Those with paid off houses, how much basic maintenance cost ?

[NW-Bound]

This is helpful. I think I am more about 3% at my weekend house and .75% at my DC row house. The DC house is about twice as valuable as the weekend place (that .75 would be more like 2 or more for an equivalent house in a more reasonably priced area) but the weekend place is way more expensive since it is free standing (more exposed) has a lot of grounds and a pool, and requires more hired help to maintain. It is more valuable than an equivalent house that wasn't waterfront so I suspect NW's 4% is a better rule of thumb.

The housing operating cost indeed varies greatly from place to place, even if expressed as percentage of the home value. If my homes were in Southern CA, their values would be about 3x more, but I doubt that the maintenance cost would increase that much because the labor and material costs do not go up by that ratio.

The 4%/yr I quoted for the last 5 years included some expensive maintenance and updates on both homes, which should not be recurrent (siding replacement, roof repair, kitchen counter replacement). I just pulled it off Quicken and did not classify these further than that, but together it runs about 5% for the last 5 years (1%/yr for the 2 homes together).

For reference, my urban home is in the metropolitan Phoenix, while my 2nd home is in the high country of AZ. RE taxes are not bad here. They run about 0.6%/yr of the home market values.

... $3000/yr utilities...

You made me look. My urban home electric+water bills run $4K/yr. My high country home costs $700/yr. The 2nd place needs no AC cooling, uses little water (no pool, no vegetable garden), and we are not there much in the winter, else it could cost a lot more for heating.

 

[bigcmagor]

Indiana house assessed @ $200k and $250K market price
Prop tax $2,100
Ins $950


Florida house assessed $190K and $300K market price
Prop tax $ 3,900/year
Ins $25/year Liability only


Michigan boat slip assessed $30,000 and $45,000 market price
Prop tax $1,200/year
HOA $980/year


My own assessment is that I seem to have the good fortune of under-assessing assessors.

 

[Independent]

1,443 Electricity
_ 897 Water, Sewer, Trash
_ 983 Natural Gas
2,506 Real Estate Tax
_ 779 HO Insurance + Umbrella
1,780 Major Repairs/Replacements
-----------------------------
8,388 Total

CPI adjusted average for last 8 years.
1,250 sq ft house, appraised for $150k in Iowa.

 

[Independent]

I gave you our numbers above.

I think the average from the Consumer Expenditures Survey is interesting.
This is the average for 600 older couples who are homeowners.

1,633 Electricity
_ 660 Water, sewer, trash, ...
_ 740 Heating fuels
3,071 Property taxes
_ 611 Homeowners insurance
1,806 House maint, repairs, flooring
_ 282 Major appliances
-----------------------
8,803 Total

 

[Nodak]

Paid off $50,000 864 sq.ft. house in small town ND:

taxes - $50 per month
insurance - $60 per month
utilities - $300 per month
routine maintenance - $70 per month

There is a picture of my home in my "misc" photo album.

 

[zinger1457]

SE Arizona, $250K home, property taxes $2600/yr, insurance $450/yr, HOA $125/yr.

 

[ERD50]

what I find interesting and baffling is the number of people who when they don't like a question respond rudely instead of moving on.

Is there an entrance test on this site?? lol you have to verify that your question are deemed important before posting??

If you don't think the question is useful, why insult those of us who wish to participate.

Any plans on kicking old ladies today?

Op,
Ignore the nasty people. this is an internet chat spot, feel free to ask any ole thing you wish. as long as you are not breaking moderator rules, you're free to do so. ...

Seriously, who is being 'nasty' or 'rude' here - posters who try to dig a little to find out what the OP is really looking for, and how the question being asked probably won't help them in their search, and offer constructive alternatives - or someone who categorizes those posters as 'nasty', and 'old lady kickers'?

I routinely find that here, and in real life, people ask questions to learn something, but often the question is misdirected. It happens often with me and people who ask me tech questions about their computers and/or gadgets. Their question may strike me as rather odd, and would require a very complex and convoluted, and maybe $$$ answer. When I probe further, and try to find out what problem they are trying to solve, it often turns out the answer is very simple, and often at $0.

That is 'rude' and 'nasty', and worthy of 'old lady kicking' accusations? Not in my book.

