I'm no math slouch and I do interest and financial calculators fairly well, but I've no formal preparation on finance data-crunching and I finally found something beyond my capabilities. A little assistance would be much appreciated.
I'm trying to calculate an LVT before-and-after tax formula. Here's the parameters:
-LVT does not affect the after-tax yearly cost of property ownership as land is perfectly inelastic.
-The yearly cost is calculated as the mortgage amortization schedule (meaning property price/30 + Interest rate)
Therefore:
Land rent before tax (land value before tax/30) + improvements rent (total structural value/30) + interest (% of (total land before tax + structure))
=
Land rent after tax + improvements rent (unchanged from above) + Interest (% of (total land after tax + structure)) + tax (% of total land value).
I'd like to know what the formula is for calculating the land value after tax. Total property + tax + interest should be the same as total property + interest with no tax, and improvement value doesn't change.
I'm trying to calculate an LVT before-and-after tax formula. Here's the parameters:
-LVT does not affect the after-tax yearly cost of property ownership as land is perfectly inelastic.
-The yearly cost is calculated as the mortgage amortization schedule (meaning property price/30 + Interest rate)
Therefore:
Land rent before tax (land value before tax/30) + improvements rent (total structural value/30) + interest (% of (total land before tax + structure))
=
Land rent after tax + improvements rent (unchanged from above) + Interest (% of (total land after tax + structure)) + tax (% of total land value).
I'd like to know what the formula is for calculating the land value after tax. Total property + tax + interest should be the same as total property + interest with no tax, and improvement value doesn't change.
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I guess all I had to do was put it on paper like this.