Wow, we had a re-assessment this past fall, and my taxes went up 200 a month! I live in a small 2 bedroom condo in SW NH. It’s nice- it’s home- but not that nice!
Anyone else find that their taxes increased drastically with the crazy housing market we are having?
Same here – property values have gone up substantially across larger metros in the Midwest (where I’m at) over the past two years. After the county’s reassessment of my humble home’s value, my property taxes are up over $1.5k for the year. Frustrating!
I guess the assessment must be nationwide. I live in the sticks of SC and our taxes increased after having been reduced due to my husband being over 65. We didn’t even get to enjoy a full year of lower taxes before they went back up… Thankfully not to the original much higher rate, but when you’re trying to work within a tight fixed budget, any little hiccup makes a difference…??
Yes, it sure does, @brigat !
This is going to take some rearranging of my budget and plans. It just seems so wrong. I could not possibly sell my condo for what it is assessed at. Not that I want to sell…
Wow everything is going up except our pay
Most taxing authorities allow appeals and it’s worth a try. Also check over your tax assessment paperwork thoroughly. Years ago I learned my property/home was being over-assessed because of an error by the tax office. I had a 12x24 screened patio that was mistakenly included as air conditioned/heated space. It was simple to appeal and correct that error and that particular county in FL actually reimbursed me 3 years of over-payments…very rare, but very appreciated. I’d been over-assesed for 10 years.
One question to ask yourself is: is there a way to exploit this situation?
Taxes are increasing and inflation means we’re spending more money than ever. But there’s 2 choices we make:
Just sit and complain about it.
Figure out a way to take advantage of the situation.
Option 1 is quite boring, so maybe let’s explore option 2 below.
If taxes are increasing and assessments are going up, it means home values are also going up. If home values are going up, that means rent may also go up. It must mean that some (if not all) of the below plays will generate alpha:
Refinance. If the interest rates increase is lower than the home value increase, you should be able to make a spread of the %.
Buy/sell houses to flip. If there’s inflation / increasing valuation tailwind, then buying an asset like a house should be a value hold. The tailwind of inflation should hopefully be able to pay for the fixed fees that mortgages / hard money provides. Bottleneck here is risk tolerance.
Rent your house on Airbnb or just buy a family rental. This will generate money over time especially if valuations are increasing. But I personally don’t like rentals because it’s not passive income, though you get taxed like it is passive activity. But hey - just because it’s not right for me doesn’t mean you shouldn’t think about this as a possibility.
Invest in real estate syndications. Market tailwinds are great for cap rate compression. Rent might just go up naturally, causing cap rate to compress and your valuation of the apartment building(s) you invested in to go way, way up = $$$. This is my personal fave.
Airbnb arbitrage. As rents skyrocket – if the short-term rental market also has skyrocketed, you can just rent out a place from a landlord and sublet it back out on Airbnb for a higher rate to make a spread. I don’t like this model right now due to COVID compressing short-term rental rates. And thus STR rental money might not increase just because taxes are increasing / inflation effect in the economy. In other words, the ‘hold of value’ of short-term rentals is offset by the pandemic I feel.
Point being:
You don’t have to execute any of the above. The point is you should think about how to take advantage of the situation.
For me, there’s thoughts that are ‘just a waste of time’ and thoughts that are productive. Costs are increasing which leads us down an easy path of endless complaining. But complaining never helped anyone. It’s waste of valuable minutes/hours of our limited time on Earth. Real question is: what are you going to do about it?
And the fundamentals of being able to exploit these situations is very, very simple: if you’re paying more for the same goods/services, it means your counterparty is charging more for goods. How can you join the sell-side and make more money that way?
There’s 2 sides to every coin. If one side is not so good, it might be time to join the other.
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I protest my property taxes every year (for both my home and our real estate investment properties). I’m usually successful in getting it reduced at least somewhat. Every county has a different process, but it’s worth a shot. Also make sure you get any exemptions you are due. In Texas, we have a homestead exemption if you live in the house that reduces your taxes ~20%.
