Jim Valentine on Real Estate
So, you recently received your tax bill and had to pay the proverbial piper to live in this great community. If you didn’t pay it directly, you are likely paying it through your house payment.
As property values go up, so do your taxes as they are established by your property’s value. It is a bittersweet thing; you have a more valuable asset, but you have to pay your local government more money because of the increased value.
The good news is that there are limitations on what they can charge you. For instance, the value used to tax you cannot be more than the market value. In a rising and falling market such as we’ve seen over the past few years that keeps the assessor’s offices busy as they have to adjust a lot of properties, not just yours. They can’t allow any of them to be assessed higher than the actual value, and they want to keep up with things as they go up, so they don’t leave anything on the table.
Nevada put a cap on residential taxes after they exploded and longtime residents that luckily bought for cheap 30 years ago in a great neighborhood couldn’t pay their new taxes. The annual cap limit keeps the amount needed to be paid under control, spreads out the increase. This allows people on fixed incomes to remain in their home as it increases in value.
Other places aren’t so lucky. Take British Columbia, Canada for instance. They seem like us for the most part but for being a little further North. In recent years, however, they’ve put in new real property tax laws that we can’t imagine ever being implemented in our area. The most absurd, in our opinion, is what they call “The Speculation and Vacancy Tax.”
It was founded on the basis of trying to slow investments in British Columbia while generating more affordable homes for the populous. It does not apply to primary residences, but if you are not a Canadian national, or if the property is vacant, you must pay the tax. There are two rates, but most will pay 2 percent. This means your median priced home in our area, $630,000, would cost you $12,600! They attribute this tax to thousands of vacant homes now being occupied as a result of it being implemented. Government in commerce.
Then there is their transfer tax. In Northern Nevada the rate is $3.90/$1,000 or $2,457 for our median price example. British Columbia charges 1 percent for the first $200,000, 2 percent on the amount between $200,000 and $1.8 million, and 3 percent above that.
Using our $630,000 example, the transfer tax when you buy the property would be $10,600. Mind you, this is just the transfer tax on the deal. When it gets above $1.8 million, the rate is 3 percent. Makes it hard to budget to change out the carpet after you buy it. And this is the median price. A $3.5 million home will garner $93,000 in transfer tax for the province.
Taxes are necessary to keep our governments working, but it is disappointing when they try to shape social policies through taxation. There are few taxes that are truly equitable, have an equal impact on all parties relative to their financial status, but playing Robin Hood as a government is unfair to those who have accumulated assets sufficient to have a little luxury in their life by their efforts and sacrifices.
Enjoy what we have here and watch out for changes that outsiders may force upon us. Things like rent control are property takings when there isn’t an emergency, i.e. – a war creating a housing shortage, etc. New York City implemented that for World War I and is only now getting traction to remove it, 100 years later!
We have to pay for services and benefits received from our government. It’s the price we pay to live in this great country of ours so pay a fair rate, watch how they spend it, and pay attention to whacko ideas coming down the pike.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, BS.3481, 775-781-3704. firstname.lastname@example.org