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You paid much more than that. A substantial part of your rent is property taxes. I also doubt you included sales taxes in that number. Then there's more esoteri
by revnode 4y ago
You paid much more than that. A substantial part of your rent is property taxes. I also doubt you included sales taxes in that number. Then there's more esoteric stuff like tariffs, etc
- jonahbenton 4y agoNo. Property tax rates are extremely- some would say criminally- low in NYC. I would think it unusual for more than 20% of rent to go to property tax. Mortgage much much more likely to be the dominant expense for a residential landlord, but varies significantly with age. There are many longtime landlords for whom their tenants are now nearly all profit. Which is INSANE.
- revnode 4y agoWhy are you assuming he lives in NYC?
- halfmatthalfcat 4y agoBecause they are responding to the OP (who is talking about NYC) and further elaborating on NYC taxes, while describing their (supposed) NYC tax burden.
- revnode 4y agoOP didn’t say anything about NYC?
- countvonbalzac 4y agoRent is not tax, what an absurd comment.
- NovemberWhiskey 4y agoIf you're renting, your landlord is paying property tax and passing it on to you.
- kevin_thibedeau 4y agoSome states let you deduct a portion of rent in place of property tax.
- jonathankoren 4y agoBy that logic, no one pays taxes except consumers.
- deleted 4y ago[deleted]
- barry-cotter 4y agoYes. Companies are legal fictions and all people buy goods and services. Some people buy those services through those legal fictions so they consume the fraction of them corresponding to their to ownership fraction. Ultimately a person pays all taxes and all people are consumers.
- prepend 4y agoI mean you’re sort of right. There’s no such thing as a free lunch. So stuff is all ultimately paid by the consumer since that’s the end of the line. There’s really no way to increase taxes without impacting consumers. Unless you try to limit rents, but then you have other problems with people not wanting to invest in apartment buildings.
- paulmd 4y agoThat assertion depends on an efficient market though, and that is provably not true - the existence of corporate profits demonstrates this, because in an efficient market everyone makes 0 profit, and any rent-seeking will cause every single one of your customers to flee to a competitor who doesn't rent-seek. Everyone has to price as aggressively as possible given the costs, or lose customers to someone who does, and that means zero profit above the actual cost of production/service. In a world where corporations make profits, some competitors choose to eat the taxes and retain customers, while others may increase prices and lose some customers, and some customers may eat the increased price and remain even though they're getting a worse deal than before. This is the concept of "consumer surplus" vs "producer surplus", and taxes are cutting into those surpluses differently depending on the specifics of each market participant. All of this has been debated endlessly by economists, in terms of just how much of corporate taxes get passed along to consumers and so on. And the answer seems to be "not zero, and not 100% either", and everything beyond that is up for debate. So no, not "everything is ultimately paid by the consumer", that is the 100% answer and that's pretty clearly wrong in a market where producer-surplus exists. In reality, real-estate and rents are probably one of the least-efficient markets imaginable. The frictional costs to buying and selling property, and finding a new tenant who might be a problem/deadbeat/etc, or spending a bunch of time apartment-shopping, picking up your life and packing your stuff, and moving, are immense, and all parties involved are highly emotionally invested as well. Landlords are trying to make a long-term calculation about whether the property is going to appreciate - even if they are losing money today, if they expect to make capital gains in the long term it could be worth it. And all parties are operating with minimal information. Out of all the markets in the world, real-estate and rental living spaces are probably one of the least efficient possible.
- Manuel_D 4y agoThe point is, the apartment owner pays property tax and collect rent from tenants to pay for that. If property taxes go up, property owners raise rents to compensate. So the tenants are paying the property tax, albeit indirectly.
- strombofulous 4y agoIf the tenants will pay and it doesn't break any rules, why not raise rent before taxes go up and pocket the extra? (serious question)
- neon_electro 4y agoThis happens all the time. Deciding whether a raised rent price is justification for moving out is a complicated and personal process and yet it fuels all of the response to landlords that do this. Also, 1-year leases are typical in the U.S. (at least Philly/NYC northeast U.S.), so from that contractual perspective, your rent can go up every year and that's totally legal.
- winstonewert 4y agoIf one landlord raises the rent, this will tend to make renters go to other landlords who are not raising the rent. But if the taxes are increased on all the landlords, they will likely all raise their rents together and renters can't simply go to another landlord who isn't raising the rent to avoid the increase. Its actually much more complicated then that, depending on factors such as the propensity of landlords to cease renting out units if their profit decreases, the propensity of renters to shift to smaller dwellings in the face of rent increases, etc.
- dwallin 4y agoLandlords are also competing with each other and tenants have limits based on what they can actually afford to pay. At some point they can be forced to move out of the city to a lower cost of living location, dropping demand. In fact it's entirely possible for a significant increase in tax rates to make rental units a poor investment, causing housing prices to plummet and rents to drop. Your mistake is assuming that people who bought up housing stock are guaranteed future profit on their speculative investment.
- listless 4y agoI’m a landlord and yes it is. My taxes doubled last year because of the stupid housing bubble and so we had to raise rent as well. Gotta make a profit here for this investment to be worthwhile.
