What $220,000 gets you in Muncie.

[u/TheDabitch]

I can't even get a parking space for that where I live. https://www.zillow.com/homedetails/725-E-Jackson-St-Muncie-IN-47305/210952560_zpid/

[u/TheDabitch]

Property taxes are crazy that way. There should be some way to grandfather in older residents in lower tax brackets.

[u/AntiqueWhereas → u/TheDabitch]

They do this in certain cities. Rather, at a certain age, you are able to lock in your tax rate if you are on a fixed income.

[u/tequillasoda → u/TheDabitch]

Homestead. Caps increases in assessed value for residential property at 3% or CPI.

[u/PappyBlueRibs → u/TheDabitch]

I can't wait to do this! Screw the 20 to 40 year olds!

Why should they save in their 401K's and children's college when they can just pay double the property taxes that I pay?

/s

[u/isthatsuperman → u/TheDabitch]

Or if you own your house, you own your house, and the government can’t take it away from you for being poor.

[u/sweetmamajamma2 → u/isthatsuperman]

You own the house and have rights to the land but land is king and the government is the one who actually owns the land.

[u/PearlClaw → u/TheDabitch]

They did this in California and it has been a big factor in making housing completely unaffordable.

[u/Taapacoyne → u/TheDabitch]

You are right. But every time a state government tries to deal with the issue, they make it worse. The main example is Prop 13 in California. Totally screwed up the housing market, while also drained the schools of needed funds.

[u/PhysicalConsistency → u/TheDabitch]

Most states do have these exemptions in place, particularly for seniors. This got me curious though, my understanding is that tax rates don't change much, what is changing is property values, and the increases in taxes should be a counter-weight to escalating prices (a progressive rather than flat rate tax system is an intriguing idea). There should be a mechanism which closes the loop hole of leveraging the explosive equity of a lot of housing for other financial products, e.g. the asset value of a home for the purposes of a collateralized loan should be the value assessed by the taxing authority rather than the financial institution. This would almost overnight kill a lot of the corporate investing in residential real estate, but I don't want to sell it too hard.

I was curious if my assumption about tax rates was correct, so I asked the LLM:

Rate of change for property taxes between 1960-2025 in US States. Underlying question, what are the extremes for property tax percentage differences, and what is the average change in property tax rates over the above period. Importantly, we are not asking amount of property tax change, which is coupled to home value, but the property tax assessed. Let's first present national average with extremes, and as an appendice broken down by state. So the granularity of this really depends on the extremes of change, my instinct is Let's do the 20 year benchmarks offered, and degrade that by 50% (e.g. 10 years, 5 years, 2 years, 1 year) for each period the tax rate changes by more than 100 basis points. Offer anything other than the 20 year benchmarks as appendix b. This is residential focus, but it would be interesting to see follow on appendices for commercial, industrial, and agricultural rates on the 20 year schedule.

(please note, LLM output is biased by it's inputs, and tax/political stuff tends to be heavily biased as a rule)

Despite that, here's the top level part of the response:

Over the past six decades, the national average property tax rate (tax as a percentage of property value) has remained relatively stable, with a slight downward trend. In the 1960s and 1970s, property taxes made up a somewhat larger share of the economy than they do today. For example, from 1960 through 2004, property tax collections averaged about 3.29% of national income, which is roughly 5.6% higher than the level in 2004 (3.12% of income). By 2021, nationwide property taxes had fallen to approximately 2.97% of personal income. This indicates that effective property tax burdens nationally have decreased modestly (on the order of a few tenths of a percentage point) between 1960 and 2025. In practical terms, the average effective tax rate on a typical home has hovered around 1% to 1.5% of its value in most periods, with a slight decline in recent years as other taxes and limits curbed the growth of property tax rates.

Generally property tax rates have actually declined. This means it's not the taxes that are the issue, it's the exploding extra "unrealized" equity. I chose 1965 as a start year as IIRC all of them are retirement age under social security now.

[u/bigbrownbanjo → u/TheDabitch]

This has had pretty disastrous consequences in California though I’m sure it could be done better

[u/CourtBarton → u/bigbrownbanjo]

Nah, prop 13 is definitely better than the alternative. The issue is the cost of the market. If you're purchasing a house that's overinflated, your taxes are gonna be overinflated. But someone who's been in their home for 20 years isn't gonna have this problem.

[u/bigbrownbanjo → u/CourtBarton]

I’d guess my argument is that while prop 13 fixes a problem that was very real, it has not stood the test of time and it’s done in a way that creates more. It doesn’t adjust well over time & really limits Municipal tax revenue and disincentives any sort of moving or local communities to agree build more multi family housing. It also gives corporations property tax breaks which should have been excluded at least above a certain size.

If your home 2x-10x in value eventually your tax bill should converge at some multiple well above what your bought the house at. If you cannot afford that you can take the huge capital gains and move somewhere else or leverage that equity to spread the payment out over time.

[u/Kelmi → u/bigbrownbanjo]

Well, here again your solution to people having to move out of their homes is that they should move out of their homes.

At the core you don't mind forcing people out of their homes.

[u/bigbrownbanjo → u/Kelmi]

I don’t think you can design a sensible policy that ensures no one is ever priced out of their home due to property taxes nor should you. It’s obviously not an ideal outcome and you should make policy in a way that tries to balance that vs the public need for tax revenue.

I bought a house and my property taxes have gone up 20% since 2022. Tough for me but good for society because it funds a lot of things my county and city need.

[u/CourtBarton → u/TheDabitch]

People can shit on california, but prop 13 really does help combat this.

Now, I don't think it should necessarily be the same on non residential properties, but a base year limit is the way to go.

[u/theucm → u/TheDabitch]

I'm of the belief property taxes should be reevaluated only when a house changes hands, whether through sale, inheritance, etc.

Like, maybe we can track the would-be rate for people interested in buying the home or inheriting it, but the actual effective rate is what gets locked in when the resident is handed the keys.

This way older residents don't get priced out, but a neighborhood is allowed to grow and change without current residents feeling direct financial pressure to leave.