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PerryChase
ParticipantChris, I pretty much agree with you.
Where I differ is that the size of a purchase, in relation to net-worth, is very relevant to one’s financial well-being.
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seattle-relo, it might be worth talking to an attorney about the problems in your house.
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rustico, I believe it’s helpful to look at housing in terms of cost-of-shelter. I could’ve sold my house, invested the money and rent. I’m lucky that I bought a while ago and that my property taxes are low. I would have to pay through the nose to rent an equivalent house. I think that I’m better off staying put.I want to keep my low property tax basis for when I’m old.
“California passed two propositions that can help people 55 and older avoid a major property-tax jolt when they move. Thanks to Proposition 60, which was passed in 1986, those seniors can transfer their old property tax basis to a home bought (or newly constructed) within the same county, and pay taxes at the same low rate. Proposition 90, which was passed in 1988, lets seniors do the same thing when they move between certain counties. (A third proposition, 110, extended those rights to the severely disabled of any age).”
By saving in properties taxes, I could afford to take trips to Europe every year when I’m old and grumpy.
http://www.nctimes.com/articles/2005/09/07/news/columnists/by_george/18_00_079_6_05.txt
ParticipantChris, I pretty much agree with you.
Where I differ is that the size of a purchase, in relation to net-worth, is very relevant to one’s financial well-being.
——–
seattle-relo, it might be worth talking to an attorney about the problems in your house.
——–
rustico, I believe it’s helpful to look at housing in terms of cost-of-shelter. I could’ve sold my house, invested the money and rent. I’m lucky that I bought a while ago and that my property taxes are low. I would have to pay through the nose to rent an equivalent house. I think that I’m better off staying put.I want to keep my low property tax basis for when I’m old.
“California passed two propositions that can help people 55 and older avoid a major property-tax jolt when they move. Thanks to Proposition 60, which was passed in 1986, those seniors can transfer their old property tax basis to a home bought (or newly constructed) within the same county, and pay taxes at the same low rate. Proposition 90, which was passed in 1988, lets seniors do the same thing when they move between certain counties. (A third proposition, 110, extended those rights to the severely disabled of any age).”
By saving in properties taxes, I could afford to take trips to Europe every year when I’m old and grumpy.
http://www.nctimes.com/articles/2005/09/07/news/columnists/by_george/18_00_079_6_05.txt
Participantlostkitty, my best buddy is a pilot so I know about the airline industry. He loves to fly more than anything and he doesn’t have a family to support. He was a First Officer with a Major and now he’s a Captain with a Minor and his pay is 1/3 what it used to be. He’s going to interview with Emirates in Dubai. I think that living in Dubai and flying the European routes would be fun.
Participantlostkitty, my best buddy is a pilot so I know about the airline industry. He loves to fly more than anything and he doesn’t have a family to support. He was a First Officer with a Major and now he’s a Captain with a Minor and his pay is 1/3 what it used to be. He’s going to interview with Emirates in Dubai. I think that living in Dubai and flying the European routes would be fun.
ParticipantMy European friends think that we’re nutcases with flags on our front porches, God Bless after every speech, and my-child-is-an-outstanding-student bumper stickers.
We have single issue personalities so we are more malleable sheep for the powers that be. We don’t think much about life (that’s how God made it so that’s the way it is) but the advantage of that is that we’re not distracted from working so we’re richer and have more stuff to consume. Is it better to be dumb, rich and happy? Or intellectual, poor and miserable? Isn’t it all a state of mind anyway?
ParticipantMy European friends think that we’re nutcases with flags on our front porches, God Bless after every speech, and my-child-is-an-outstanding-student bumper stickers.
We have single issue personalities so we are more malleable sheep for the powers that be. We don’t think much about life (that’s how God made it so that’s the way it is) but the advantage of that is that we’re not distracted from working so we’re richer and have more stuff to consume. Is it better to be dumb, rich and happy? Or intellectual, poor and miserable? Isn’t it all a state of mind anyway?
ParticipantSD Realtor, you’re almost right 🙂
You can appeal your property taxes to then current market value if the market is lower than the price you paid.
However your neighbor who bought at the very low is capped at purchase price + 2% compounded annually.
Say the neighbor buys in 2012 for $350k. If you appeal, you can have your house reassessed to $350k that year. If the following year, in 2013, prices move higher to $400k (still below your purchase price of $550k), the county can assess you based on $400k. You neighbor, however will be capped at $350k + 2%, or $357k. Your taxes will be $4800 ($400k @ 1.2%) and your neighbor’s taxes will be $4284 ($357k @ 1.2%). The difference of $516 is an air-ticket to Europe in the winter and the market hasn’t even recovered to your purchase price yet — you’re still upside down by $150k.
