Creating a Homestead where tax is lowest.

When the cost of living on an annual basis is considered, property taxes are very low, compared with food, transport, energy.
Yet I see many comments like this around,
"Similarly, ag land in my area is taxed based on how good it would be for
producing corn and soy, so something that would be tough on a combine means lower taxes."

I think it is false economy trying to homestead on a property which is unsuited to homesteading for the sake of lower property taxes.

Are property taxes high compared with wages, in your country?
In Australia, my property taxes are less than 1.4% of my annual salary, $80,000, paid in 12 monthly payments.
OK if you are on a pension of $20,000 in Australia it comes a bit higher, but are those taxes a drain compared with energy, food, transport etc?

John C Daley wrote:I thinks it false economy trying to homestead on a property which is unsuited to homesteading for the sake of lower property taxes.
Are property taxes high compared with wages, in your country?
In Australia, my property taxes are less than 1.4% of my annual salary, $80,000, paid in 12 monthly payments.
OK if you are on a pension of $20,000 in Australia it comes a bit higher, but are those taxes a drain compared with energy, food, transport etc?

I agree that it is false economy to try homesteading on lower quality land.  The amount of work required and money input are often greater than the overall tax saving.
Being off the grid is a blessing. I would hate to be trying to pay power bills of over $1,500 per quarter without adding the luxuries like air conditioning and swimming pools.
Our fuel has gone up by 13.1% in 12 months.  My aim is to be as self sufficient as I can be which will off-set the higher land taxes for having better land.  Self sufficiency also means less driving for me.

I know many people who seem to be focused on the idea that there should be less taxes, but I know an equal number who complain when potholes in the roads near them don't get fixed. In most places, property taxes would need to be replaced/subsidized by people "working 4 days/month for their municipality" like people used to have to do for their feudal lords. Some places already encourage volunteer work parties for tasks which are manpower heavy but skill light, such as spring beach cleanups.

What's really important is that tax money is spent wisely with decent over-sight!  That requires getting involved at the Municipal level and building community spirit. A community in Ontario (Canada) decided that reducing/offsetting their carbon footprint was important to them and they made huge progress in that area. Transportation, as in most places, was a sticking point, but they got grants, raised funds, and got some debt and upgraded many public buildings to use far less energy. The money saved due to the energy savings was to go directly to paying down the debt incurred and that was an important selling point. With the increases in energy costs since these projects were completed, they are way far ahead in the game at this point.

All that said, one of the principles of permaculture is to take degraded or less valued land and use permaculture principles to improve it's productivity. Leaving the flat land for the homesteaders that intend to use big combines and choosing what is often considered "marginal farmland" and turning it into a self-sustaining food forest is not a bad goal. But as John C suggests, it isn't likely the tax rate that will make or break the attempt!

Paul Fookes wrote:

John C Daley wrote:I thinks it false economy trying to homestead on a property which is unsuited to homesteading for the sake of lower property taxes.
Are property taxes high compared with wages, in your country?
In Australia, my property taxes are less than 1.4% of my annual salary, $80,000, paid in 12 monthly payments.
OK if you are on a pension of $20,000 in Australia it comes a bit higher, but are those taxes a drain compared with energy, food, transport etc?

I agree that it is false economy to try homesteading on lower quality land.  The amount of work required and money input are often greater than the overall tax saving.

Here in the US, what's considered "marginal land" can often be a matter of experience and technique.  Since "farmland" is primarily categorized as land that can be mechanically farmed.

I live on "marginal" land in the desert SW, in a place that is admittedly hard for most people to grow in using conventional, modern means.  It's also half the taxes of my past home in Oregon, which was on TRULY marginal land (forest edge land in deep solid clay soil, with minimal sunshine, 40-60" rain falling mostly in winter - that's marginal, imo).

After learning to garden on really tough land in Oregon, learning permaculture methods along the way, and then moving to the desert SW  - gardening here has been a blast in comparison.  I didn't know other people had the absolute opposite experience here until I introduced myself at the local gardening meeting, described what an amazing time gardening my husband and I were having in the desert, and saw the responses on people's face.

