How to pay less in property tax? (Baltimore City) (Towson: renting, mortgage)

[Pilot1]

Originally Posted by kodachrome919

Hey All,

I'm interested in purchasing a property in Baltimore to rent out, however the insane property tax rate (2.2%?) seems to take away almost all of the potential upside to such an arrangement. For any current residents who own their own house, have you found any legitimate ways to lower your property tax? (tax credits, lower appraisals, etc.)

If not, how do you justify paying such an exorbitant rate? Yes, I understand this is partially offset by the lower overall cost of real estate in Baltimore, compared to say Washington D.C.; however this tax is going to need to be paid -every- year, even after the mortgage has been fully payed off.

Thanks!

Everyone pays the taxes, so you'll be competing with other properties in your area with a similar tax structure depending on the assessed value. Taxes, insurance, maintenance, etc are Operating Expenses that everyone also will have although they will vary, property to property. Have you determined what your market rent will be, and what your total OpEx will be to get to a Net Operating Income for the property? Do a Pro Forma, and budget to see what the property will support to pay your mortgage. You may have already done this in your due diligence. I assume the utilities will be in the tenant's name, and paid for by the tenant.

[james777]

Originally Posted by kodachrome919

Thank you, that essentially sums up my issues with that argument you referenced. Regardless of how the house is being paid for, and regardless of how much is being put up as a down payment, you will be paying roughly double in property taxes for the same priced house out in the suburbs or even further out in the country.

If you look at the house as an investment, you can see that when it comes time to sell, a $100,000 (value) house in the city will sell for ~$100,000, and the same can be said for the $100,000 house in the suburbs, or anywhere else for that matter. The only difference in the end is, you paid a lot more over the years in property taxes for the house in the city vs the house somewhere else.

Now, the question of whether your $100,000 goes farther in the city vs elsewhere is up for debate, and would depend on each person's preferences. However, from a pure investment standpoint, buying in Baltimore is going to cost you significantly more in the long term, for the same priced house.

Technically yes, but that would include the water bill. As for the real estate taxes alone, the city property taxes are about one and a half times, or slightly more, the property taxes of a similar property in the county.

Baltimore County subsidizes its residential water bills; Baltimore City does not. That makes water bills in the city much higher for the same water usage. Add that onto the taxes, and a homeowner in Baltimore City will pay double what they would in Baltimore County for a similar sized and priced property with the same amount of water usage per year.

[pwduvall]

Originally Posted by kodachrome919

Thank you, that essentially sums up my issues with that argument you referenced. Regardless of how the house is being paid for, and regardless of how much is being put up as a down payment, you will be paying roughly double in property taxes for the same priced house out in the suburbs or even further out in the country.

If you look at the house as an investment, you can see that when it comes time to sell, a $100,000 (value) house in the city will sell for ~$100,000, and the same can be said for the $100,000 house in the suburbs, or anywhere else for that matter. The only difference in the end is, you paid a lot more over the years in property taxes for the house in the city vs the house somewhere else.

Now, the question of whether your $100,000 goes farther in the city vs elsewhere is up for debate, and would depend on each person's preferences. However, from a pure investment standpoint, buying in Baltimore is going to cost you significantly more in the long term, for the same priced house.

Yes, if you look at property taxes as the only home ownership cost and property cost the same amount, the city is a terrible deal. My point is that the higher taxes are built into the lower cost of real estate in the city.

You should be able to get a lot more house, and/or a lot more rental income from each dollar invested in a city property. If not, the county property makes a lot more sense. Presuming that everybody can buy property of unlimited value without borrowing money is just not realistic and does not match up with the situation of people that I know that are investing in city property. Also, if you buy a house with cash, you are creating an opportunity cost for money you could have invested elsewhere and earned money on. Investable money really isn't free for anybody.

I remember talking to an old timer landlord in Charles Village about 15 years ago. He was complaining about increasing costs related the the increasing value of his property portfolio. I asked him, "Hey, haven't you been able to increase your rents, and that is the reason your property is going up in value?" He said something like, "Sure I'm making a lot more money than before but I judge the success of my business based on my costs and not on my net income. Getting wealthier and making more money means nothing to me because that's not what I'm in business to do." I have to say that I have very limited sympathy for people complaining about getting rich. But I know most of you do.

As an example, you can look at sales prices for houses on the same block where some are in the city and some are in the county. Do the houses in the county sell for more money? Yes. Do they sell for twice as much? Not even close.

[pappjohn]

Property taxes in the city have been extremely high for 40 years. You get nothing for paying them, so most people move to the county. Plus the crime in Baltimore is extreme.

