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Old 08-23-2019, 01:16 PM   #29
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Originally Posted by jeffk View Post
But be cheerful! If you WERE to sell, you would get more for your property! I was certainly happy that my lake house increased 3.3 times what I bought it for 21 years prior. And I didn't begrudge the higher property tax the increased value brought over the years. If I had bought NON lake property for the same original value, I would have paid less tax and made a LOT less money on the sale. PLUS, I got to live in it for 21 years! WHAT A DEAL!
That's interesting math but does it actually work out in your favor?

Taxes are an annual expenditure that directly erode any gain in value meaning that the value of the property has to exceed the growth of the taxes paid annually in order for you to come out on top.

For example if your tax bill is 8K per year that would mean your property would have to beat that year over year in value increase. Since the taxes paid are on an upwards sliding scale so too must the property value. Keep in mind that if your property value goes down, stagnates or basically doesn't keep up with the annual taxes you're in the red.

So for a real world example my primary residence has doubled in value in 20 years of ownership... yay right? Nope! Now my property assessment has been fairly accurate in tracking the actual market value so no complaint there per say BUT my property taxes have gone up just shy of 5X over in that same time frame and have consistently outpaced the actual annual increase in home value so I have essentially spent the equivalent to all that increase in value incrementally in the form of taxes. What a deal.

The problem is people don't look at the cost to hold property just look at what it's worth when it's sold versus what it was purchased for. It's not zero sum game. In NH, property is not the best of investments in fact if at the end of owning a piece of property you end up breaking even after calculating all the holding and transaction costs consider yourself lucky.
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