I rent a house in the city.

When (and if) I ever decide to become a property owner, I can guarantee that the property tax burden will be a key deciding point (if not the most important -- I do want to be able to retire at some point). Clearly I'll never be buying a house in Baltimore City, and probably not even Maryland.

I'm really surprised anybody buys houses in Baltimore City, especially families -- the pluses can't possibly outweigh the minuses, much less justify the additional tax expense which about twice what the same property in the county would be assessed. That's significant amounts of money that families can put to good use themselves.

Why can't the politicians seem to grok this?

I've only owned in Baltimore but have moved within the city and it's still incredibly frustrating. I sold my first house bought pre boom and bought a larger nicer house for about 30% more than I sold my first house for. Yet my property taxes went up 6X. I knew it was going to happen but it is still frustrating enough that even though I love this city I will NEVER buy another property again in it just to pay more in taxes than everyone I know yet get lesser services.

Dude bought an entire house just to visit his daughter on weekends? Why doesn't he just stay with her?

If his daughter has a family of her own, she might not have space. But it would be interesting to do a calculation on the cost-benefit of staying in hotels vs. buying.

Sad truth is the city has to get money somewhere. A large chunk of property is held by non profit organizations... a nice portion of property has little to no value to generate revenue...and a portion of the taxbase within the city are not subjected to tax...it leaves the small percentages to pay 100% of the city property taxes.

I always dismayed when I read about how a new home owner is "shocked" when they get their first property tax bill b/c the "listing said the taxes were X amount" - - it's just supremely basic due diligence to look up the MD State Dept. of Assessements and Taxation info - - not just to see the most current assessment information but to see the sale history of the property (so you understand why the seller, who maybe bought the place for $500K in 2006, is desperately clinging on to that $469K way-too-much-list price) -> http://www.dat.state.md.us/ And then the other due diligence part is to see what the current home owners are actually paying on the Baltimore City website (accounting for Historic and Homestead credits) - - http://cityservices.baltimorecity.gov/realproperty/ It's the first thing I do when I find a house I'm interested in. Not to sound too harsh but people that get "surprised" by their taxes maybe aren't savvy enough to be buying a house in the first place! ;)

Assuming a 400k purchase referenced, with a 20% down payment for a loan amount of 360k at 4.0% for 30 yrs:

PI=1719/mo
taxes(his goal of 9k annual)=750/mo
condo fee at least=400/mo

TOTAL MONTHLY PAYMENT=2869
or assuming every single weekend 2 nights a weekend=$359/night

Plus tying up $52k in down payment and closing costs.

There's something else to this story that is not being disclosed. Reminds me of a guy who was trying to buy a million dollar plus condo in OC MD. I said to him "for your monthly payment, you could take a week long vacation anywhere in the entire world and stay in 5 star accommodations."

SLL, in this particular case, the buyer did do his due diligence beforehand, so his sticker shock was prior to buying rather than afterward. But you sure are right that people need to do their own research about taxes.

Josh, interesting cost-benefit analysis!

I successfully appealed my property tax assessment a couple of years ago. During the hearing, one of the appeals board members mentioned the Homestead credit, saying even a successful appeal might not lower my taxes. My reply was two-fold: the Homestead credit can be amended or revoked at any time, and as a public record, assessments should be as accurate as possible. So those who think their assessments are off-base should consider an appeal.

And here we enter the cycle, no?

High taxes dissuade people from buying, so the city continues to see fewer full-time residents and more rundown properties. As a result, the city sees less return on its tax policies leading to... an increase in taxes to make up the difference on the people who do live here.

Isn't this basic (super simplified) Laffer curve? At a certain point, an increase in taxes is no longer bringing in added revenue or may in fact decrease revenue?

If the city lowered its taxes, perhaps it could encourage more people to live here. But as my local grocer just reminded me yesterday - starting in March, the store will be charging me 20c a bag to cover a city tax on plastic bags. One more reason I'll head out to the county to shop.

Anyway, I'm no conservative - but it does bother me. I rent in the city now and would consider buying, but seeing how much more I could get for my money elsewhere is a huge disincentive.

My wife and I settle on our new Locust Point home next Thursday. We had the same issues when pulling up listing as to what the actual taxes were. Took us a couple times through and finally got the right answer. Taxes in the city are shocking for sure, but since its just the 2 of us and we live a very active lifestyle the taxes are kind of worth it. It will be nice not having to take care of a large yard that may get used once a month during the summer and spring season during the little bit of down time we have.

Bill,

Nice RAH reference.

I wish that someone could explain to me the rationale behind property assessments and taxes. Some bureaucrat decides that my home is worth X dollars because someone up the street sold a house for that much. Three years ago it was assessed at thousands of dollars less. What about my house has changed, other than it is three years older? It is worth exactly the same to me, shelter for my family. The tax has nothing to do with my ability to pay. All you retired people whose homes were reassessed at inflated rates, fixed income? Too bad, pony up. Why are non-profits exempt? Does the fire department respond to their call? Do the police investigate a crime against them? They should all pay up. How much money does the state and county spend on managing the assessment system? How many employees does it take? How much could be saved if the system were more simple? Set the tax when the property is sold and leave it there until it is sold again.

I know you were asking for a perspective on buying from outside Maryland, but, I would like to share my experience in looking outside Maryland. A few years ago, the work being done in my department was being taken over by a firm in Camp Hill, PA. Facing the prospect of being transferred, I took a look at the housing in the Camp Hill/Harrisburg area. The property tax wasn't too bad, but it was the School Tax that made my jaw hit the floor. Maryland's system is far from perfect, but my experience lends credence to "the grass isn't always greener on the other side".

Thanks for that perspective, Chris!

people should keep in mind that higher property tax rates in the city keep home values down in the city.

we just bought a house within 2 blocks of the city/county border. if you go 2 blocks over from us, the same homes sell for 15-20% more. meaning you pay that much more for the house, plus the mortgage interest adds on to that.

with the homeowner (owner occupied) benefits you mention in this article, it works out that you are really only better buying in the county (lower tax rate) if you live in the house for 20+ years. that's some rough, back-of-the-envelope map, but its something to think about.

over a longer period of time, the property taxes will start to outweigh the additional mortage principle and interest.

IMO, the city would be well advised to lower the property tax rate slowly, maybe on a fixed schedule (.1%/yr for 5 yrs?) starting whenever the real estate market recovers. this is because the higher % on city property tax disincentivizes long term owners (people with little or no mortgage) and also creates a disparity between prices that many people don't understand. they say "the city has a higher property tax" and don't understand that this is also what keeps city real estate prices relatively cheaper compared to the same thing in the county. of course, it's apples and oranges comparing a rowhome on patterson park to a small single family home in essex or middle river... but as far as prices/taxes go, most people are just not smart enough to figure out that there's a relationship going on there and the tax/price situation is related.

just my $.02