Let’s do some simple math. If you earn $1,000 a month rent on a $250,000 house your return is 4.8%. An extra expense of $2,500 means the value of house has to drop over $52,000 in order for you to earn 4.8% on your money. (($9,500/.048).
It doesn’t have to drop this much because there is a FIT tax benefit but the decrease is pretty significant.
A $500,000 home would be worth a lot more with a 3% tax rate than a 5% tax rate.
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What is a FIT tax benefit? Do you mean Federal Income Tax Benefit?
If so and if this assessment were to be allowed in the deductible amount, isn’t there now a $10,000 limit in property tax deductions of Fed Inc. Tax?
I would guess that a $500,000 house would already exceed that $10,000 limit in local property taxes.
Sorry, the FIT benefit is the deductibility of the property taxes, Good point on the $10,000 limit. I am not anywhere near that level so hadn’t thought of it. The various caps on tax laws make it so complex to figure things out.
My main point was a 1.0% tax has a large impact on values
particularly in a low interest rate environment.