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Thursday, September 15, 2016

PROP TAX LOOP HACKS

What your family gave you, the tax man can still take away.

ED GAUTHIER


First let's dispose of the disclaimer: I'm not a licensed or bonded financial adviser, real estate agent, contractor, or even lawyer. Sure, I've taken classes in most of that stuff, but what I did many years ago really doesn't count. What happened in college, stays in college.

Anyway, the following property tax loophole info goes out to the ancient majority, meaning those having a few extra bucks who will soon be approaching retirement (and beyond) and may have a few concerns about their future and/or might be puzzled as to why certain taxes seem to be eating up their money like a ravenous devil dog.

(Sorry, young people, but unless there turns out to be any social security or other significant chucks of money in your future, you're in the vast minority here. You can hang around with the grownups, but no doubt you'll get bored and start missing your little portable phone thingies.)

Each year tangible "real property" which includes houses, cars and boats are arbitrarily tax appraised, and based on that, homeowners must likewise pay said tax annually. (Some areas even require this every half year.)

Early last century, it started out being based only on what was originally paid for the property, but that didn't last too long after local governments got tired of demanding what seemed like only 10 bucks per year, if you get my drift.

Having a great grandparent will you a long since paid off house very much irritates most council members, especially those who are more firmly than usual in the pockets of greedy land speculators.

Your comfortable old rambling ranch house makes those future mall developers - and their bulldozer drivers - very uncomfortable indeed.

The result is having your 401K type life savings account, monthly social security funds, checking account and savings account drained in an ultimately failing effort to pay this tax, until you eventually also lose said house, car and boat, etc., anyway.

As it is in the world of betting, the odds are always tilted in favor of the gambling house, not the gambler.

However, stocks and bonds are not considered to be "real property," so keep any investment savings in safe stocks and bonds.

Therefore do not buy said house, car or boat. Instead just rent a modest property using social security money only. Because renters cannot be property taxed and expected to pay for resulting bills. Only their property-owning landlords are required to do so.

And if you cash out your 401K type savings after retirement, put it into a Roth IRA or regular savings account in your bank, which also cannot be property taxed.

Until far better property tax laws are put in place of the current scam system we have now, we're forced play a little dirty ourselves, thus putting far less money into governmental and real estate company coffers. Well, they showed no mercy to us, so why should we give them a break?

The above may sound like fairly basic financial common sense. But you'd be surprised at how many people have very little clue about these things, nor do they have any particularly strong desire to find out such facts.

So they wind up being scalped on an annual (or semi-annual) basis. Then later on they wonder what the heck happened to their poor beat-up wallet.

Then they also blame media types like me for not writing about it in a column first, to warn them ahead of time. Well, those who needed said warning have now been warned. So mission accomplished.

Now gentlemen, re-start your financial engines!