Winning the lottery and whining about it [Archive]

CBL4

20th June 2005, 03:08 PM

Bernadette is a 76 year old widow who has hit the lottery - the property lottery. 30 years ago she inherited a dumpy three bedroom apartment and she just discovered it is now worth 1,200,000 euros! Of course, she is thrilled and thinking about how her grandchildren will get to go to the school of their choices and trying to decide which charities she should.

Just kidding, she is whining because she has to pay 2000 euros in tax per year! If she did a reverse mortgage, she has enough equity to pay the tax for the 600 years. Or she could probably find someone who would pay her 3000 euros a year in exchange for the title to the house when she dies. (Of such a person would go to jail for taking advantage of her.) Or she could sell her house and spend the money on whatever she wants.
I worked hard all my life, I saved for my retirement, and this is what I get," she said, waving the form from the tax authorities. "It's just terribly unfair. I'm not rich, just look at how I live. All I have is this apartment." http://www.guardian.co.uk/international/story/0,,1508394,00.html

The even more absurd thing is that a newspaper would feel sorry for her. She's a millionaire and we need to feel sorry for her. What a joke.

CBL

WildCat

20th June 2005, 03:18 PM

Originally posted by CBL4
Bernadette is a 76 year old widow who has hit the lottery - the property lottery. 30 years ago she inherited a dumpy three bedroom apartment and she just discovered it is now worth 1,200,000 euros! Of course, she is thrilled and thinking about how her grandchildren will get to go to the school of their choices and trying to decide which charities she should.

Just kidding, she is whining because she has to pay 2000 euros in tax per year! If she did a reverse mortgage, she has enough equity to pay the tax for the 600 years. Or she could probably find someone who would pay her 3000 euros a year in exchange for the title to the house when she dies. (Of such a person would go to jail for taking advantage of her.) Or she could sell her house and spend the money on whatever she wants.
http://www.guardian.co.uk/international/story/0,,1508394,00.html

The even more absurd thing is that a newspaper would feel sorry for her. She's a millionaire and we need to feel sorry for her. What a joke.

CBL
It's the same crap you hear from the anti-gentrification crowd. "This poor senior citizen now can't afford her property taxes". The place is paid off, get a reverse mortgage already! Not only will she get income on top of the increased taxes, she gets to live in a safe neighborhood for once in her life. Stop the freakin' whinin' and cryin'!

Come to think of it, it's really anti-gentrification that is at the root of all this. Apparently, slums should stay slums. Slums can expand all they want, and that's ok apparently. But if a slum suddenly becomes a desireable place to live, the activists see a victim in every house.

Bjorn

20th June 2005, 03:34 PM

Originally posted by CBL4
Just kidding, she is whining because she has to pay 2000 euros in tax per year!

The even more absurd thing is that a newspaper would feel sorry for her. She's a millionaire and we need to feel sorry for her. What a joke.

CBL Well, she cannot afford to pay it and is cash poor.

Her annual tax bill, nearly â‚¬2,000, represents almost three months' pension. This, of course, is because property prices have gone up far more than the average salary or pension - something we are making laws against in the US:

Nevada:

The agreement will cap the maximum tax bill increase for owners of commercial and other types of property at 8 percent in Clark County. The 3 percent increases are limited to single-family, owner-occupied residences under an economic hardship provision in the state constitution. Illinois:

Under the bill, counties could cap annual property tax assessment increases for residential properties at 7 percent. Idaho:

A law was passed in 1995 setting a 3% cap on annual increases in the amount of property tax revenue used to fundTexas:

Legislation to reduce the cap on annual increases in property appraisals from 10 percent to 5 percent was approved Thursday by the House Ways and Means Committee.Many if not most states do it to prevent what is considered unfair taxes.

Activists? In Texas? :p

State Rep. Dwayne Bohac, R-Houston, the sponsor of the appraisal legislation

Manny

20th June 2005, 03:43 PM

Originally posted by WildCat
It's the same crap you hear from the anti-gentrification crowd. "This poor senior citizen now can't afford her property taxes". In fairness, at least some of what you hear from some of the more responsible anti-gentrification crowd is "This poor senior citizen now can't afford her rent." And I think that in the '70s and early '80s many places did do a poor (heh) job of creating a culture of low and moderate-income ownership before investing millions of the public's dollars in renewal. That benefitted property owners over residents. Happily, the current trend seems to be a better one, where at least some or many residents of areas targeted for improvements get opportunities to share in the upside in exchange for some sweat equity.

pgwenthold

20th June 2005, 03:43 PM

Originally posted by Bjorn
Well, she cannot afford to pay it and is cash poor.

