It's kinda both. The tax increase on each property is rather small, but it increases for each property. I don't pay much attention to it, but I think it goes up like 5 for each property past 3? Something like that. Anyways, if you have like 7 properties and add one more, your tax increase alone is like 40 tax certs, which is 1600 LP. I have 7 right now, since I recently demo'd one. But, with 8, my farmhouse tax was 60, large farms were 40. The only way I can keep up with it is by buying labor pots from the AH, since they are so cheap right now thanks to gold sellers.
For most people, I don't see much reason to have more than say, 1 large farm, 1 farmhouse, or 2 large farms and a house.