So I'm just throwing that out there- what's listed as marginal land or 'unsuitable for farming" in the US is often anything but.  Except in the PNW - yeah, that can really be tough.

I have danced around this topic in past threads. I agree, it would be foolish to purchase land without considering taxes.  I also feel  it would be foolish not to consider what those taxes are buying for you.

I live on land that's not suitable for conventional agriculture in southern Oregon. The property taxes aren't very high but that's because most of the property is zoned for forest. It's well suited for livestock though and food forest. So I would say that it very much depends on what you are trying to do on your homestead. The EFU (exclusive farm use) land is flat and in the valley. I didn't want to live in a fish bowl where everyone can see what I'm doing so that didn't appeal to me. My property feels very isolated despite being only 3 miles to town.

When people ask about taxes I always ask, which taxes, property, income, sales or something else? What works for one person might not for another.

The responses have been interesting.
My main focus was primarily the % of your annual income that  the property taxes are, being an important issue in land selection.

I would have thought comparing the costs and differences of alternative land sites would be more important,
IE
-  costs involved in making land productive on a small scale,
- amount of rain and sun, cost of access etc.
- are major earthworks involved- is flooding an issue
- access to energy, if its important
- access to community if its important
The issue of how taxes are spent is another issue.

John C Daley wrote:My main focus was primarily the % of your annual income that  the property taxes are, being an important issue in land selection.

That's the thing with homesteading - some people's "annual income" is not that representative of their quality of life. So long as I can pay my taxes and buy things I can't produce or repurpose, I'm not personally willing to figure out whether my annual income is higher because I raised and processed12 ducklings this year (well, Mother ducks did much of the hatching and raising to be honest).

So yes, there are plenty of farmers and homesteaders who *do* need to do cost/benefit analysis and must make the tough economic decisions when choosing crops and livestock. However, I expect that many people realize that when doing things even semi-permaculturally, on the road to true 'permanent agriculture',  quality of food, areas to forage that take minimal management, repairing things independently so you don't pay others to do things like fixing a plumbing drip and you don't have to wait around to let the plumber in, are all things that don't fit what most working people would consider part of their "annual income".

Jay Angler wrote

 I'm not personally willing to figure out whether my annual income is higher

It is not difficult to be aware of income from one year to the next.
I have found being aware of it has made life much easier and more comfortable, because its allowed me to purchase equipment that suits an application.
I dont think being a Permie means sacrificing time and comfort unnecessarily, in fact I aim to improve those factors with permaculture.

John - From what I have gathered, things in Australia are vastly different than the US. It doesn't appear that things vary as much as the US from state to state or territory to territory. Here one state may rely heavily on property tax, another primarily sales tax, so it really isn't useful to look at property taxes in a vacuum. Personally, I have no taxable income, so I don't care about that. Oregon has no sales tax but it makes up for this in alcohol prices which are double Californias.

Hi Stacy,

Exactly. And each individual needs to determine how those taxes impact him/ her from all perspectives.  Illinois has a reputation for high taxes.   For the most part, those taxes don’t negatively impact me any more than they would in any other state.

I am surprised about the different taxing systems.
With high alcohol taxes, is smuggling something that happens?
In Austrlia if your income is lower than $A18,000 no income tax is payable.

To me the bigger problem isn't the tax rate but the property value based on the location.
A 2,000sqft house on 2acres of land in New York City will cost 40x more that if it was in the middle of no-where in Alabama. And so even if they both had the same 1.4% effective tax. The dollar amount would be 40x more.

But yes property tax rate does vary alot. It ranges from $600 in Hawaii (0.28%) to $5,419 in New Jersey (2.49%) and those are state averages, on the county and city level it also varies.
https://www.rocketmortgage.com/learn/property-taxes-by-state.

There are lots of execptions and reduction that someone can apply for to lower their property taxes: homestead/primary residence, senior, veteran, circuit breaker, brownfield, low income, etc

I don't know about Australia, but in the US there are too many variables.

