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Is owning always better if property taxes cause your monthly housing payments on a 250k house to be $500-750 more than renting? If you add in maintenance, the amount is at least another $2500 per year. Rent goes up but so do taxes. At what point does renting win over buying or does it ever?
250k, 20% down, 11000 school and property tax =$1900ish
Rent 2 bedroom house/apartment =$1200-1400
Does buying still make sense in a high property tax area?
That depends on how YOUR numbers lay out.
The purchase price is still likely to be the bigger issue about making sense or not.
eg: The incremental difference between the 1.2% of FMV (or less) that most of the US
still has vs the 3.5-4.2% charged in some places like Chicago still requires a FMV to multiply against.
The 3% differential applied against a $200,000 property adds $6000 (500/mo)
but when applied against a $550,000 property it adds $16,500 (1375/mo)
What else do you get by paying more?
In some instances it's the price required to get the additional income of the high COL area.
In some instances it's the price required to avoid non deductible private school tuition.
In all instances it's a value judgment.
Does buying still make sense in a high property tax area?
That depends on how YOUR numbers lay out.
The purchase price is still likely to be the bigger issue about making sense or not.
eg: The incremental difference between the 1.2% of FMV (or less) that most of the US still has
vs the high mil rate charged in some places like Chicago still requires a FMV to multiply against.
(I prefer using FMV rather than appraisal number)
A 3% higher differential applied against a $200,000 property adds $6000 (500/mo)
but when applied against a $550,000 property it adds $16,500 (1375/mo)
What else do you get by paying more?
In some instances it's the price required to get the additional income of the high COL area.
In some instances it's the price required to avoid non deductible private school tuition.
In all instances it's a value judgment...
but the more who are willing to accept such... the more they'll be charged.
It is entirely a personal choice. For the added expense, you get the security of owning your own home.
With renting, you're at the mercy of the owner. At the end of the rental period they may decide to sell or not renew your lease for whatever reason, forcing you to go through the hassle and cost of moving.
However, if you're going to face financial hardship with all of the costs associated with owning, you're going to be better off renting.
It is entirely a personal choice. For the added expense, you get the security of owning your own home.
With renting, you're at the mercy of the owner. At the end of the rental period they may decide to sell or not renew your lease for whatever reason, forcing you to go through the hassle and cost of moving.
However, if you're going to face financial hardship with all of the costs associated with owning, you're going to be better off renting.
I wouldn't be facing hardship, I can afford either scenario but the property tax basically doubles my monthly payments. However, you're right that I would have to figure in the likelihood of having to move a few times. I'd plan on having the house for 20 years and then move after retirement. I guess I'll use one of the calculators and see if I truly save by not having property tax. I prefer to own but I hate to pay so much in taxes.
I wouldn't be facing hardship, I can afford either scenario but the property tax basically doubles my monthly payments. However, you're right that I would have to figure in the likelihood of having to move a few times. I'd plan on having the house for 20 years and then move after retirement. I guess I'll use one of the calculators and see if I truly save by not having property tax. I prefer to own but I hate to pay so much in taxes.
If you're going to be in the house for 20 years, you'll likely make money on it when it comes time to sell, if it is in a good district and you get a good price for it to begin with.
Obviously nobody can predict the market, so it isn't a guarantee, but after 20 years of renting you wouldn't even have the possibility.
The specifics I provided are the reasons I'm debating.
At what point does renting win over buying or does it ever?
Do you have a true apple to apple scenario? They're rare.
Unless the choice is to rent or buy the EXACT same specific property... it's subjective
And whatever you're rental costs... it will still have taxes and all the rest being paid from it... higher as a NOO rental.
So to get a specific answer you need a specific pair of properties to compare between.
And assuming that you're planning to stay put in either one long enough.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Wow, you make me realize that our property tax is not as bad as I thought. It's at about $6,000 also, but based on assessed value $675,000. Hen you rent, you have a roof over your head, but that money is gone forever. When you buy, you have a good chance of getting it back and then some when you sell, especially if you stay there 10-20 years. We paid $190k, and even in the recession it,was still worth $400k at the bottom, now going up 13%/year. Also, both mortgage interest and property taxes are deductible from your federal tax. That has reduced our taxable income by as much as $25,000, though less now that more is going to the principal $10,000 deducted in 2016. Upcoming changes by the current administration could affect that, however.
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