Anyone else prepaying property taxes so you can still deduct them this year?

[DawnM]

Median home price is $205k. That means half are more and half are less. “Average” doesn’t tell the whole story. Mean household income is closer to $72k.

Yes, it still seems prices for homes are high. Even at $72K, $250K is a high price for a home.

 

[hsmamato2]

we always pay before the end of the year anyway for tax reasons...maybe this will be our last year doing it.

 

[GlamMistress]

DH and I will get kicked in the teeth to the tune of several more thousands of dollars with this bill. Yes, we'll be prepaying property tax.

I'm worried for all the social programs getting slashed and the poor who won't be able to make it... and my god the deficit explosion.

 

[tvguy]

Yikes, median household income is $52,250 and the average home price is $250K? I understand there are people who make less and more and there are cheaper and more expensive homes, but I had thought the averages could afford an average home. I guess not.

Well, I look at my situation. We bought a $101,000 house and we had $30,000 combined income in 1983 with 5% down. We jumped then because mortgage rates had plunged from 16% to to 12 1/4%. We managed.
With mortgage rates currently running about 4%, I can see someone buying a house like that on that income.

 

[tvguy]

In NJ, 5 kids, 1 income, 2 in college, $12,000 in property taxes for our 1800 square foot home.

Sounds like California in 1978. That's why there was a property tax revolt here.

 

[wgeo]

We're in the group that are gonna pay more. I sat down with last years taxes and spreadsheets to figure it out. We're both self employed making a moderate middle class income but we itemized a lot. So before we got the itemized deductions plus the personal exemptions. Now that we lose those exemptions it's really gonna hurt. We do have 2 kids so the extra child credit will take some of the bite out, but we're still definitely gonna see an increase.

I always am surprised when people think that only the most wealthy people itemize a lot - that's not a true reality.

 

[tvguy]

We used to spend the end of June with an Aunt and Uncle who lived in Saskatchewan Canada. There, if you paid your property taxes early, you got a discount. And it appears that property taxes are deductible there was well. I like the idea of a discount for paying early.

 

[wendow]

I really am not sure how to figure out whether we will be paying more or not. All the calculators I have used say we will be paying less...BUT...Our 2016 schedule A shows just under 24k. Since we are now going to be right at the standard deduction but we are losing the personal exemptions (4 kids), this means we should be paying more, right?

 

[havaneselover]

I really am not sure how to figure out whether we will be paying more or not. All the calculators I have used say we will be paying less...BUT...Our 2016 schedule A shows just under 24k. Since we are now going to be right at the standard deduction but we are losing the personal exemptions (4 kids), this means we should be paying more, right?

Not really. It depends on too many factors to list. I'm not sure how many of your children you will get the tax credit on but that makes a big difference for me. From what I'm reading (from multiple sources) only 5% of taxpayers will see hikes next year with a lot of those concentrated in NY/NJ/CT/IL/CA.

Personally I think there's a lot of bad information out there and this will get sorted out in February for many of us when our withholdings are adjusted.

 

[TwoMisfits]

I really am not sure how to figure out whether we will be paying more or not. All the calculators I have used say we will be paying less...BUT...Our 2016 schedule A shows just under 24k. Since we are now going to be right at the standard deduction but we are losing the personal exemptions (4 kids), this means we should be paying more, right?

You have to include the 3% across-the-board rate cut...for $100K in income, that would be $3K less in taxes.

So, say your exemptions lost ($8K) were taxed at 25%...that would have given you $2K in taxes.

At $100K, you'd pay $1K less ($3K less in across the board - $2K you lose in exemption loss)...plus a savings on how much below $24K your itemizing was...

The kids are a wash, or a net positive, depending if you were above or below the 25% bracket (above and you get them in full to $400K in income, so positive...below and the extra $1K would represent a better deal that was your exemption loss at your rate was)...

 

[DawnM]

Well, I look at my situation. We bought a $101,000 house and we had $30,000 combined income in 1983 with 5% down. We jumped then because mortgage rates had plunged from 16% to to 12 1/4%. We managed.
With mortgage rates currently running about 4%, I can see someone buying a house like that on that income.

Our first home purchase was in 1999. We bought about double our salary. I didn't feel comfortable going over that.

 

[havaneselover]

Our first home purchase was in 1999. We bought about double our salary. I didn't feel comfortable going over that.

