Another home thread: 2mil / 40K in taxes

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rhornback
Posts: 89
Joined: Tue Mar 07, 2017 9:59 am

Re: Another home thread: 2mil / 40K in taxes

Post by rhornback » Sat Jun 09, 2018 9:34 pm

denovo wrote:
Sat Jun 09, 2018 5:09 pm
AlphaLess wrote:
Sat Jun 09, 2018 4:57 pm
rhornback wrote:
Sat Jun 09, 2018 3:20 pm
+1 about SALT. I think the 10K ceiling on the property tax and income taxes as well as the 750K cap on mortgage dept will end up having a dramatic effect on New York, California and Illinois as people learn more about it and as it works its way through the system.
Generally agree. However, I think housing in Illinois is very cheap.
I don't know why Illinois keeps appearing in the same sentence with Manhattan and SFO / California.
Chicago?
Because I live in Illinois, specifically Chicago. And yes you are correct that in comparison to San Francisco or Manhattan real estate is cheaper.

However, if you put my exact same house in a suburb of Dallas, the price would be 60%, taxes would be 60% and no state income tax.

runner540
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Joined: Sun Feb 26, 2017 5:43 pm

Re: Another home thread: 2mil / 40K in taxes

Post by runner540 » Sat Jun 09, 2018 9:40 pm

rhornback wrote:
Sat Jun 09, 2018 9:34 pm
denovo wrote:
Sat Jun 09, 2018 5:09 pm
AlphaLess wrote:
Sat Jun 09, 2018 4:57 pm
rhornback wrote:
Sat Jun 09, 2018 3:20 pm
+1 about SALT. I think the 10K ceiling on the property tax and income taxes as well as the 750K cap on mortgage dept will end up having a dramatic effect on New York, California and Illinois as people learn more about it and as it works its way through the system.
Generally agree. However, I think housing in Illinois is very cheap.
I don't know why Illinois keeps appearing in the same sentence with Manhattan and SFO / California.
Chicago?
Because I live in Illinois, specifically Chicago. And yes you are correct that in comparison to San Francisco or Manhattan real estate is cheaper.

However, if you put my exact same house in a suburb of Dallas, the price would be 60%, taxes would be 60% and no state income tax.
Are you sure? Dallas home prices have increased ~50% in the last 5 years. And property taxes are quite large, since there is no income tax.

526297
Posts: 6
Joined: Sun Jun 10, 2018 4:03 pm

Re: Another home thread: 2mil / 40K in taxes

Post by 526297 » Mon Jun 11, 2018 10:30 pm

surfstar wrote:
Sat Jun 09, 2018 10:16 am
Keep renting. Stash all you can, FIRE to somewhere better to live.
Second this. You could easily do it.

pascal
Posts: 88
Joined: Sun Jun 19, 2016 5:05 pm

Re: Another home thread: 2mil / 40K in taxes

Post by pascal » Mon Jun 11, 2018 11:55 pm

Salmon wrote:
Sat Jun 09, 2018 8:19 am


Taxes are insane!

Questions:
1. Can we comfortably afford a 2mil house with $40k in taxes? There are other cheaper homes i.e. around $1.5m but these will require renovations (which we would like to avoid)

2. If we do buy such a $2mil home, should we put more than the 20% down?

3. If buying such a home, would private school still be an option?
Taxes are indeed insane.

1. Yes you can comfortable afford the house. If not you, who?

2. No.

3. Can't say.
"Never underestimate the ability of a bad situation to get worse...rapidly." Ninegrams

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sergeant
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Joined: Tue Dec 04, 2007 11:13 pm

Re: Another home thread: 2mil / 40K in taxes

Post by sergeant » Tue Jun 12, 2018 6:09 pm

In his other thread we learned that they're Docs and they live in the NE. They have very stable incomes with excellent benefits. The current rental is a deal and to move to a larger rental would double their rent costs.

