How do we play the property tax game when buying a house?

Asked by Maya, Palm Harbor, FL Thu Jan 22, 2009

Is it better to get a smaller house with less taxes ($9,000) in a more desirable town (Rye, NY) or a bigger house with more taxes in a good town (Mamaroneck, NY in the Rye Neck School District, considered great, taxes here are $15,000--the house has more yard too)? In the long run, for us now and wanting to keep expenses a bit lower, is the house with the lower taxes better? We are confused about deductions and such. Thanks!!

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Dane Hahn’s answer
Dane Hahn, , 34223
Wed Apr 8, 2009
Hi Maya,

You may have already made a decision on what to do, but my take on your question is to buy the best home that you can afford that meets the needs of your family. If you have school needs, evaluate the schools that "come with the taxes" you will pay to the town. If you have medical needs, evaluate the Dr's and the hospitals that are near to your prospective home. If you must commute, evaluate transportation costs and NOISE for the access to your work.

Remember this is home, NOT an investment, so buy what is right for YOU. If you decide to buy less of a house in a more expensive town, you may regret not getting all the other benefits that a larger home would provide. As they say, buy in haste, repent at leisure...

Best luck,
Dane Hahn
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Isaac Bensus…, , 92037
Sat Jan 24, 2009

When I was starting in Real Estate many years ago the advice that Realtors gave their clients was to try to purchase a property in a very good area, even if it was the least expensive property in that area. I am sure that the same rule still applies.

Personally, I always went for the home that met my family needs first; especially if you have children to send to schools. Best of luck.
1 vote
Andrew Rogov…, Agent, Rye, NY
Sat Jan 24, 2009
First thing you need to do is confirm those taxes to be accurate. You may find that they are slightly off and that may make the decision easier. Also when considering the home in Rye Neck schools, find out what the towns assessed value of the home is. If I am not mistaken Rye Neck taxes based on that vlaue. So if the home has decreased off its highs you may find that the taxes will be lowered based on a lower sales price.
After that you really need to figure out what your short term and long term needs are. Both towns are considered strong. As a result you may be able to decide based on wether you plan to expand your family, plan to move in next few years, etc. Whichever town you choose good luck and if you have any questions please dont hesitate to call.

Andrew Rogovic
Associate Broker
1 vote
France M. Tu…, Agent, Larchmont, NY
Thu Jan 22, 2009
You should definitely speak with an accountant if you are debating between two houses that you like equally but only those answer will tip the scales in favor of one. As a realtor in business for 21 years, I believe in the international real estate mantra: location, location, location; Once you have established what your budget is, you should let that guide you. Hope that helps!
1 vote
Majorie S. W…, Agent, Larchmont, NY
Thu Jan 22, 2009
HI, Maya,
Probably you should talk to an accountant, but in general property taxes are fully deductible, as is the interest on your mortgage (and at the beginning of a mortgage it is almost all interest.) Therefore the impact of the property tax is reduced by the percentage of the tax bracket you are in. I am familiar with both Rye and Rye Neck. Rye Neck is part of Mamaroneck Village and the Town of Rye and Rye itself is a city. WHat is the differential in the purchase price of the two houses? Your monthly payment will consist of both property tax and mortgage, so if the purchase prices are the same your differential between the two houses would be $500/month, reduced by the tax deduction. If you want to keep expenses down it would seem that the less expensive taxes would be better, but how you feel about the two houses counts too! As far as the communities are concerned, both are wonderful places to live, with excellent school systems so you shouldn't feel that you are getting shortchanged as far as community is concerned with the less expensive house. Remember that you will live in the house for a long time, so you should be happy with it. Please let me know if I can help you further in any way. Margie Weschler
1 vote
Dallas Texas, Agent, Dallas, TN
Thu Jan 22, 2009
Confer with CPA regarding deductions on taxes.

SUGGESTION: When we work with home buyers determine the short/ long term goals owning home, personal and professional lifestyle, cost of gas too your office. In many instances we lay all pros and cons excel spread sheet which paints a better picture for options.

Larger homes require additional expense maintain from utilities, lawn, however ALSO can allow space for all family members enjoy privacy.

Other families no matter what will purchase a home in a better school district than expense of private education.

We also recommend families who are confused visit area on weekend, park, shop, dine determine where the comfort level is.
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1 vote
John Richard…, Agent, Charleston, SC
Fri Apr 3, 2009
Not knowing your area, typically, when assessing a home, the land value is split from the value of the structure (square footage cost) to determine the actual value of the property. The land (neighborhood) is the variable, since you can put (or find) a comparable house anywhere. So you have to determine whether you like the neighborhood enough to justify living in a smaller house. I would always buy a smaller house in a great neighborhood with less taxes, than a larger house in a lesser neighborhood (with higher taxes). Another determining factor is how important that particular school district is to you. Do you have kids that would attend the schools.You can use the property tax as a deduction for your income tax liability, so i would consult with your CPA or tax expert to determine whether a higher property tax deduction would help you.
John R. Wilson, Realtor
Carolina One Real Estate, Charleston, SC
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