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Comment by u678u | Hacker News Reader

No I'm in an 2br apartment with my wife and teenage daughter. Taxes are $1600/mo. Still cheaper than the suburbs with good schools.

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Glad to hear you are in an apartment in the good transit part of NJ!

Then a LVT is definitely in your interest as the others say. More stories => less taxes!

You’re apartment is valued at $700,000?

That’s not a lot for a 2BR with a reasonable commute to New York.

$700k+ is objectively a large amount of money to spend on housing, more than double the median US home price. Even if it's a middle class home in its local market.

Housing is inherently local. You can't aggregate over multiple commute sheds and have your conclusion mean anything.

Is there some way to look at $700,000 and not think, "Holy shit that's a life changing amount of money for nearly any American."?

FOMO is the biggest reason I find not to sell and rent for a while. If I want to buy again in a few years, there is no way to know if the equivalent house would be out of my price range. And I can't think of too many places I would feel safe investing that amount of money given current asset price inflation.

Becoming a landlord while renting out something new may be a good option though. Or moving to a low cost of living area.

Life-changing would be living in nicer arrangements, consuming more stuff, doing less work, being more secure.

That’s not what’s going on here.

In California we have Prop 13 which is the polar opposite of the situation in NJ.

$700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Also our schools are a joke compared to NJ.

But at least taxes are low here. Wait...

> $700k is half what I'd need to buy a place and still end up with an hour long freeway commute.

Yeah, but that’s because you live and work in a place that is ridiculously expensive by California standards. (I'm guessing SFBA.)

Yes. What Prop. 13 has done is taken all the tax money that would go to fund local services, and instead given it to former property owners. From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount. But the difference to the local economy is that the tax money would stay in it, while the mortgage payment effectively funds a large payout to the previous owner, who then most likely takes the money out of local circulation.

> From a cash flow perspective, there's no difference between paying a large mortgage and small property tax, or a smaller mortgage and larger property tax that total to around the same amount.

Not initially. When you pay off the mortgage around the time you retire and have no more steady income, it's night and day difference.

Probably higher. I'm not saying I'm struggling, I'm just trying to get some push back on property taxes and how toxic they are. When I was laid off the taxes are a huge burden. I have a mortgage that fixed for 30 years, but property taxes keep going up every year.

To reiterate on the original reply, a land value tax is on the value of the land your apartment sits on, but crucially, not on the value of the apartment. If there's a derelict tyre place next door that's on the same area of land and selling for significantly less, your entire building combined pay the same LVT as its owner.

Why would you assume that a LVT would be lower than current property taxes? If your land is built up the same as the average density of the surrounding area, then you probably were already paying comparable taxes to all your neighbors and your taxes should be unchanged under LVT.

I didn't actually say that. I said that if you have an apartment you'd pay less than a derelict tyre place on the same amount of land. If you live in high density residential apartments you'll pay less than lower density neighbours.

If the entire area is equally high density, then congratulations, it sounds like you live in a very desirable location in the middle of a lot of public and private infrastructure: if that's the case, you should be taxed, to encourage even higher density development and even more productive use of the land you're on.

Aha! we'll here's the joy of different types of averages / https://en.wikipedia.org/wiki/Jensen%27s_inequality

How do we take the average density? Is it the average height weighted by land area, or floor area?

"average height of building on a piece of land" vs "average height of building a piece of floor is in"

Well, unless all buildings are the same height, the second average will always be higher, because taller buildings have more floor!

Most people would go with the former for the average. And it does make sense in general to average over the fixed thing. But that mean building will pay a greater portion of the total tax revenue than before.

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