Don’t fear Tax

by MonopolyHQ on October 13, 2009 · 12 comments

taxesMany Monopoly City Streets players seem to be doing everything they can to avoid tax, or even venturing into their sixth street.

My take is if it’s a worthwhile street, go ahead, venture out and buy a bit.

What’s worthwhile may vary depending on where you’re at in the game, but I’d ballpark as low as $5million for most players in the game who have been around since the beginning.

Here’s why:

1. The daily tax total may seem absolutely ridiculous compared to what you’re making in real life (if not, we need to talk), but using some really really crude math: 3% of your daily income < (97% of your income - 30% to chance cards)*invested into income generating buildings. ie. even if you're making 5 billion daily, and you're being taxed an extra $150million - surely you can make that all back with buildings on that street with your remaining buildings. (Yes, I'm aware at 33+5 buildings, you make literally zero, and profitability probably only works for an additional 4-8 streets)

2. Flipping it. There are plenty of people still hungry for $5-10million dollar streets, and frankly don't have the time to be searching for one if you've stumbled across one. Most of them are also sitting on hundreds of millions they'd love to quickly trade up for decent streets.

3. Refreshing your Strategy. I've got streets that were maybe $8 million dollar streets when I bought them, but they 'appear' to be worth a billion now. I'm sure plenty of you have something like this as well. Have the guts to let go of them. If you stumble across a $12 million dollar street - that extra 30-50% of roadway could be well worth it. Sell the property for 50% and flip the street for plenty more. Hold both streets for an extra day or two if you need to. It's a short term dip in income for a long term return on investment.

In conclusion, you can’t escape tax, but it doesn’t have to be that bad. Realistically I can see losing about a quarter of my income with 9 streets and still be actively progressing in my net worth.

I could be dead wrong though, so go with your gut and where you’re at in the game right now.

Next post will be on “finding longer streets”. Shout out if you’ve got thoughts on this post tax or easy ways of finding worthwhile roads.

12 comments

{ 12 comments… read them below or add one }

1 Martin October 13, 2009 at 1:42 pm

Quite true, not buying an additional street for tax reasons is stupid as long as you can build up that street to bring in more than 3% of your total income.

Example: You own 5 streets, each street brings 10mil rent. If you bought a sixth street, you’d lose 1.5mil on taxes for the existing 5, and your 6th will lose 3% of whatever it brings in. If your 6th brings in at least 1.55mil when the next rent payout comes, you will have earned more than before.

If you already own 10 streets at 10mil rent each, your 11th street must bring in at least 3.66mil. Why? The additional 3% will cost you 3mil from the existing streets, and the new street is taxed at 18% – 3mil/0.82=3.66mil :D

The easiest way to find long streets is just to buy them off me over at http://marketpoly.fridaycode.org/offers.php?username=barfoo – at market prices, which may look a bit steep to some.

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2 Rick October 13, 2009 at 2:34 pm

Good analysis ! Was wondering if you can explain how my listing at marketpoly is for 250M when all I wanted was 25M. Thanks.

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3 Martin October 13, 2009 at 2:36 pm

I’d guess you just accidently typed an additional zero? Always took the correct amount from me.

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4 MindObserver October 15, 2009 at 11:13 am

I agree – don’t fear the tax man. Just run the numbers and see whether buying another street is more profitable than upgrading what you have.

As you say, 9 streets will cost you about 25% of your income, but that is 9 in addition to the first 5 streets which are tax-free! So you can have 14 streets with a manageable 25% tax bill.

You can actually buy 19 streets before the loss from taxes outweighs the gain in rent. If your options are buying another street or upgrading to Sky High Towers, then you should buy 10 to 14 streets before upgrading (depending on how much you have to pay for the streets). I’m finding that $10M+ streets cost more than $1B in trade, so I’ll probably stick around 10 to 12 streets.

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5 ATColt October 16, 2009 at 6:16 am

Lets assume, you make an income of INC pre-taxes. Lets further assume you have k streets. Then your net-income would be
INC*(1 – (k-5)*0.03)
If you buy another street and build houses on it, making x more income pre-taxes, your net-income will change to
(INC + x)*(1 – ((k-5)+1)*0.03)
Obviously, a new street is worth it, if x manages to be big enough so that the second calculation is greater than the first. Doing the math yields
x > 3*INC/(100 – (k-4)*3)

Meaning, if your income is low and you have only few streets, buying another one pays of with ease.
On the other hand, if you consider selling a street that gives you a rent value of x, a similar computation results in a breakeven point, when
x < 3*INC/(100 – (k-6)*3)

Note that the formulas only make sense for a certain number of streets, i.e. above 5 streets and below 38/39 streets. Note also that there is no assumption on the value of possible Chance Cards included, its the plain market value.

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6 MonopolyHQ October 17, 2009 at 5:35 pm

nice work, yup that’s another way of putting it all. again, only works to a point, theoretically i’ve read 19 or so streets – really depends how much you’re maximizing each street as well.

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7 FinancialCrema October 16, 2009 at 11:34 pm

What about back taxes / lax accountant percentages. If %m of the randomly applied tax, which is at least partly a function of total asset value, is > than cash on hand, are you driven into bankruptcy? Do you have to make sales? Is this even possible, or is %m also partly a function of cash on hand?

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8 Martin October 17, 2009 at 8:59 am

The chance card penalties depend only on the current rent, I think 5% to 25%.

Yes, you get a $0 fine if you don’t earn any rent, I’ve gotten one yesterday.

You cannot get into negative cash, if your money is lower than whatever percentage of rent a chance card would steal you won’t get that chance card. Anyone reporting negative cash got it fixed by a reload, it was just his confused browser. That’s the only correlation between current cash and chance cards.

Oh btw, did you know you can get chance cards from building while being broke? Apparently the server first assigns you a chance card, then checks your balance. If that chance card gave you 100/250/500k cash it will go ahead and build the building, provided it’s a cheap one.

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9 MonopolyHQ October 17, 2009 at 5:34 pm

wow, haven’t come across that one, interesting tot know!

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10 rick October 17, 2009 at 10:19 pm

Can anyone help me fix a problem I have while selling buildings? I can only delete one at a time then I have to refresh game and re sign on each time otherwise when I click on the cross for prop. details there is no response. I figure is a cashe issue, but none of my attempts to refresh w/o logging back on have worked. Help.

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11 MonopolyHQ October 21, 2009 at 2:46 pm

besides deleting one at a time are you using a script? if not you should check out the tools section of this site. otherwise, it maybe becauase of the current game-wide glitch…

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12 mcs-stats November 6, 2009 at 2:55 pm

Hi everyone,

We just created a tool that allows you:

- View initial streets value.
- Rent.
- Next day income.
- Taxes calculation.
- # Bonuses / Hazards
- More coming…

You can find it @ http://mcs.vertigoproject.net

Hope it helps you on having a good strategy,

Greetings,

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