Open House Picks

basemenatlist said it right …”someone who lived in their house in a gentrifying neighborhood for 50 years finds they’ve got a working-class income, or a fixed Social Security income, and a $1.2M house that they can’t pay the taxes on.”

Also, for those complaining about the low property taxes, don’t forget about the lovely NY “Mansion Tax” for any home sale above $1M. Say you buy a home for 1.2M, you will shell out another $12,000 in taxes at the closing, in additon to the $2000 or so ever year after. Not to mention many other misc taxes the buyer and seller will pay (mortgage, transfer fees):

http://www.corcoran.com/guides/index.aspx?page=ClosingCosts

tybur6: That is one way of doing it. Is it actually most fair?

It would benefit me personally, I guess. I own a house, but I bought it a looong time ago, at a fraction of what it would fetch on market now. In the meantime, though, my income has gone up a fewfold.

Under your system–if I understand right–more of the burden for city service etc would be borne by property taxes mostly on basis of sale price, as opposed to income tax. Well, fine by me, since I would have a low sales price basis and would benefit from (1) lower income taxes, (2) low property tax compared with unfortunate more-recent buyers or (3) a better funded city government. Downside is my house is worth less if I want to sell, but I don’t plan to for the foreseeable future, if ever, and have plenty equity anyway.

Good for me, but good for society? I could afford to pay more, but would be afforded the same protection as the pensioner. That doesn’t seem right.

I don’t know the correct answer, but changing the tax paradigm has a lot of consequences. Personally, I believe the tax burden should be carried by those who can afford it best. So I don’t quite see the point in funding schools mainly on the basis of property, as opposed to income (or other wealth such as stocks).

You also don’t change the rules in the middle of the game. That’s why the US, despite the current econmic turmoil, is still considered a “safe haven.” and will remain the reserve currency of the world.

I could argue that my real estate taxes shouldn’t go up the 6%+ a year, or whatever it is, because inflation is nowhere near that level and hasn’t been in many decades.

basementalist, the point is to assess taxes on the purchase price. if it was bought for $19,000 in 1959, then by all means, shell out your annual $2200. but whoever can afford to buy a property for $1.2 million should pay taxes that reflect that. and that would solve the issue of focusing taxes on those with the highest incomes.

Also, my house is not worth $1.2MM. it will be someday, probably in the next 5-7 years. But that’s a different discussion….