Before buying land in the US that has existing Ag taxes, talk to the County Assessor about how to keep those Ag taxes.

As Stacy suggested, I could get a tax break on Forested land though instead, I get lower taxes for Wildlife Management.

So where the title is Creating a Homestead where the tax is lowest to me would be to buy land that has existing Ag taxes and do what it takes to keep the Ag taxes.

There is a situation in the US where you can choose property with significantly lower taxes, and it may make a difference in your lifestyle/income, etc.  It never occurred to me until moving to a place like this - a border region.  I mean on the border of two states.

I live in one of those at the AZ/NM border.  It all looks like the same place, but if you buy property on the NM side not only is the property cheaper(!) your taxes are about half of what the same property would be on the AZ side.  Once learning all this, my husband and I were quite glad we landed on the NM side.

Sales tax is a complicated matter in the US - in AZ and NM it's different by county AND by city. It's ridiculously complex to a person moving form a no-sales-tax state like Oregon.  Some towns have added sales tax, some of which even applies to food.  Sales tax for different things is also a different amount, like a contractor's sales tax!

So you can save money, especially with property taxes, while still having basically the same lifestyle by living on one side of a state border or another.

Property tax where I live (Cook County, City of Chicago) is relatively low compared to the rest of the state. However it is also completely inscrutable. There's no set "rate" to rely on, rather the municipality determines how much money is needed to to run services and pay bills, then divided that out amongst all property owners, factoring in discounts for homeowners, seniors, and others. And then there's the historically weird value assessments on our property which bear little resemblance to what any ordinary person would pay for the property in question. So there's no real way to predict the tax. It can fluctuate surprisingly.

Still, ordinary folks end up subsidized by the big commercial property owners.

John C Daley wrote:"Similarly, ag land in my area is taxed based on how good it would be for producing corn and soy, so something that would be tough on a combine means lower taxes." I think it is false economy trying to homestead on a property which is unsuited to homesteading for the sake of lower property taxes.

It seems like it is a false dichotomy to imply that the options are either bad land with low taxes or good land with high taxes. Since the tax structure for ag is based on how suitable the property is conventional agricultural, there are lots of properties that are great for permaculture that also have low taxes. For example, if the Krameterhof were transported to my area, the taxes on the land would be practically nothing. If there are two good properties and one of them has high taxes, and the other low, I’m going with the low one every time.

For what it’s worth, the property taxes on my primary residence are about equal to what I spend on food, more than my federal income taxes, and twice as much as I spend on gas and electricity (and I definitely considered property taxes when purchasing my house).

John C Daley wrote:I am surprised about the different taxing systems.
With high alcohol taxes, is smuggling something that happens?
In Austrlia if your income is lower than $A18,000 no income tax is payable.

Income tax, VAT/sales tax, property tax, and special hotel/alcohol/car/etc taxes are all different. Someone who rents and thus don't pay property taxes still have to sales taxes.

The average house in USA is valued at $400,000 and with the average tax rate of 1.1%, thats $4,400/year or just about $400/month. Sadly even though the national tax rate hasn't really changed much in the past 10year, the tax dollar amount sure has.

I live in Brazil and land taxes hier are ridicilously low. I pay less than 4 dollars a year and the woman accountant charges around 9 dollars to do the accounting for me. So the accountability is more "expensive" than the tax itself. I live at a small property, 1.2 hectare - less than 3 acres of hilly country. I just love my property!
Larger properties with flat land is not so low, but still cheap.

Sergio Cunha wrote:I live in Brazil and land taxes hier are ridicilously low. I pay less than 4 dollars a year and the woman accountant charges around 9 dollars to do the accounting for me. So the accountability is more "expensive" than the tax itself. I live at a small property, 1.2 hectare - less than 3 acres of hilly country. I just love my property!
Larger properties with flat land is not so low, but still cheap.

$9 for an accountant, is that family-pricing or is she getting paid by the government.
I just looked it up and min wages in Brazil is about US$1/hr or $200/MONTH. So that accountant is making 9x min wages, that sounds normal.

Yes taxes is truly different in different locations.