Appeals here have a snowflake’s chance in a fireplace. Our local home valuations are through the roof, so I expect our taxes to jump significantly next year.
I was able to appeal successfully two years ago, just as things were really heating up in our neighborhood. Lucky for me that in October 2019 a house just like ours was sold “as is” for a low price. It was flipped three months later for about $200k more, but, as the tax appraisal district tells us all the time, these numbers are snapshots, and the snapshot date is Jan 1. … and on Jan. 1 that house was worth the basement price, not the flipped price. The panel went with me and lowered my appraisal. Not as much as I would’ve liked but enough for my hour’s effort!
I could never get away with that now. I just got back from an open house for the first $1M listing in our’ hood. Insanity. We are a normal, middle-class area.
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Even with TX’s higher property taxes, with a paid off home, I come out way ahead owning rather than renting in retirement. The break even point is at a house much more expensive than mine will ever be. In fact, I’m timing my retirement with the end of my mortgage (give or take 1-2 years).
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With a paid off mortgage (and even with what looks like a given upcoming hike in taxes), our payment will be equal to a studio rent in a not so nice part of the city. Plus, the backyard keeps my husband entertained. Of course, we have to pay for the maintenance, but we patched up this place quite well for the next 15 years, so… 
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For a fair rent vs own comparison on a paid-off house, you do need to consider the average earning you could get from the house sale proceeds. Of course profit is higher in pricey real estate markets… which is good because that’s where rents tend to be higher.
A disgruntled person on a big local facebook discussion group recently sold out and is planning a move to smaller town in Arkansas. He explains that salaries are a little lower, but housing costs are a lot lower. It would not be my choice (here we have a local kid, many friends, familiar and pretty location)….but it did remind me of the financial appeal of downsizing to a lower cost market.
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For folks over age 65, make sure to investigate possible senior citizen property tax savings. My husband invested a modest amount of time in application paperwork, but it will save us about $500 per year.
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No property tax breaks for seniors in my state. There is a proposal currently being discussed to shelter some retiree income from state taxes, which would be nice. 4.25% is a big chunk of change.
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You need to include everything when comparing rent vs. home ownership.
Living in an apartment will most likely be just rent and utilities (small renter’s insurance).
Living in a home will include property taxes, HOA if a condo, utilities, larger home owner’s insurance, regular maintenance (caring for lawn, snow removal, gutter cleaning, pest control, annual furnace/AC tune up, etc.), unexpected maintenance or repair (appliances, heat/air, water heater, tree removal, driveway, etc.)
If you sell your paid off house you have that much extra money in the bank to cover these expenses.
Let’s make up an example. Let’s say living in your paid off house costs you $3,000 a month for everything (including some annual unexpected maintenance). Let’s say living in an apartment costa you $4,000 a month for everything. Let’s say your paid off house is worth $400,000. If you sell your house and pay $1,000 more a month in rent then you have 400 month’s worth of these extra costs in the bank from your home sale money. That will cover 33 years of the monthly extra expense of rent.
None of this is including the convenience factor of an apartment - you call somebody when something goes wrong instead of doing it yourself or hiring a repair man. Not that apartment living is for everybody, but I can totally understand the convenience for older people.
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You’re right. I was not factoring investing the money from selling it. If I didn’t hate apartment living so much, I might consider it. 
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It is really hard to quantify what one defines as quality of life. For us, not having to deal with smoking neighbors is a huge deal. My husband loves his yardwork and his garage projects. I like to be able to make any dish in my kitchen without neighbors knocking on the ceiling demanding that I stop pounding my chicken cutlets. I want my 3 cats to have a happy retirement with us instead of dealing with the crazy HOA demanding that I give up one of them ‘cause 2 pets max allowed. I want to paint the walls in my bedroom the colors I want - not the colors landlord picked. I want to be able to hang wall art without asking permission from the landlord. I don’t want to pack everything up and move in 30 days because my landlord decided to sell the place (BTDT).
We can’t take it all with us into the grave. If we had to go by pure $$ numbers, we would have been so much better off financially by investing the money into Tesla stock instead of buying this house when we did. Hindsight is 20/20. Quality of life is priceless.
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Such an interesting rent vs. own discussion! So much nuance to take into account.
For thoses whose houses aren’t paid off (like ours) - I keep thinking - if we sold, then rented, we’d be losing out on all the equity we’ve been building monthly and pouring the money down the drain in rent.
