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Taxes and the cost of home ownership

Posted by Rona Fischman May 13, 2011 01:52 PM

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CatB wants to know how to calculate the costs of renting and owning. Today, I go over typical taxes that are added to the mortgage principal and interest.

Taxes.
I took a look at Middlesex County, Massachusetts. The typical taxes on single family house recently sold are below. To figure out your expected monthly payment, simply divide by 12.

Up to $120,000: low $1659 high $3901

$120,000-$240,000: low $2095 high $4565

$240,000-$360,000 low $2593 high $6112

Your residential tax is never going way. It is likely to go up over the time of your ownership. This payment will be due even after your mortgage is paid. So, those buying their retirement house need to keep an eye on this figure.
As an aside, I am not of the opinion that property taxes are a bad thing. I think municipal taxes that are spent prudently are a huge advantage to the residents of the town or city. Before you buy into a town -- and its tax base -- you need to do your homework about how your residential tax will be spent.

Some towns do a good job of keeping taxes low for homeowners by bringing business into town. The business tax offsets the residential base. You need to decide if you want to be a town with more houses and less business. It will mean more residential property tax. Also, what business matters to the quality of life in the town.

How did you make your town decision? Did taxes figure into the equation?

What is the way to examine the effectiveness of a municipal use of funds? Did you look at schools, fire, and police?

As a renter, you don't pay taxes directly, but you pay them through the rent. When you started looking at real estate, were you surprised at how high the taxes are? (I know some of the readers from other parts of the country will be sniggering at us for complaining or sniggering at us for paying such high taxes -- depending on where they are from.)

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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