Originally Posted by Nuggets
A friend of mine owns a number of business properties valued at a couple million dollars (gross). He pays over $40K in property taxes anually and has to work a full time job because his rental business is not producing like it used to. So I guess he should also get a part time job along with his full time joan (and find time to maintain 62 rental units) to pay even more into the system because Johnny Noskills is upset because he got a water bill.
I pay nearly $5K in property taxes and I also have to pay personal property tax on equipment for my business that I already paid taxes on when I bought the equipment! Don't forget, I'm also expected to collect sales tax and send that to the proper government authorities too.
40k annually is not that much on a 62 unit apartment. I've appraised houses that had the PRE (homestead exemption) and still paid $120,000 annually in property taxes.
until last year, our annual property tax bill on our modest home in Fenton was $3,600
one problem that proponents of eliminating personal property tax don't realize, is that exempting it altogether just means that your local government/services have even less to provide basic services, and your local tax attorney will simply get richer as he will argue (and in some cases win) that things that are commonly viewed as part of the realty under the guise of fixtures and leasehold improvements are in actuality "personal property". Therefore, that $200,000,000 factory is now suddenly taxed as an empty shell building, and since there is little to no market for a 1.5M SF industrial shell building that it suffers from economic obsolescence so now will have a property tax levy less than you currently pay.
All that does, is shove more of the burden onto home-owners and small businesses that can't afford the high priced attorney's - or don't have significant enough sized potential settlement offers to attract their services.
all of that being said, I understand your points about small businesses getting shafted from every single direction and is one of the key reasons why such a huge percentage of them fail.
Originally Posted by brewmenn
I don't know why your friend cannot earn a decent return on his millions of assets, so I can't comment on that.
All of the taxes you mentioned are state or local taxes, so What Obama does doesn't effect these.
More than likely he doesn't actually own a couple million in assets free and clear - in fact most commercial property is not owned free and clear, rather they are on a cycle of nearly endless 5 year balloon, 20-30 year amortized loans leveraged at 80/20 (or worse) - after taking into account depreciation, financing charges and other tax shelters it's likely that he shows a paper loss year after year, and his true internal rate of return can't really be calculated until the reversion/sale when he's ready to cash out of that investment.
If lenders would do conventional 30 year notes for commercially zoned property that might change, but typically when analyzing the value of a commercial property it's a multi-layered affair, developing a capitalization rate on the leveraged portion, as well as the "cash on cash/equity" portion of the investment.