OP, go for it! You can afford it and your wife has been very patient. The rental is cramped and you're not comfortable. Is it a home in the same development that you were looking?
Lincoln 3 EOW!

bungalow10
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Joined: Sat Apr 09, 2011 6:28 am
Location: Amsterdam

Re: Another home thread: 2mil / 40K in taxes

Post by bungalow10 » Tue Jun 12, 2018 6:31 pm

HEDGEFUNDIE wrote:
Sat Jun 09, 2018 11:23 am
Of course you can afford it. DW & I just bought a house for $1.8M and we only make $300k combined.
This. I bought a $800k house on $200k. Put a little extra down, cutting the budget back quite a bit.

There are many parts of the country where houses are $700,000-$1M and households don't have the benefit of $600,000 incomes.
An elephant for a dime is only a good deal if you need an elephant and have a dime.

indexonlyplease
Posts: 1021
Joined: Thu Apr 30, 2015 12:30 pm
Location: Pembroke Pines, FL

Re: Another home thread: 2mil / 40K in taxes

Post by indexonlyplease » Tue Jun 12, 2018 6:31 pm

wrongfunds wrote:
Sat Jun 09, 2018 8:27 am
I have no suggestion but when you quote this earning power at age 32, I would certainly like to know the industry and the job specific so that I can get my future grand-kids in those fields. It is too late for me or my kids to change the careers at this stage.
I second that question for my college kids.

On the house I think it is a weird question about a house. You know what you can afford but would like someone to agree with you.

I think you should purchase a house that will cost you what you have been paying in rent. $3000. This way you know what you can afford and will not change your lifestyle. But I don’t you can get a 2mil house for 3k a month.

e5116
Posts: 369
Joined: Mon Oct 05, 2009 11:22 am

Re: Another home thread: 2mil / 40K in taxes

Post by e5116 » Tue Jun 12, 2018 7:00 pm

indexonlyplease wrote:
Tue Jun 12, 2018 6:31 pm
wrongfunds wrote:
Sat Jun 09, 2018 8:27 am
I have no suggestion but when you quote this earning power at age 32, I would certainly like to know the industry and the job specific so that I can get my future grand-kids in those fields. It is too late for me or my kids to change the careers at this stage.
I second that question for my college kids.
Being a physician usually pays very well (in the U.S. at least), but it's hard to get to that point. They are both doctors.

fcf18
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Joined: Wed Jun 13, 2018 9:35 pm

Re: Another home thread: 2mil / 40K in taxes

Post by fcf18 » Wed Jun 13, 2018 10:40 pm

with this level of income, I wouldn't worry about the price of the house. If you are going to buy a house, don't buy it too cheap because most people can't resist the urge to purchase a house that somewhat matches their income. And exchange house at a later time is a very expansive proposition with all the fees and taxes.

JuniorBH
Posts: 63
Joined: Fri Jun 09, 2017 12:54 pm

Re: Another home thread: 2mil / 40K in taxes

Post by JuniorBH » Thu Jun 14, 2018 11:19 am

ytrewq wrote:
Sat Jun 09, 2018 11:00 am
One way could be to check how much income is available for mortgage payment by deducting all expenses and target savings for
long- term goals - retirement/children's college. As an example:
120 Living excl. Housing
054 401K / IRA / HSA for double income couple [some recommend saving 20% of Gross for Retirement, so 20% of 600K = $120K]
040 Prop Taxes
015 Daycare [this gets reduced to 8K - 12K for enrichment, summer camps etc as kids reach elementary/middle school]
015 College [Current top tier annual college cost is $70K and with 4% inflation will increase to $142K in 18-years; assumes savings grow at 5%]
005 Cleaning [Lawn Maintenance, Monthly Cleaning service etc.]
004 Utils [Single Family home being bigger will lead to higher bills for Electricity, Heating/Cooling, Water, Gas, Home Security]
004 HOA/Insurance
003 Maintenance/Repairs [Thumb rule is annual spend equal to square footage so $3K for a 3000 Sq Ft home]
260 Total (if saving $54K min. for retirement)
326 Total (if saving $120K recommended based on thumb rule for retirement)
Take your after tax-income (income left after Federal, State, FICA taxes) and see how much is available for mortgage after deducting $260K or $326K.
This is the approach I would take. I don't agree with using 3x or 4x multiples when income gets this high, because expenses tend to be a smaller % of income and there is more money that can go to housing (albeit at the expenses of having normal retirement rather than massive retirement savings).

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