- AnIdiotOnTheNet 4y agoMaybe if people didn't buy property they don't live in as an investment then things like the stupid housing bubble might not happen in the first place. Personally I think owning a residence you don't actually live in should just straight up be illegal, but I'm admittedly pretty radical about parts of the system that seem to exist solely to make the rich richer.
- RHSeeger 4y agoSo, if I am going to live in an area for a year... I should be required to purchase a house, including all the money, time, and effort that involves? I would hate to live in a world where that was the case. I have both owned and rented at different points in my life. There have been times where renting was a better choice for me, for a variety of reasons. I am glad that renting is an option.
- coding123 4y agoIn a world where there was no rentals there would probably be new things we can't imagine such as community ownerships. The specific thing that shouldn't exist - in parent commentors and myself is that the renter is paying money so that the actual owner pays off the property for their benefit, not the renter. If some kind of community property system exists (not for ALL properties but a large number of them) then any rent you pay in say New York is also paying down a virtual mortgage you have the the "community" that spans the country. Like a virtual HOA.
- cleftie 4y agoThat's how it used to work in the UK with social housing. The local authority would collect the rent and it would be used for upkeep of the properties, with surplus going to other public works. This was set up in the decades following the Second World War as Britain rebuilt, and it generally worked really well. But then a right-wing government came to power and sold most of the social housing off, while banning local authorities from building any more. So now, we have the situation here where the large majority of tenants are renting from private landlords, who are just pocketing all the rent for themselves and doing the bare minimum upkeep, while holding a rapidly appreciating asset. Which is exactly what the right-wingers wanted, but of course doesn't help everyone else who isn't a landlord, and just wants somewhere decent and affordable to live.
- daenz 4y ago"rent" != "a substantial part of rent"
- thebean11 4y agoNY has low property taxes compared to most no-income-tax states
- vlan0 4y agoWhere is that? My parents lived in North County and paid 13k+ a year on a $350k house. Their current place in Tampa is about 400k and the taxes are less than half of what they were in NY. Maybe Florida is a special case?
- thebean11 4y agoI'm basing this off of apartments in NYC. I often see ~$600k co-cops with $800 monthly co op fees (of which half is maintenance half is taxes). That seems low to me compared with similarly priced homes elsewhere.
- lotsofpulp 4y agoWA is also lower than NY. I have a few properties, and I would say property tax is 0.75% to 1% of market value, max.
- RHSeeger 4y agoNY's property taxes are among the highest in the nation (top 10).
- dwallin 4y agoYou can't just assume tax increases directly lead to increased 1:1 consumer prices, that's not how supply and demand works.
- revnode 4y agoWhere did I assume that?
- dwallin 4y ago- A substantial part of your rent is property taxes. Without detailed analysis there's no way to know if this is true, or how true it is. It is entirely possible for an increase in taxes to lead to no increase in end prices or even a drop in rent prices. It's a complex system.
- revnode 4y agoI didn't say anything about increases in taxes. You added that. I also didn't say anything about increases or drops in rent. You added that again.
- akimball 4y agoAll property taxes are paid from rents unless the landlord is operating at a loss.
- colinmhayes 4y agoLandlords are price takers. Supply is fixed short/medium run so just charge the maximum people will pay. Property tax rates have next to 0 effect on that.
- ABCLAW 4y ago>A substantial part of your rent is property taxes. Here. Without determining elasticity, it's impossible to determine how much of that cost is flowing through or how much goes to impact margin.
- jonathankoren 4y agoThe renter is not paying the property taxes. The landlord is. This feels like a slight of hand that leads to double counting.
- revnode 4y agoThat's not how things work. When you file your taxes, your rental properties will be treated as a business and the taxes paid there are a business expense. They are deducted from any rental income before the income is counted for the landlord. It is essentially as if the renter is paying the government directly.
- azinman2 4y agoAnd what do you think rent price includes?
- abfan1127 4y agoI'm entirely sure that landlord is not taking a loss on those property taxes. It is passed onto the renter.
- sixothree 4y agoAnd don’t forget your healthcare costs.
- sdenton4 4y ago"To some economists, the question is moot: Americans already pay a massive “tax” to fund health care, they say. It just happens to go to private insurance companies, rather than the federal government." ... "Health insurance costs raise the average effective tax rate on American labor from 29 percent to 37 percent, they said." https://www.washingtonpost.com/business/2019/10/16/americans-already-pay-gigantic-hidden-health-care-tax-economists-say/ https://www.washingtonpost.com/business/2019/10/16/americans...
- Aunche 4y agoPrices are determined by supply and demand. Both are rather inelastic, especially in a highly desirable city like NYC, so very of the property taxes gets passed to the renters. If this weren't true, then renters in California would see savings from prop 13, but clearly that isn't happening.
- revnode 4y agoBobby gave Lisa $10. Lisa then gave $3 to Uncle Sam. What percentage of Bobby's money went to Uncle Sam? 30%. It's that simple. Bobby gave Uncle Sam 30% of his money.