouraging home ownership.
When people OWN their homes, as opposed to renting, they tend to put more effort into the community at large. More stable communities = better for the economy, less crime, etc.
Also, if you own your home, you pay a lot more property tax than an apartment owner... say an apartment owner pays $100k in property taxes and rents out to 100 tenants... each person could theoretically pay about $3k in property taxes... that means they could stand to earn $300k in property taxes instead of $100k... the government would rake in an extra 200k from just property taxes not to mention the other hidden taxes in other stuff (like increased electric bill or water bills, etc. etc.)...
It's not about BRAINS... it's about supply and demand.
No its about brains. A company (or person) that knows what they are doing would determine all costs (including vacancy rates) and make sure rents will cover everything. Of course, there could be a big down turn in rents. But that is a relatively small risk in general. The vast majority of apartment complexes, investment properties etc aren't bleeding each month (i.e., renters are paying their share of property taxes). That is just occurring with people that purchased investment properties over the last 8 years.
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Really, renters pretty much take on ZERO risk in the game but complain about pennies on the dollar that owners pay in taxes.
I have no problem with a business deducting interest as a business expense, whether they are in real estate or otherwise. Rather, its the tax deduction on personal residences that I have a problem with.
No its about brains. A company (or person) that knows what they are doing would determine all costs (including vacancy rates) and make sure rents will cover everything. Of course, there could be a big down turn in rents. But that is a relatively small risk in general. The vast majority of apartment complexes, investment properties etc aren't bleeding each month (i.e., renters are paying their share of property taxes). That is just occurring with people that purchased investment properties over the last 8 years.
I was arguing about how pricing works. Since it seemed like there was a consensus that the landlord determines prices and can pass on property taxes and other expenses at will. Also even with the biggest brain in the world... if there's no demand for the product... guess what... your going broke. Of course if your really, really good at sales... you can probably still sell dirt.... but that's the exception rather than the rule.
Even if the landlord has "Brains", they would have to price their product competitively with the market. If all of a sudden there was a glut of housing... more than likely the landlord would have to reduce the price (even bellow costs if necessary). So, it's not about the Cost of doing Business (which includes property tax)... it's about supply and demand. Like f_m said, those with more "Brains" are able to reduce the costs and increase margins while being competitive and maintaining a low vacancy rate.
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I have no problem with a business deducting interest as a business expense, whether they are in real estate or otherwise. Rather, its the tax deduction on personal residences that I have a problem with.
Fairly similar... a personal residence is someone who is selling shelter to themselves with zero profit or break even. What's really the difference between a landlord and a personal residence? if your ok with a landlord deducting interest? The personal residence and the landlord both pay the same taxes/fees and incur the same amount of risk.
-chuck22b
Last edited by chuck22b; 09-16-2008 at 06:11 PM..
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