Then she should sell the house and move into a place she can afford.

For starters, she will have a lower tax. Second, she will have a boatload of extra cash from the sale of her mansion. Both problems solved.

WildCat

20th June 2005, 03:50 PM

Originally posted by Bjorn
Well, she cannot afford to pay it and is cash poor.

This, of course, is because property prices have gone up far more than the average salary or pension - something we are making laws against in the US:

Nevada:

Illinois:

Idaho:

Texas:

Many if not most states do it to prevent what is considered unfair taxes.

Activists? In Texas? :p
I don't know about the other states, but the proposed "reform" is a joke here in Illinois. Note that reference to "assessed value". It's the biggest fudge factor ever invented. And even if they actually did reform it, Illinois communities (property taxes are local taxes, after all, none goes to the state) would still have some of the highest rates around.

Bjorn

20th June 2005, 04:01 PM

The problem, as I see it, is that in some (many) states you have a bunch of old people living in places where property values have skyrocketed in the last 5-10 years.

Personally, I think it's totally fair to let the owners pay property taxes based on whatever it was worth when they bought it, plus some reasonable increase per year (at a level compared to the raises in income).

pgwenthold, can you imagine all the old people being forced to sell and move?

WildCat

20th June 2005, 04:13 PM

Originally posted by Bjorn
Personally, I think it's totally fair to let the owners pay property taxes based on whatever it was worth when they bought it, plus some reasonable increase per year (at a level compared to the raises in income).
That's nice, but how would you then fund schools, police, fire, etc.? BTW, about 50% of my property tax goes to schools.

Bjorn

20th June 2005, 04:17 PM

Originally posted by WildCat
That's nice, but how would you then fund schools, police, fire, etc.? BTW, about 50% of my property tax goes to schools. It's not like people stop paying property taxes, but the increase is limited to a certain percentage per year.

In some areas, homes have doubled in value since 2000. It's hard for me to see that the costs you're mentioning should go up at the same rate.

WildCat

20th June 2005, 04:33 PM

Originally posted by Bjorn
It's not like people stop paying property taxes, but the increase is limited to a certain percentage per year.

In some areas, homes have doubled in value since 2000. It's hard for me to see that the costs you're mentioning should go up at the same rate.
FYI, a doubling of the homes market value does not equate to a doubling of the homes' property tax. Cook County has a freeze on assessed values for senior citizens, but it doesn't mean their taxes won't rise. This is because any local body that is funded by property taxes can always raise their levy. Bottom line is, regardless of a homes value, the local gov't will still have to raise enough tax revenue to get the money the want (Ha! Almost wrote "need". ;) ) And you can bet they'll get it! Remember, I'm just talking about Cook County, IL (http://www.cookcountyassessor.com/) so YMMV.

Sorry for the derail, back to France. How does it work there?

billydkid

20th June 2005, 04:52 PM

Ok, yes her property appreciated greatly in value. You all just naturally assume that property tax is somehow just and you assume that a person should be compelled to have to sell their home if they can't afford to pay the property tax in order to live there and that they will be able to find a buyer who will pay the assessed value. It was common up here when property values sky rocketed for a while for people's property taxes to sky rocket and for people to lose their homes for taxes.

In some cases "undesirable" types were deliberated over assessed with the express intent to drive these people out of the area. Clearly, these people were never going to get anything like the assessed value of the homes - often they were rundown shacks, but they had potential commercial value and they were assessed based on that potential values. It's all fine to be smug and self satisfied until you find yourself in such a position. You know, this stuff happens to people without connections and people who often do not have a clue or the resources to defend their rights.

CBL4

20th June 2005, 04:54 PM

The problem, as I see it, is that in some (many) states you have a bunch of old people living in places where property values have skyrocketed in the last 5-10 years.
...
can you imagine all the old people being forced to sell and move?The place I am living is becoming gentrified - e.g. all the drug dealers are being kicked out and replaced by decent people. This means that some people are sitting on $100,000 in equity that they did not have 3 years ago. They are whining because their property taxes have gone up by $300-400 per year. Let's make a rash assumption and assume that their property taxes have gone up by $1000 a year. They have the equity to pay for it for 100 years. How are they being kicked out?