But I can see that might be countered by the idea of gaining interest or investment income from the proceeds - hadn’t thought of that either. But, with all the market volatility, that’s a lot less safe than real estate, it seems…
I like to be warm in the winter. We spent 5 weeks last winter in FL and are spending 6 weeks now. I could reduce my cost of living a lot by making Florida my tax residence. If we were to make this our tax home, we could finance the purchase of a nice house here on just the basis of the MA income tax we wouldn’t be paying. But, it is a lot of work to make that happen. Not only would we have to spend less than 6 months in MA, we would need to make the change of residence real. Interestingly, if travel ever restarts, I barely would spend 6 months a year in MA without a Florida residence so, if I spent the winter in FL, it would be easy to be in MA well under 6 months a year. The prior owners of our house in MA put the house into a family trust or LLC and built an in-law unit for themselves and spent 6 months a year at a house or condo in Key West. I imagine we might do something like that.
I believe that the best tax deal may be in Puerto Rico. If I moved my consulting HQ down there, I could eliminate Federal tax on my consulting income. I don’t think I could eliminate Federal tax on the RMDs from my 401k. Sales tax is high there (11.5%, I believe) but avoiding Federal tax on income would be huge.
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Rent includes all of the costs of ownership/maintenance of the unit. If it doesn’t your landlord won’t be a landlord long. So although you may not be paying them directly, you are still covering them (at least on a pro rata basis while you are renting).
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I have been a renter for many years, since I had to sell my condo because I was in a big financial hole in the mid-2000s (before the Big Crash). I have rented two different places, and neither was noisy. One was an apartment in a 4-unit brownstone (row house) and all of us tenants watched out for one another. Now I am in a 63-unit apartment building with an elevator. The only noise I hear is 45 minutes of piano practice usually some time between 4 pm and 7 pm from my neighbor upstairs, most days. It’s not loud and certainly bearable. And my apartment building is smoke free.
I did have an issue this summer when the elevator was replaced. I am on the 4th floor (60 steps, ask me how I know!) and it was awful, but it’s done and I am a happy tenant. My apartment falls under the rent stabilization law in NYC so I am protected from drastic increases. For sure I pay less than an equivalent apartment I could own. And for people at my income level there are no longer big income tax benefits.
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" if we sold, then rented, we’d be losing out on all the equity we’ve been building monthly…"
You do until you don’t. Home appreciation is not guaranteed month after month.
Even in high growth areas, real estate can take a hit. Not often, but it happens. When my dad passed last year, I was Executor so had to split the house proceeds to the heirs, but different heirs got different %'s, meaning I had to go back to figure out the home value when mom passed, right before the '08 crash. Based on my research, the house in a popular Bay Area city, took a 19% hit in '08/'09; recovery took nearly 10 years to get back the value right before the crash.
My point is that the next crash is coming, but we don’t know when. If you have a $2m home value that tanks 20% over the next months ($400k), you might not live long enough to see the recovery. Of course, the same is true for equities.
In our case, we live in a VHCOL area, and may move to another one. If so, we’ll likely cash out the current house and rent a house. Not sure it makes economic sense to purchase another place in a VHCOL area.
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Presumably some of the equity being built equity is through principal payments.
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Just an FYI:
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@sushiritto, that would be a deterrent. We also have liked being able to drive to FL rather than fly so that we can take our bikes. In PR, we would need to have duplicates of everything.
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I definitely get the quality of life priorities… feel the same way myself.
My points about cost of home ownership were because I sometimes encounter older homeowners who WANT a simpler rental (or independent living) situation but balk in sticker shock at the monthly fees. When comparing, they just don’t appreciate how much they spend now on taxes, home upkeep, lost earnings on house sale proceeds. In some cases, they are old enough to even start spending down that house money.
There may come a time when we will need to get more in that mind set. One financial planner we talked to had a good take on it. His thought was: If you like living in your home and can easily afford to stay, do so… until the day you pull into the driveway in think, “I really don’t want to deal with this house anymore“.
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@bluebayou, my parent’s home was a few hours from the Bay area, when they moved there it was a frequent place people from the Bay area moved to, a small town in the foothills to escape and raise kids. They bought during a prior recession, the 2008-11 downturn changed the entire area dynamic, the possible sales price from 2011 onward was about what they paid in the early '90s, half of what places were going for prior to 2008. Even with the recent boom, the sales price was not even 70% of the 2006 prices. As far as I can tell, that bedroom community county has not recovered.
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