ParticipantSD Realtor, you’re almost right 🙂
You can appeal your property taxes to then current market value if the market is lower than the price you paid.
However your neighbor who bought at the very low is capped at purchase price + 2% compounded annually.
Say the neighbor buys in 2012 for $350k. If you appeal, you can have your house reassessed to $350k that year. If the following year, in 2013, prices move higher to $400k (still below your purchase price of $550k), the county can assess you based on $400k. You neighbor, however will be capped at $350k + 2%, or $357k. Your taxes will be $4800 ($400k @ 1.2%) and your neighbor’s taxes will be $4284 ($357k @ 1.2%). The difference of $516 is an air-ticket to Europe in the winter and the market hasn’t even recovered to your purchase price yet — you’re still upside down by $150k.
ParticipantChris is right that a house is not an investment, but, value is in relation to other things that money can buy.
Chris is apparently a wealthy investor and he’s certainly not giving up trips to Europe in order to own his house. His lifestyle would not be affected by a 30% to 50% drop. He probably would not give up anything else that he could buy. Well, perhaps a fractional ownership airplane.
relo, if you’re giving up trips to Europe to afford your house, then you’ve definitely made a mistake.
But once you make a mistake, it’s best to call it water-under-the bridge and move on to other things. But it’s important to recognize the mistake to you don’t repeat it. Don’t delude yourself by thinking that you’ll be “OK.”
Chris seems to say that you should work harder and earn more money to make up for your buying decision. What are you giving up when you work harder?
Do you want to be a mortgage slave?
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458487&in_page_id=1770&ParticipantChris is right that a house is not an investment, but, value is in relation to other things that money can buy.
Chris is apparently a wealthy investor and he’s certainly not giving up trips to Europe in order to own his house. His lifestyle would not be affected by a 30% to 50% drop. He probably would not give up anything else that he could buy. Well, perhaps a fractional ownership airplane.
relo, if you’re giving up trips to Europe to afford your house, then you’ve definitely made a mistake.
But once you make a mistake, it’s best to call it water-under-the bridge and move on to other things. But it’s important to recognize the mistake to you don’t repeat it. Don’t delude yourself by thinking that you’ll be “OK.”
Chris seems to say that you should work harder and earn more money to make up for your buying decision. What are you giving up when you work harder?
Do you want to be a mortgage slave?
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=458487&in_page_id=1770&ParticipantNow that you’ve made the mistake, it’s hard to undo. Try to list the house at a high price and see if you find some greater fool. Offer to give cash back to the buyer to the maximum possible. You might be able to get out. If not, you have no choice but to hunker down.
On property taxes, no, I’m not incorrect. I was attempting to debunk the argument that if you hold long term and that when you market recovers, you’ll be OK. Certainly not as far as property taxes are concerned.
Say the market troughs in 2012 and takes off again and by 2020 the house is worth $800k. In that case, you’ll definitely pay $4004 more than the neighbor who buys at $350k in 2012. That difference will grow as time goes by.
Yes, you can temporarily appeal your property taxes, but as soon as prices get back to above purchase price + 2% compounded annually, the county will adjust you right back to the high basis (Proposition 8).
http://www.sdarcc.com/arcc/docs/calrev.pdfPersonally, I would not be happy to pay $4,000 more in property taxes than my next door neighbor based on time and price of purchase. I’d rather donate the money to charity.
ParticipantNow that you’ve made the mistake, it’s hard to undo. Try to list the house at a high price and see if you find some greater fool. Offer to give cash back to the buyer to the maximum possible. You might be able to get out. If not, you have no choice but to hunker down.
On property taxes, no, I’m not incorrect. I was attempting to debunk the argument that if you hold long term and that when you market recovers, you’ll be OK. Certainly not as far as property taxes are concerned.
Say the market troughs in 2012 and takes off again and by 2020 the house is worth $800k. In that case, you’ll definitely pay $4004 more than the neighbor who buys at $350k in 2012. That difference will grow as time goes by.
Yes, you can temporarily appeal your property taxes, but as soon as prices get back to above purchase price + 2% compounded annually, the county will adjust you right back to the high basis (Proposition 8).
http://www.sdarcc.com/arcc/docs/calrev.pdfPersonally, I would not be happy to pay $4,000 more in property taxes than my next door neighbor based on time and price of purchase. I’d rather donate the money to charity.
ParticipantI think that Patrick has a good site on the reason why NOT to buy. I check it everyday for news.
ParticipantI think that Patrick has a good site on the reason why NOT to buy. I check it everyday for news.
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