Is Your Rent Subsidizing the Single Guy Next Door?
Well, Mr. and Mrs. Assumes-too-much, have a look at what the National Multi Housing Council (NMHC) has to say: "..it appears that in many jurisdictions apartment residents are subsidizing their single-family neighbors."
Turns out that the average renter does, in fact, pay their share of local taxes and maybe more than that. Here's how:
Renters Pay Property Taxes
Landlords must pay federal, state, and local taxes to keep their building. The landlord may be the person who signs these checks, but who do you think pays for it? Yes, all you renters pay a portion in you monthly rent payment.
(Any landlord who doesn't accurately forecast tax expenses and pass the costs along the tenant is sure to find themselves in a pickle.)
Rental Properties Pay More Taxes
In addition to paying property taxes via their rent payments, apartments are typically taxed differently than owner-occupied homes. Who pays? The renter.
As explained previously, these costs are passed along to renters who do not benefit from the tax breaks given to home owners. Moreover, while the tax structure varies a great deal by locality, taxes are typically determined by the valuation of the property, called the "effective tax rate."
Again according to the NMHC, "...several national surveys document that apartments are taxed at a significantly higher rate than are single-family structures."
Rental Residents Pay for Stuff They Don't Use
Think about it: renters tend to be younger, urban, and single and more than likely have fewer kids than their homeowner friends. So, while we all pay for public services financed through local property taxes - for instance, funding the police department and fixing potholes - the apartment dweller is paying for things they themselves may not use - like the local school system.
So, Mr. or Ms. Smug-Homeowner? Think twice before decrying the renters and apartment buildings in your neighborhood. You'd miss our tax money if we left.