Wauwatosa School Tax Increase

[William S.]

Curious how other investors are going to handle this significant tax increase. $188 more a year per $100,000 of home value. This is going to put my duplex close to an increase of $600/yr. This is in addition to the constant other property tax increases that occur every year. 

This seems like such a significant increase in a short amount of time. Raising rents simply can’t keep up with these taxes. I’m starting to debate selling and getting out of Milwaukee all together.

[Marcus Auerbach]

Hi @William S. I have looked into this I think right after you moved and here is what I found - Milwaukee's tax income depends more on property taxes than many other municipalities, because we have a very low sales tax. Wisconsin in general is only 5.0% and Milwaukee is 0.6% for a total of 5.6% - this is one of the lowest in the US! 

Look at the pdf here - Milwaukee is almost at the end of the list sorted by total sales tax: https://taxfoundation.org/sales-tax-rates-major-ci...

Kansas City is listed with a whopping 8.35% combined sales tax, so they can probably afford lower property taxes.

Most people don't seem to even know how much sales tax is exactly, it's such a small amount that you don't pay attention. Unlike property tax bill, which is a large sum once a year and you see it black and white. Something for our major to think about...

To your point though: your tenants benefit from it, because their everyday cost of living is lower, but as an investor you benefit from this only marginally when you do improvements, but you definitley get hit with the higher property taxes.

As a fun side note and to put things in perspective: VAT (sales tax) in Austria is 20%, in Germany it is "only" 19% - so for a large purchase like a car it pays to buy in Germany. I did that a few times. Income tax is right around 50% if you make a little bit of money and gas is about $7 a gallon. Can you blame me for moving to the US??