-ERD50

 

[ERD50]

Wait a second...why pay off the mortgage? My CPA told us we NEED to have this large of a mortgage or we will jump up in tax rates, we're in Illinois.

So...doesn't being mortgage free have to do with how to get the lowest tax classification when in retirement?

Thanks

I'd suggest you do the math yourself. It should be easy to back the mortgage interest (only interest, the principal portion of the payment is not tax deductible) out of your tax form, and see what effect it has on your total taxes.

Remember, only the amount above the higher tax bracket is taxed at the higher rate. The mortgage interest isn't going to effect anything other than the mortgage interest. It doesn't 'push' other income into a higher bracket (though a higher taxable income might affect some phase outs of other credits/deductions?).

So if you are in a 25% marginal tax bracket, you get 25% of the mortgage interest back in the form of lower taxes. Probably not a reason to hold a mortgage or not by itself, but it might be a factor.

-ERD50

 

[daylatedollarshort]

I would agree with ERD50 on the whole mortgage issue. Paying off a mortgage may help with cash flow in retirement, but if you are close to paying off a mortgage and/or have a very low rate you aren't paying much in interest rates anyway, and paying on principal is not going to change your overall net worth. Whether you have $100K in a CD or home equity it doesn't change your total net worth. And in some states it may be better for asset protection to have the money in a CD in a retirement account instead of home equity.

If you have a $100K mortgage at 3% tax deductible interest and $100K invested in a CD in an IRA at 3% tax deferred interest, why would paying off your mortgage be a milestone event?

However, if rates go up to 6% you can pocket the difference and if they go down you can choose to pay off your mortgage or refinance again at that time. I think when interest rates are low, statistically the odds are in one's favor of keeping a mortgage over the next 10 - 30 years and pocketing the difference in interest rates as the mortgage rates will stay fixed and the investment returns will likely rise.

 

[urn2bfree]

Wait a second...why pay off the mortgage? My CPA told us we NEED to have this large of a mortgage or we will jump up in tax rates, we're in Illinois.

So...doesn't being mortgage free have to do with how to get the lowest tax classification when in retirement?

Thanks

Um, hold on... If you are drawing a paycheck anyway, then sure the mortgage deduction might help lower your income and change your bracket. But if you are in withdrawal mode, the mortgage is extra income you have to produce and pay out which increases your income needs and could increase your tax bracket.


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[Amethyst]

ERD50 is a big boy who doesn't need me to defend him, but I will say that I don't read harshness or rudeness into his posts. He is just very matter-of-fact.

 

[Amethyst]

Uh-oh, are we turning this into a "whether to pay off the mortgage" thread? I don't think the OP meant for it to go that way....

 

[bclover]

Seriously, who is being 'nasty' or 'rude' here - posters who try to dig a little to find out what the OP is really looking for, and how the question being asked probably won't help them in their search, and offer constructive alternatives - or someone who categorizes those posters as 'nasty', and 'old lady kickers'?

I routinely find that here, and in real life, people ask questions to learn something, but often the question is misdirected. It happens often with me and people who ask me tech questions about their computers and/or gadgets. Their question may strike me as rather odd, and would require a very complex and convoluted, and maybe $$$ answer. When I probe further, and try to find out what problem they are trying to solve, it often turns out the answer is very simple, and often at $0.

That is 'rude' and 'nasty', and worthy of 'old lady kicking' accusations? Not in my book.

-ERD50

Ok, then I will take my own advice to my children and assume the best of people.

My apologies

 

[Rustic23]

Not sure this info is useful unless you are willing to move to my neighborhood.

Insurance, this depends on location, and even location within a state. Insurance for wind and water is different on the coast vs inland, and can very by over $1,000 a year.

HOA, in some HOA's there is little or no benefit, in ours it covers 24/7 ambulance, garbage disposal, 24/7 security, common area maintenance and other smaller benefits. A great deal for only $400 a year. As you may guess there is more to this also. (our HOA reserve account generates well over $300,000 a year in income)

Proprety Tax. Would appear to be straight forward, but here again not so. In Tx, there is not income tax. The difference is made up largely by property tax. Also many Texas subdivisions are developed using bonds. These are paid off through property tax. If the subdivision builds out, the tax is fairly low. If it does not, then the tax is higher. Again, the difference can be thousands of dollars in two neighborhoods that are side by side.

