Property Taxes Equivalent to Two Months Rent

I just received my property tax assessment in the mail.  Normally I would read through it and just pretty much just ignore it, because it’s paid from an escrow account that is part of my monthly house payment.  Normally I read the tax assessment and note whether it went up or down (it’s usually up,) and then I toss it in the shredder and go about my day.

Since we’ve begun to recognize the fallacy of the American dream of home ownership, I’ve been taking a closer look at some of the ways we spend money.  Especially around house related expenses.

Our property taxes for the year of 2010 comes to $2472.53.  To put that in a little perspective, the two bedroom apartment we are looking at moving to is about $1300 a month.  Two months rent would be $2600.

The yearly property taxes on our home are nearly equivalent to two months rent in an apartment.  That’s a big chunk of money for the privilege of owning a house.

This year our property tax bill acts as a reminder that we are on the right track.


    • says

      Hi Willow,
      Those hidden costs sure do add up. It’s really eye opening when you start to look at the true cost of home ownership. Those costs don’t stop with the mortgage; there is so much more to it than that. Thanks for stopping by and leaving a comment!

  1. abra says

    Hate to break it to you, but renting is not going to save you on property taxes. It is built right into your rent– it is after all a business and they have to charge you enough to (1) maintain the property, (2) pay their taxes, and (3) make money. I managed a single property with a mortgage on it and rent was set so that the mortgage (with the escrow account for property taxes and insurance you mentioned) would be paid and there would be a little extra (not a lot) to cover upgrades and emergencies. It was the going rate and what was charged under the previous owner.

    I am not trying to talk you out of renting. We are getting ready to make the move ourselves for similar reasons… but being honest with ourselves, we are in the right market to own and the wrong market to rent based on housing costs alone (even with those hidden costs shy of major improvements/emergencies). The kicker is adding in transportation costs of commuting, including the opportunity cost of travel time, and opportunity cost of that basic maintenance — and for us, the prospect of being stuck with house and needing to move for a job.

    One final note about property taxes: you get what you pay for. School districts are usually the biggest property tax line item — and being in a good school district can dramatically increase the value of your home (owned or rented) all other things being equal — and usually they are not because “good school districts” also happen to be in low crime, well-maintained , well-serviced areas — all of which also entail taxes. Even if you don’t have kids in public schools, these things are valuable and you usually don’t get one without the others short of a retirement community.

    • says

      Hi abra,
      Thanks for stopping by and adding your thoughts. I had considered the fact that property taxes would be built into apartment rentals, but I am guessing that with a smaller “footprint” the taxes should be lower. In any case, for me, seeing that tax bill was simply another opportunity for me to see some of the hard costs of my current situation living in our current home. Your advice on school districts is wise, we have checked the area we plan to move to, and they have ‘A’ rated schools.

      I think you and I are in somewhat similar situations. The cost of commuting is a factor for us as well. The job I started in January is costing me $12 a day in gas just for the commute. All in all, with gas savings, utilities savings, mortgage/rent savings, etc., a move to an apartment will save us $1000 per month. Plus I’ll get back about an hour of time each day from the shorter commute.

  2. says

    The property tax on our home was a killer at @$6,000, which wasn’t bad when money was flowing but once business dried up – ouch!!!

    As it became clear we _had_ to sell or let the bank foreclose my parents offered to buy us a town home. As much as we appreciated the offer we came to the conclusion that ownership wasn’t something we wanted again…at least a single-family home.

    So, we are renting a home. Waaaayyyy less rent than our old house payment and it is lovely to call the landlord when the drain stops up!! lol!!! IF we every buy again, it will be a multi-family property only.

    But, at the moment we are really liking the feeling that we are not tied down by property anymore!!! If we wanted to we could move next month!! It’s totally freeing!! :)

    Our families think we are nuts, but they don’t own their own homes either as they make mortgage payments….so, while they get some tax benefits I don’t think they are worth the feeling of freedom we have! :)

    I’m excited for your family!!! :)
    Laura :)´s last blog post ..The Sound of Breaking Glass

    • says

      Ouch, $6000. That is a killer. I am looking forward to the end of being the resident handyman. I’m also looking forward to that freedom.

      I agree with the whole tax benefit thing. Tax benefits are just one of the many over hyped benefits that really isn’t a great as it seems. It just means your getting a little back on the money that you threw out the window in interest payments. Getting a few pennies when your throwing out dollars isn’t a good argument for home ownership.

      • says

        Yea, California sucks for a lot of reasons…property tax is one of them!!

        I never really got the tax benefit thing….it was explained to me many times but you are right, it was pennies, really. So not worth it. Especially when compared with living the life you want and not the life others think you should live…..I think I said that right!! :)
        Laura :)´s last blog post ..The Sound of Breaking Glass

  3. Jenny says

    What are your thoughts on home equity? As long as we sell our house for a little more than what we bought it for (accounting for repairs, etc.) we would “break even” so-to-speak and essentially have lived in the house rent free. Where as if we were renting, all that money would go directly into the landlord’s pocket and we’d never see it again. Even when I account for landscaping and slighty higher utility bills, by my calculations, we should come out ahead in the end.

    Have you ever considered buying a condo? You wouldn’t have to pay for landscaping or AC repairs, but you would have all the financial benefits of owning your own “apartment” and being able to sell it when it’s time for you to move. Plus, condo’s are much cheaper than houses and I bet your mortgage on a condo would be cheaper than rent.

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