Note many people are living in subsidized housing.

[Digger 68]

Originally Posted by pappjohn

Property taxes in the city have been extremely high for 40 years. You get nothing for paying them, so most people move to the county. Plus the crime in Baltimore is extreme.

Note many people are living in subsidized housing.

You are wrong as usual. And a Townhouse in Cockeysville just cost $3100 in property taxes. My Grandfather's property taxes on a row home in Hampden were under $500 for ever. He also paid off his ground rent, some people never got the memo on that. The property taxes were even less than that once upon a time. I had friends who bought down there and their property taxes were much, much cheaper than the suburbs.
That never raise Taxes Republican who was Governor raised property taxes in the city.
And yeah, crime is high, there are 600,000 people in the city, and about 1500 violent crimes. Tiny.

[pappjohn]

It well known that Baltimore City property taxes have been extremely high since the 80s if not 70s and earlier. Anyone that says otherwise is a liar. Many people have left the city to places like Cockeysville because of it over the past 30 years. The tax rate percentage is what we are talking about. Of course a Baltimore rowhouse has lower taxes because it's smaller, less desirable and worth far less. Many Baltimore rowhouses are practically shacks with a brick exterior, very hard to sell!

If you compare a 400K Baltimore townhouse to a 400K Cockeysville townhouse the taxes will be far higher on the Baltimore dump. Keep in mind many residents never pay property taxes as the landlords do, so how would they know or care?

The dump Baltimore has been run by crooked democrats since the 60s so don't blame a Republican on the high taxes, because they had nothing to do with it.

And yeah, crime is high, there are 600,000 people in the city, and about 1500 violent crimes.

1500 Violent crimes in a month or year?

The crime stats released by Baltimore are phony, the real crime stats are far higher my friend.

[Digger 68]

Originally Posted by pappjohn

It well known that Baltimore City property taxes have been extremely high since the 80s if not 70s and earlier. Anyone that says otherwise is a liar. Many people have left the city to places like Cockeysville because of it over the past 30 years. The tax rate percentage is what we are talking about. Of course a Baltimore rowhouse has lower taxes because it's smaller, less desirable and worth far less. Many Baltimore rowhouses are practically shacks with a brick exterior, very hard to sell!

If you compare a 400K Baltimore townhouse to a 400K Cockeysville townhouse the taxes will be far higher on the Baltimore dump. Keep in mind many residents never pay property taxes as the landlords do, so how would they know or care?

The dump Baltimore has been run by crooked democrats since the 60s so don't blame a Republican on the high taxes, because they had nothing to do with it.

1500 Violent crimes in a month or year?

The crime stats released by Baltimore are phony, the real crime stats are far higher my friend.

Yep, my Grandfather shack that needed a lot of work sold for $120,000 at auction, the buyer put $57,000 into it, and old it for $250,000 in less than two weeks. To a buyer from Texas.

Again you are wrong all the time.

And you have no proof to back your comments up.

[picardlx]

Home prices already reflect differences in local property taxes and a slew of other things that have value. I'm not sure why people need to argue when their position rests on the existence of two hypothetical properties all else equal including price but just different taxes. Um....don't bother.....those properties don't exist.

[pappjohn]

If a person doesn't understand that the tax rate in the city is far higher than elsewhere, he probably shouldn't be a homeowner, there.

[Tallybalt]

City taxes are levied by the city government.

The governor has nothing to do with it. Baltimore's high property tax levies crept up steadily under Democratic administrations as the creep occurred in the 1970s to the 1990s and there were no Republican governors until Ehrlich in 2002. The last Republican governor before Ehrlich was McKeldin, who left office in 1959.

A rehabbed Hampden house is going for 300+K at the moment and noticeably higher on the better blocks. The new owners are paying far more than $500 in property taxes. They are likely paying $7,000 or more in taxes.

If your grandfather paid sub $500 in property taxes this was some decades ago and even back then, on one of the lesser blocks in Hampden.

By the way, you do not pay off ground rent. You buy it from the holder of the ground. It is not a mortgage on the land.

Originally Posted by Digger 68

You are wrong as usual. And a Townhouse in Cockeysville just cost $3100 in property taxes. My Grandfather's property taxes on a row home in Hampden were under $500 for ever. He also paid off his ground rent, some people never got the memo on that. The property taxes were even less than that once upon a time. I had friends who bought down there and their property taxes were much, much cheaper than the suburbs.
That never raise Taxes Republican who was Governor raised property taxes in the city.
And yeah, crime is high, there are 600,000 people in the city, and about 1500 violent crimes. Tiny.