Attention landlords and renters! The recent tax hike on non-owner occupied rental property affects the property owners and their tenants alike. It is well to remember that not many landlords around here are evil absentee tycoons — many are small investors. One such property owner has just contacted us here. Artist Peter Gemei has this to say,
This evening at 5:30pm at City Hall there will be a rally in response to recently received property tax bills. “Is it worth it to keep property in Providence?”, I asked myself as I saw my property tax soar from under $6000 last year up to over $10,000 for this year. (I have a mortgage on a 3-apartment house at Fox Point on Ives Street and am a self-employed artist who works on projects in the garage located on this property. At present, the rents don’t cover all the expenses and I’m struggling). I searched online to find where the outraged could be found and discovered that they are rapidly growing at Fixprov.com, The Providence Apartment Association. Last night I attended an open meeting at Abe’s Pub on Wickenden Street and got informed. Last week there were 30 members, now there are 200 and growing. I spoke to many property owners like myself who struggle to maintain property on the East Side, slashing rents to convince prospective tenants to submit an application, paying taxes and insurance from dwindling savings, and paying a mortgage to keep a step ahead of foreclosure.
Many of us are not making any profit from our investment in this city but thought to hold on in expectation of a positive outcome in the future. East Side property owners have been unfairly targeted with the perception that we are all very wealthy and therefore immune to financial hardship. Landlords are expected to afford these almost doubled tax hikes. What’s the point in investing in Providence?
And there is nothing to say a person can’t make a profit on investment property (it is predatory, unregulated capitalism that bugs us here). At any rate, what affects these landlords will soon come down on the head of the renters. Our interests are aligned on this issue. So head down to the rally on the steps of the City Hall, and then head inside to the scheduled council meeting and make your voice heard. This is no way to fix the city.
5:30pm, Thursday, Rally in front of City Hall/ 6:30pm City Council Meeting/Providence Apartment Assn.
At Dialectric.
The Homestead Exemption for non-owner occupied homes was originally proposed by tenants groups who felt it unfair that owner occupied home owners got a tax break while renter occupied didn’t get a break on high (pass through) property taxes.
The “tax break to non-owner occupied properties is allowed under state and city laws, and tenants ultimately benefit from it. If you have a problem with semantics, the traditional 50% to owner occs to 33% for non-owner occupied is the same thing mathematically as a 25% to owner occ to 0 to non-owner occupied.
This year, eight city councilors voted to have the owner occupied homestead exemption at 50% with no exemption to the non-owner occupied. That’s probably not the best way to stimulate an already battered housing market. You can have two identical three families side by side where one is taxed at $4,000 and the other at $8,000. I feel that the owner occupant should have a bit of a break, but that’s too much, and will drive needed investment dollars out of Providence.
There’s a lot of good info on this issue on FixProv.com.
property investment is speculative. An owner assuming that he or she would continue to receive non-owner-occupied tax breaks under a law intended for homestead exemption was a speculation. This is and has been a tax break for absentee landlords. Few other parts of the country have such a berak. Any tax increase in a down economy is difficult, but landlords who own multiple properties should not, and should never have, received a tax break intended to benefit owner-occupants.
The ‘will come down on the heads of the renters’ argument could be used for anything from the increased costs of requiring a non-death-trap level of fire code compliance, to testing for lead paint.
Projo article: http://www.projo.com/ri/providence/content/ABSENTEE_LANDLORD_TAX_07-20-10_L9J8JLA_v24.14cbd27.html
“…what affects these landlords will soon come down on the head of the renters.” Will!? Providence already has the same rent prices on the East Side for the same deal I can get right near downtown Chicago, and its new construction in Chicago! I would be willing to guess that the taxes contribute to higher rents, less modern buildings, less refurbished historical buildings, and a lower availability of cheap rent buildings that aren’t ghettoized or falling apart.
It’s not just landlords and renters that are feeling the pinch of the removal of the exemption.
I bought a foreclosed home in the beginning of 2010 that was bank owned for tax year 2010 (2009). The house was deemed non-owner occupied for the tax year by the city yet the seller/Fannie Mae paid back taxes as though it was owner occupied. So now, even though I live in the home, I have to pay 2010 taxes as though the home is non-owner occupied.