My point is there are far too many variables that make up the foundation of 'additional home expenses' to compare using anecdotal evidence.

 

[jkern]

SF Bay Area home 2050 sq ft valued at $950K.

Prop Tax: 5,460/yr
Insurance: 1,020/yr
HOA: 575/yr
Maintenance Budget: 1,200/yr
CA Fire fee: 120/yr

Total: 8,375/yr

 

[daylatedollarshort]

Uh-oh, are we turning this into a "whether to pay off the mortgage" thread? I don't think the OP meant for it to go that way....

It is fine to say many think it is a milestone event to pay off a mortgage in retirement, but to declare it as a statement of fact may be misleading to others seeking retirement advice, and many more people than just the OP will be reading the replies in this thread.

 

[Car-Guy]

We had another thread this week (re: Exxon) where the tone became a bit aggressive toward the end IMHO.

I guess that's what makes the world go around. I liked the XOM thread.

 

[Car-Guy]

I was just wondering if anybody cared to share the cost of of taxes, insurance and Hoa you guys still spend yearly (or monthly, if you prefer translating it to a monthly cost).

No HOA out here, just no trespassing signs. Total annual cost for home/property insurance and taxes is about $3000 but the tax component is super cheap here in the Texas countryside.

 

[REWahoo]

...but the tax component is super cheap here in the Texas countryside.

Ag exemption?

 

[Car-Guy]

Ag exemption?

That does help.

 

[target2019]

4000 sq ft on 5/8 acre in NJ.
$13k real estate tax
$1200 insurance
$3000 utilities

Zillow will give you most data on any location, for those looking to settle somewhere else.

 

[rodi]

I agree with some of the points made - the taxes aren't just location based - here in CA because of our Prop 13, it's also length of time you live in a home. Our next door neighbors, who moved in less than 2 years ago, but have the same square footage, same size lot, pay 3 times what we do. And it would be 9 times what we do if we didn't have our granny flat - which had a base tax of the market value of the granny flat from the date of occupancy. Another factor here in SoCal is Mello-Roos.... an extra tax for newer neighborhoods. The developers used to have to pay into the city to cover infrastructure: fire houses, roads, libraries, parks, etc. But in the late 70's the developers figured out they could put a 30 year bond on homes and make the home owners pay for these costs... So it's a 30 year tax from the time the last home in a development is built. (So early buyers in a large development might pay longer. Yikes.)

My stats:

Taxes: $3236 - includes entire parcel which is multifamily since we have a detached granny flat.
Insurance: $1201 for primary, $511 for rental unit. (Same parcel since it's a granny flat)
HOA: 0
Mello Roos: 0

 

[Bestwifeever]

I know that it is a milestone to pay off your mortgage and your house free and clear. However, we all know that we still have to pay real estate taxes, home owners insurance, HOA (I would consider these 3 items as the basic mandatory maintenance cost).

I was just wondering if anybody cared to share the cost of of taxes, insurance and Hoa you guys still spend yearly (or monthly, if you prefer translating it to a monthly cost).

Yes, paying off one's house is definitely a milestone on its own--some of us think it's not a very important or helpful one to aspire to and some think otherwise. Different strokes. And since you asked quite simply and nicely if anyone would care to share, I will:

Taxes are a little over $8k and going up, home insurance is a little under $1k, no HOA.

We have lived in this house forever and our taxes today equal our initial mortgage payments and taxes put together.

 

[rayinpenn]

Paid off or not the maintenance cost are the same..
RE tax $8,000 annually
Insurance $1300 annually
Umbrella $200
Heat electric $3000

No mortgage is a wonderful thing.... Maintenance varies.



Sent from my iPad using Early Retirement Forum.

 

[mystang52]

Seeing what others pay in property taxes has me a bit depressed .
I live in expensive Bergen County, NJ. I have a nice house, but it's modest. I honestly don't know if I'm on 1/4 acre or 1/5 acre. Anyway, here goes:
Property Taxes $11,000
Insurance: $1200
Lawn mowing/treatment: $2000

I paid off my mortgage years ago and for me it was the right decision.