I'm a Realtor. Ask me anything

[Matt Harper]

4Q said:

They’ve had a B2 visa for 15+ years and only done this a couple of times without issue. The Villages is a little bizarre but they’re in their 70’s and in a fully inclusive community with loads going on, something I don’t think exists anywhere else in the world. I think “freak show” is a little unfair, it’s mostly oldies making the most of their twilight years and I love visiting even though I’m only early 50’s.

I'm sorry - the documentary I referenced leaned it toward the 'freak-show' nomenclature - it looks at the less conventional inhabitants of that strange environment. That said, I feel that any kind of "planned community" - examples being Seaside (FL pan-handle), Celebration, Avalon Park are all way too contrived and odd, as a result.

I'd be interested to hear what Matt (Mr Moose) thinks about these types of communities, from a realtors perspective.

I hope your parents continue to enjoy their time here - just be careful with CBP, if they plan to test the limitations of B2.

[The Moose]

Stigproducts said:

The Moose said:

Not quite! The amount of money you paid for the house doesn't have any bearing on the tax bill.

It does. As someone else said, it depends on where in the US this is
example
"Property taxes in California are limited by Proposition 13, a law approved by California voters in 1978. The law has two important features.

First, it limits general property taxes (not including those collected for special purposes) to 1% of a property’s market value. And secondly, it restricts increases in assessed value to 2% per year. These two rules combine to keep California’s overall property taxes below the national average, which in turn keeps your bills low.

The average effective property tax rate in California is 0.73%. This compares well to the national average, which currently sits at 1.07%California property taxes are based on the purchase price of the property. So when you buy a home, the assessed value is equal to the purchase price. From there, the assessed value increases every year according to the rate of inflation, which is the change in the California Consumer Price Index. Remember, there's a 2% cap on these increases.

This means that, for homeowners who have been in their house for a long time, assessed value is often lower than market value. The same is true of homeowners in areas that have experienced rapid price growth in recent years, such as San Francisco and San Jose.."

The Moose said:

Also the reason to keep the big house is to avoid paying the CGT! I'm not a tax guy but I understand that when you die and your heirs inherit, their basis in the property is the value at the time of inheritance. So in your example:
Buy at $75k
Now worth $3m
Die & kids inherit
Kids sell for $3m
Kids pay no (federal) CGT
Kids pay no (federal) IHT if estate is valued at less than $23.x million (for a husband and wife)

I think I said that, maybe from a slightly different angle but my understanding is (and I am not 100% sure on this, I'll admit) that you can sell a house but as a married couple, if you make more than 500k "profit" you get taxed on the excess.

On the first point, as I said, I'm not an expert in CA property, but I was under the impression that they made a differentiation between an acquisition value and a purchase value. I am happy to bow to your superior knowledge of that particular market however.

On the CGT/IHT taxation front - you're right about the $500k - right now you're able to make $500 per couple every 2 years on your primary residence and not get taxed on it. What I'm saying however is that by waiting until you die, your family can actually avoid all CGT. What I thought of after I wrote that post is that I don't know if you used the unified tax credit system to give the property to your heirs before you died, if their basis for CGT purposes would be increased as if they'd died.

[Ayahuasca]

Are you the Moose who flew planes in Indonesia ?

[The Moose]

Ayahuasca said:

Are you the Moose who flew planes in Indonesia ?

Not that I recall

[Ayahuasca]

The Moose said:

Ayahuasca said:

Are you the Moose who flew planes in Indonesia ?

Not that I recall

How many Mooses are there?

[h0b0]

NJ property taxes can be over 3% of assessed value. At my last house I was paying 3.6%. By moving 6 miles down the road I dropped to 1.4%.

[MitchT]

The Moose said:

Stigproducts said:

MitchT said:

I'm a British national living in the UK with no current opportunity to live in the US, but I'm curious...

How is property tax calculated? I understand that, for example, it's 0.7% in California, therefore, you pay 0.7% of the value of the property, annually, as a tax. However, how is the value of the property determined? Is it the price you purchased it for, or its value on a specific date in the past, or something else? If it's based on the value of the property on a historic date then what if it's a new build that didn't exist on the date in question?

The price you purchased it at. However even then there are increases year on year because other costs are included like paying for police which isn't fixed.

I'm not sure that percentage is right, but it's around that.

It creates an interesting situation for old people, to a certain extent it forces them to remain in a large family home until they die
-very rough numbers, pick them apart by all means but the principal stands
Couple lives in house bought for $75k in 1980, now worth 3 million ,property tax is about $1k per year.
If they downsize to a smaller property they will have to pay capital gains because the allowance is only 500k for a married couple, that leaves them with 2million. Then they buy a smaller house for 700K, but now their property tax is 10k a year but their income is fixed so that money has to come from house sale proceeds.
So they would burn up the equity and end up in a smaller house, with limited savings, for nothing.

Instead, stay in the massive house until you die, and have something to leave your children.

To go back to your question. That couple paying 1k a year will be living next door to some poor bd working his arse off to pay property tax of $30k+ a year as well as a mortgage on 3 million dollar house.

Not quite! The amount of money you paid for the house doesn't have any bearing on the tax bill.

Also the reason to keep the big house is to avoid paying the CGT! I'm not a tax guy but I understand that when you die and your heirs inherit, their basis in the property is the value at the time of inheritance. So in your example:
Buy at $75k
Now worth $3m
Die & kids inherit
Kids sell for $3m
Kids pay no (federal) CGT
Kids pay no (federal) IHT if estate is valued at less than $23.x million (for a husband and wife)

Sounds even more complicated than I imagined!