Not to get off topic, but mortgage rates were also about double what they are now in 1999 which has a major impact on affordability.

 

[tvguy]

Not to get off topic, but mortgage rates were also about double what they are now in 1999 which has a major impact on affordability.

Interest rates make a huge difference.
My initial 30 year mortgage at 12.25% had a payment of $1,100.
A refinance 4 years later to a 30 year at 9 % dropped my payment to $900 and added 4 years to my payoff.
A refinance 4 years after that (8 years after purchase) to a 15 year mortgage at 6.25% cut the payment to $625 and cut 11 years off the payoff.
And because we kept paying $1,100 a month no matter what the actual payment was on the refinances, the house was paid off 17 years after purchase and just over 9 years after the last refinance.

 

[DawnM]

Not to get off topic, but mortgage rates were also about double what they are now in 1999 which has a major impact on affordability.

True, although our first mortgage was a little less than 6% in 1999 on a 30 year. Our payments were $1,100 with tax and insurance, can't remember what our mortgage payment amount was exactly.

We currently have 2.37% on a 15 on a different house.

 

[havaneselover]

True, although our first mortgage was a little less than 6% in 1999 on a 30 year. Our payments were $1,100 with tax and insurance, can't remember what our mortgage payment amount was exactly.

We currently have 2.37% on a 15 on a different house.

Average rate on a 30 year fixed was about 7.4% in 1999 (I have a file for work with historical interest rate data). I know we were at 6.875% on a 30-year fixed on our first place in 2002. Thought that was a great rate! Now I’m at 3.5%. If my mortgage rate weren’t so low my lifestyle would be quite different!!!

 

[DawnM]

Average rate on a 30 year fixed was about 7.4% in 1999 (I have a file for work with historical interest rate data). I know we were at 6.875% on a 30-year fixed on our first place in 2002. Thought that was a great rate! Now I’m at 3.5%. If my mortgage rate weren’t so low my lifestyle would be quite different!!!

Yeah, I know ours wasn't at 7, but it was around 6%. We may have paid points, I honestly don't remember the details now.

When we bought the house we are currently in (2006), our interest rate was around 5% at 30 years. We refinanced to a 15 year when it went to 2.37%. It is amazing to see the statements and see how little interest we pay!

 

[deide71]

The big problem with losing the deductions in lieu of decreased rates and increased child tax credit is that the rate cuts are set to expire and your kids will eventually grow up...but the deductions are gone for good.

 

[bdcp]

Well, I look at my situation. We bought a $101,000 house and we had $30,000 combined income in 1983 with 5% down. We jumped then because mortgage rates had plunged from 16% to to 12 1/4%. We managed.
With mortgage rates currently running about 4%, I can see someone buying a house like that on that income.

We bought our first home (townhouse) in VA Beach in 1982. It was $52,000 and the interest rate was 15.5% on a VA loan. It dropped to 12% and we thought we'd hit the jackpot when we refinanced. Our payment went from $700/month to $600/month. When we bought it DH was an Ensign in the Navy making maybe $18,000/yr and I didn't have a job. Within a month of closing and moving in, I was working and making about $11,000/yr. We had money to burn lol. So, yes, with current rates, it's easy enough to buy that. Where we live you can't even buy a decent condo for $200,000.

Both our sons own townhomes and one was making about $80,000 18 months ago and bought a $325,000 home (brand new) and the other bought a $276,000 home (30+ years old that he's fixing up ) 9 years ago when he was making about $60,000. Both have had large increases in their incomes since. Interest rates make a huge difference.

 

[TwoMisfits]

The big problem with losing the deductions in lieu of decreased rates and increased child tax credit is that the rate cuts are set to expire and your kids will eventually grow up...but the deductions are gone for good.

Nothing is gone for good...taxes and all their parts (rates, exemptions, deductions, credits, etc) can be changed every year...all this did is give almost every paying tax payer a break. 2-4 years from now another Congress can and probably will try to make you pay more, so enjoy the break for what it is...a break.

In fact, in my lifetime, taxes almost always forever and ever go up...so this will be a nice present for once. I'll enjoy it for as long as I can. I mean, in property taxes, I had 1 year in 15 that went down - 14 years went up...you can bet I fully enjoyed the extra money from that one single year. It was so nice to see a lower number every month, even if I knew it wouldn't last (and the money was greatly welcomed, since that was a year of a pay freeze for us)...

 

[starry_solo]

I prepaid mine today.