Property Tax Math? (Tyler, Howe: HOA fees, how much, house)

[Jasmine0]

If tax rate is 2.7% in A vs 2.2% in B, how much money one would save 0ver 10 years by buying a $500,000 house in B?

If 0.5% of $500,000 is $2,500 then in 10 years you save $25,000 in taxes?

[FalconheadWest]

Not quite. Your taxable value is assessed each and every year. If the value of area B has higher appreciation than area A, the taxes start to catch up. Plus, each area will have different amounts for the taxable values when you file your homestead exemption.

[Jasmine0]

Lets assume tax rate difference between two towns is historically same for decades and exemptions are similar than above math is correct?

Of course home's market value, accessed value and tax rates will change but this is historic difference between A & B's tax rates and appreciation values are somewhat similar as well so roughly one would save 0.5% annually and 0.5 x 10 savings seems sizeable.

[Mark Senior]

I don't know, just come to Tyler with the lowest city property tax rate of any city in Texas over 15,000 pop, and lower than most of the rest. lol

On 500,000 valuation without any exemptions the taxes would be about 1,050 per year. Tax rate is .21 per 100 evaluation. The rest of the tax rate are just average.

Oh, you can find a great home for 300,000 too, yeah I know, off topic. smiley face.

[texasdiver]

Your local property tax rate is the sum of the different assessents, each of which can go up or down individually. For example, mine shows:

County 0.46
Farm to Market Road ..0236
Community College .1515
School Dist. 1.32
City .7862

Each assessment also has a different amount exempted and each can go up or down individually such as if the city or school district or community college passes a new bond or has one expire.

In addition, taxes aren't your only issue when comparing to localities. For example, we moved from a rural unincorporated area to the city and saw our taxes go up due to the new city tax but our total cost probably went down or was a wash because we are now paying MUCH cheaper water than in the rural district and services that the city covers street maintenance unlike the rural area where we had HOA fees to cover that kind of thing. In addition, the taxes I p ay to the city are deductible whereas the $1000/year I was paying to the HOA to maintain local services were not.

[texasdiver]

Originally Posted by Mark Senior

I don't know, just come to Tyler with the lowest city property tax rate of any city in Texas over 15,000 pop, and lower than most of the rest. lol

On 500,000 valuation without any exemptions the taxes would be about 1,050 per year. Tax rate is .21 per 100 evaluation. The rest of the tax rate are just average.

Oh, you can find a great home for 300,000 too, yeah I know, off topic. smiley face.

Yes, but that's just the city tax. You'll also pay Tyler ISD (public schools), county, community college and emergency service district taxes which brings the local Tyler rate up to 2.1062% so the TOTAL taxes on a $500,000 house in Tyler will actually be close to $11 grand. You can see the actual rates here:

Tyler, TX - Taxes

[texasdiver]

Originally Posted by Jasmine0

If tax rate is 2.7% in A vs 2.2% in B, how much money one would save 0ver 10 years by buying a $500,000 house in B?

If 0.5% of $500,000 is $2,500 then in 10 years you save $25,000 in taxes?

Theoretically, assuming everything else is equal. Of course your property taxes are tax deductible on your federal income tax so that will diminish the impact of the $25 grand depending on your Federal tax bracket. And you may be getting more services in the higher tax district that you have to pay for other ways such as HOA fees as was my experience. So everything else is never equal.

[jdrtx]

Watch them school districts. Bond votes on May 11 for the childrens, ipads, football fields, and really bestests teachers, property appraisal increase, tax rate stays the same. Equals more taxes from the taxpayers. Every year. Good luck.

[Trainwreck20]

Also, depending on your specific tax situation, up to 1/3 of your property taxes may be refunded via federal tax deduction. It can be quite a bit less, depending on what the value of the standard deduction is, what your tax bracket is, and what other deductions you do (or don't) have, as well as the fact the AMT could kick in.

By doing a quick calculation and assuming identical 3% appreciation and a 20% effective discount on taxes due to itemization, the lower property tax location saves you ~$22,230 over 10 years.

HOWEVER, if the higher tax rate is in a more 'desirable' area and achieves a 3.4% appreciation over a 3.0% appreciation in the lower tax area, then it is essentially break-even - the saved taxes are almost exactly equal to the reduced appreciation. If the appreciation is 4% to 3%, then you are out about $30,000 in value. Of course, that doesn't mean much until you sell, but just one of the other considerations.

FINALLY (I promise), if appreciation is the opposite (higher in the low tax area), you 'lose' a bit of your tax savings but still come out ahead by $75,000.

Moral of the story - buy in areas that will appreciate, and you will likely come out ahead at the end of your ownership.