HOMEOWNER OR A LANDLORD? HOMEOWNERS
PAY THE TAX BILL!
Who hasn’t stop to think about what the local government
does with your taxes at the end of the year? After all the “tax brakes” that
they get, homeowners still pay a bigger share of the tax bill. When the expenses
rise to the point in which they are difficult to pay, some people turn to
renting their properties as a resource of income. According to local governments
property value is always going up. But, think about it, if the value of your
home goes up so the property taxes since they are based on the same increase. If
you are paying a mortgage, you most also pay for the local school, city and
county taxes. Where are my tax brakes?
First of all, you, as a homeowner, get to claim the
interest you pay for your mortgage in your income tax but it does not offset the
increase of the property value which generates a raise of your property taxes.
Lets put it this way, if you are paying a low fix percentage of interest in your
loan like 7% your mortgage, according to the inflation, will be lower with time
but, if the value of your property goes up 3%, you end up paying more at the end
of the year in property taxes since it is calculated on the total value of your
property. It only benefits you if you want to sell!
We all know that the money collected from local taxes is
used to subsidize schools and increase local government projects, but every time
that the government needs money they turn to the homeowner to get it. After the
projects get completed, the city most find new “necessary” projects to use
the money on because the collection of taxes most be justified. Taxes do not go
down due to budget problems.
The peace of mind that could come from paying a low
mortgage banishes when you have to pay your local taxes since it increases your
out of pocket expenses. I am only talking about middleclass people who sometimes
struggle to get ahead in life. We could complain about it or we could find
another, low tax, place to live but it could only turn you in to a nomad.
Another resource is to rent your house and move to an apartment because you will
not have to worry about the property taxes there. Your taxes will be paid by
your rent revenue and will also help you with your new expense. You were paying
rent in the form of taxes to the government anyway!
If you start renting your properties to others you just
became a “landlord” to them and moved away from just been a homeowner. Who
knows it may just turn in to a good business. We do have recessions and,
depending on where you buy your property it could decrease its real value, but
real state usually goes up with time. In other words your investment is,
sometimes, safer if you are renting it.
It may sound as a complaint but it is not. It is just an
exposition of a problem that may have a solution. I just want to suggest others
to think about a way to help the government come up with an idea to fix the
problem without thinking about taxes. The local government, for example, could
invest in a profitable business to generate the needed revenue. It could create
jobs and help the economy at the same time. The local governments, in the other
hand, are approaching the collection of resources from another angle. It wants
to help you create a business to get you to be able to pay more in taxes. Why
not do both? Create businesses and help others create their own.
If it is a good or a bad suggestion I do not know. For now I think that some homeowners are changing their clothes and way they look to transform into “landlords. Some of them are not doing it because of the money involved but because they also got tired of paying their rent to the government in the form of property taxes.
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