I like it! But the image I had in my head as I typed was this one:
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This is another problematic issue for the 55+ housing: when something happens to the grandparents – serious medical issues or actual death – there’s no option for the kids or grandkids to move in; they HAVE to sell, and as quickly as possible so as to not be responsible for monthly costs for too long. If you’ve built up equity over your life, this is a great way to piss it away instead of passing it on to your descendants.
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In Arizona until recently they would win – nd that’s not speculative, it’s history. Wrong grass, no grass, wrong trees, wrong shrubbery. Native, low water use species strictly forbidden. No clotheslines, no rooftop solar.
That finally got to the point that the laws addressed it.
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This is a common issue in a lot of places (and in part led to Prop 13 in CA which has had numerous deleterious knock-on effects). It also came up for a good friend of mine’s father who retired about 10 years ago, after which his neighborhood in Savannah GA became very popular.
Since then I thought there was a much more appropriate fix for retirees - lock in tax payments at the rate when you are 60 or 65 for the homeowner or even suspend them altogether - provided that a record is kept of the difference between the payment made and the payment if the lock-in had not occurred, and the delta is due on sale or death.
I have never heard this raised by any politicians in talking about this issue which means it’s a really great idea or a really stupid idea and I haven’t been able to figure out which.
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I’m not sure about paying the delta on death, it’s possible there’s no money to pay it and now the estate is in debt with no cash.
But, worse, it can be gamed. Didn’t someplace in CA try to address this by locking in the assessed value, and hence the tax amount when combined with the restrictions on rate changes, unless the property was sold? Sounds good, prevent a bubble market from forcing you to sell to afford the taxes. Reality, wealthy people made one sale to an LLC, setting the price and tax amount forever. Never sold the property again, instead sold the LLC that owned it. No sale, no change in tax amount. The financial games people with money can play. Just own an LLC valued at $1.2M that owns a house assessed at $200K. I’m sure I read it here.
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You might have to sell the house on death of the homeowner, that’s true. I would say if the house sale doesn’t satisfy the tax proceeds then either the tax rates are far out of whack or the decedent won the long-life lottery. Either way I suppose you could make it non-recourse outside of the property itself.
You are right about California, but it’s usually done with a trust. Obviously you can’t prevent all gamesmanship but this particular loophole seems fixable. (Full disclosure: I own a home in California that is in fact in a trust, and still think the laws should not permit this kind of shenanigans.)
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In PA, they are trying to eliminate property taxes for everyone except businesses, and replace the funding through income tax changes and budget cuts/reallocations:
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Interesting. Looks like several of the proposed plans are trying to trade property tax relief for an increase in sales taxes which are generally even more regressive and therefore difficult for people on fixed incomes. At least two are “funding sources still being calculated” which I read as “difficult to make this work with math”.
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In NJ, it’s done with hobby farms - a loophole the state has been trying to close since a few infamous cases made the news:
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True. Increases in income tax seem to be more acceptable, but any change that makes it seem more equitable is likely to pass if put on the ballot as a question. Even though landlords make sure rental rates will cover their property tax payments, renters are not directly billed. It gives a false impression about their contribution to the school districts.
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Surely this is Dickensian-level terrible, but didn’t the grandparents buy the house knowing they were in a community that had a HOA? Isn’t that part of the reason why they bought it? They were seniors and wanted to restrict other neighbors from ever having non-seniors… oh, but, now they want to change the rules for themselves.
Easier said than done, unfortunately.
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Assuming he was in his thirties in 1985, Cobra Commander should be the right age.
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Most of my fellow Americans only seem to care about being forced to do things when the orders come from an organization to which society attaches the label of “government.” Corporations, churches, and HOAs can be as dictatorial as they want.
It makes no sense to me either. I do agree with the other commenter who pointed out that HOAs are usually most draconian in areas where the local government has abdicated its responsibilities in terms of planning, zoning, and basic services in the community.
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There are some principled libertarians out there. Unfortunately the ones I know seem to be under the impression that most humans are much smarter, more conscientious, and able to predict their own and others’ future actions and those actions’ consequences, than is actually the case.
I haven’t seen any. Libertarianism appeals to egotism. Nobody picks up the trash in Galt’s Gulch because they are too busy feeling superior to everyone else.
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Admittedly they’re rare, much rarer than the type you are used to.
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OK. On your word I will treat them like giant squid. I know they are out there somewhere but I have never seen one live, up close.
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Yeah this “not my monkeys” issue is one of my major beefs with the libertarian crowd, because the monkeys in question will grow up, if we are lucky, to be the fire fighters, airline pilots, nurses, dentists, housepainters, engineers, artists, teachers, cable installers, computer programmers, butchers, pharmacists, barbers, farmers, fruit pickers, construction workers, doctors, cooks, foresters, air conditioner installers and repairers, air traffic controllers, car mechanics, inventors, plumbers and all those other occupations and workers that we all need to live in an operational society, to the extent that our society can still be called functional.
I thank you for recognizing the importance of keeping schools–yea verily even public schools–funded. With a screenname like “MadLibrarian” I suppose it’s natural to recognize that cutting our future off at the knees (by turning our collective backs on educating the next generation) is first-order idiocy or cynicism or heywhynotboth?.
My partner and I replicated at below-replacement-rate. We fund other kids’ futures through property taxes and other taxes. If only we could direct all monies to education in some ironclad way…
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I hadn’t heard about the LLC trick, but yes, in California, the property is only reassessed when sold, limiting tax increases per year, and then back taxes have to be paid when it is sold.
I would think that sale of a LLC holding property would trigger a reassessment though. In fact a quick search and I’m reading that LLCs are not recommended, because transferring a majority interest in an LLC to a child on death triggers a reassessment on the full value, where transferring directly would be exempt.