BTW, I realize that equity does not translate directly into cash flow but in extreme situations like this, it is very easy to make it do so.

CBL

Bjorn

20th June 2005, 04:57 PM

Originally posted by WildCat
FYI, a doubling of the homes market value does not equate to a doubling of the homes' property tax.Well, if the assessed value was adjusted acccording to the real value and the property tax percentage stayed the same, it would. Increases in both of the two are limited to a certain percentage in some states.

Sorry for the derail, back to France. How does it work there? With the opening post in mind, it doesn't? :)

HarryKeogh

20th June 2005, 05:02 PM

it's time like this I wish I really understood how a reverse mortgage works...

quick, to the search engine!!! (sounds more dramatic than "let me google it")

WildCat

20th June 2005, 08:25 PM

Mycroft

20th June 2005, 09:43 PM

Originally posted by HarryKeogh
it's time like this I wish I really understood how a reverse mortgage works...

quick, to the search engine!!! (sounds more dramatic than "let me google it")

Essentially it's structured like an anuity payment, with the owner being paid an amount amortized so that the balance of the mortgage will equal the value home when they reach 100, assuming little or no apreciation of the home. There are other types structured that provide no payments, but create a line of credit on the home that grows as the person grows older.

Often these things are used to pay existing standard mortgages, and are structured so the homeowner gets no payment at all, but no longer has a mortgage payment either.

When the owners are no longer able to live the home, either because they die or have to move on to assisted living, their heirs inherit the home and deal with the mortgage as they would any other mortgage, either by refinancing it or by selling he home, paying the mortgage and keeping the remaining equity. I don't know about overseas, but in the US these kinds of mortgages are "non recourse loans" which means that somehow if the balance on the mortgage exceeds the value of the home, the lender can only collect up to the value of the home.

Hope that answers your question. I'm not always as clear as I can be when I talk shop.

Jas

21st June 2005, 08:55 AM

Sell the home, make your cash, get over it. What are they supposed to do...reduce property taxes based on what you earn, not the value of what you own? My condo has doubled in price since I bought it, and the property taxes have gone up a considerable amount as a result, but that's just how it works.

Granted, it is a problem in some areas. My dad lives in Mexico, and the gov't is trying to figure out a way to tax the guys who come down there to retire, differently than they would Jose who's lived there all his life, makes $30/week, and has discovered the the land his tin-can hut is sitting on is now worth a quater of a mil.

CBL4

21st June 2005, 09:36 AM

Cook County has a freeze on assessed values for senior citizens.Why should young people have to payer higher taxes than senior citzens? The elderly are disproportional rich in the US. They are also in some senses disportionately poor. I would have no problem giving poor seniors a break but I do not see why Teddy Kennedy would deserve a break.

CBL

Bjorn

21st June 2005, 01:04 PM

Originally posted by Jas
Granted, it is a problem in some areas. My dad lives in Mexico, and the gov't is trying to figure out a way to tax the guys who come down there to retire, differently than they would Jose who's lived there all his life, makes $30/week, and has discovered the the land his tin-can hut is sitting on is now worth a quater of a mil. Substitute 'Mexico' with Southern California and 'Jose' with John and you have decribed what has happened to many old people here.

headscratcher4

21st June 2005, 01:07 PM

The only clear solution is to kill the elderly and confiscate their property....:D

CBL4

21st June 2005, 01:12 PM

Substitute 'Mexico' with Southern California and 'Jose' with John and you have decribed what has happened to many old people here.Damn, my father's name is Ralph and I guess he retired in the wrong place. He would have loved to be able to sell his house and travel around the world.

CBL

Bjorn

21st June 2005, 01:39 PM

Originally posted by CBL4
Damn, my father's name is Ralph and I guess he retired in the wrong place. He would have loved to be able to sell his house and travel around the world.

CBL If he isn't, it's not because of where he retired, but where he lived before that. He can't possibly be from anywhere near the ocean in my county. :)

WildCat

21st June 2005, 03:35 PM

Originally posted by CBL4
Why should young people have to payer higher taxes than senior citzens? The elderly are disproportional rich in the US. They are also in some senses disportionately poor. I would have no problem giving poor seniors a break but I do not see why Teddy Kennedy would deserve a break.

CBL
There is an income limit to qualify for the freeze, of course this means little if you're retired. You could be sitting on millions in assets and still qualify simply because you don't have much income. Shows you what voting can do!