Investment Options ?

[longislander]

In NH, 10 acres and more, can be taxed at a reduced rate, if declared "current Use"; Google it.

An additional reduction, if declared recreational use, in current use; e.g., letting snowmobilers go thru the property, etc.

You can restrict motorized vehicles and still claim current use with the low tax rate.

Actual Example for "current use":
Bought three years ago, 34 acres in Moultonborough that was in "current use" and annual town property tax was $24; not a typo ... twenty four dollars per year for 34 acres on land.

Took out of current use, a little under 2 acres for new-build house and driveway from the 34 acres. Was Taxed 10% of the assessed value of the just under 2 acres, and the rest on the property was still current use with very low tax rate.

On-going tax rate reflects just under 2 acres at regular assessed tax rate and balance of the 34 acres tax at the low current use rate.

Anyone with ten or more acres of vacant land should be looking at "current use", to pay a very reduced annual town tax.

[mswlogo]

Originally Posted by longislander

In NH, 10 acres and more, can be taxed at a reduced rate, if declared "current Use"; Google it.

An additional reduction, if declared recreational use, in current use; e.g., letting snowmobilers go thru the property, etc.

You can restrict motorized vehicles and still claim current use with the low tax rate.

Actual Example for "current use":
Bought three years ago, 34 acres in Moultonborough that was in "current use" and annual town property tax was $24; not a typo ... twenty four dollars per year for 34 acres on land.

Took out of current use, a little under 2 acres for new-build house and driveway from the 34 acres. Was Taxed 10% of the assessed value of the just under 2 acres, and the rest on the property was still current use with very low tax rate.

On-going tax rate reflects just under 2 acres at regular assessed tax rate and balance of the 34 acres tax at the low current use rate.

Anyone with ten or more acres of vacant land should be looking at "current use", to pay a very reduced annual town tax.

Maxum's point is those generous programs may disappear.

I know half a dozen families that were "taxed" out of their home in NH over the years. And I know several planning on it. They know they can't afford to stay after they retire. I don't know of any in MA.

[FlyingScot]

Originally Posted by mswlogo

I know half a dozen families that were "taxed" out of their home in NH over the years. And I know several planning on it. They know they can't afford to stay after they retire. I don't know of any in MA.

This phenomenon is often misunderstood or overstated. First, many communities have programs designed to let strapped seniors slide on taxes until their house is sold in the future. Second, although many reverse mortgages have been shown to be predatory, today there are reasonable and fair reverse mortgages that allow people to pull equity out of their homes.

Individuals need to do their own homework here, not rely on rando posters (like me). But if an older person's real goal is to stay in their beloved home, there are options available. Of course, if folks are looking at a massive run up in value, and they want the cash, that's cool too. But it's not being taxed out of one's nest.

[BroadHopper]

Originally Posted by FlyingScot

Individuals need to do their own homework here, not rely on rando posters (like me). But if an older person's real goal is to stay in their beloved home, there are options available. Of course, if folks are looking at a massive run up in value, and they want the cash, that's cool too. But it's not being taxed out of one's nest.

Partly right. The family estate on the lake was 'taxed out' in the late '90s when the state took over evaluations using the 'view' tax. Neither the state or town had options back then other than veteran status. This happens to a lot of locals.
Estate has been part of the family since 1892. Beautiful 'On Golden Pond' fishing cottage overlooking the Broads. Unfortunately, the late '90s was not the time to maximize profits as it was in a recession.

As for woodlots/farms, we made the decision to set up our farm as a non-profit trust. This saves us a lot of money. When we were hounded by developers to sell and become rich, we put the trust under the Belknap Conservatory umbrella. To us this is the best investment, preserving land for the future generations!

[John Mercier]

Originally Posted by BroadHopper

Partly right. The family estate on the lake was 'taxed out' in the late '90s when the state took over evaluations using the 'view' tax. Neither the state or town had options back then other than veteran status. This happens to a lot of locals.
Estate has been part of the family since 1892. Beautiful 'On Golden Pond' fishing cottage overlooking the Broads. Unfortunately, the late '90s was not the time to maximize profits as it was in a recession.

As for woodlots/farms, we made the decision to set up our farm as a non-profit trust. This saves us a lot of money. When we were hounded by developers to sell and become rich, we put the trust under the Belknap Conservatory umbrella. To us this is the best investment, preserving land for the future generations!

There is no ''view tax''. The ''view'' is simply part of the market value of a property like any other feature that potential purchasers are willing to pay more for.

Assessors look toward what similar properties are selling for and try to determine what the market value of any property is.

[longislander]

Then you should know that Current Use II only provides a minimal augmentation to the tax advantage... and that Current Use does not require 10 acres. It can be any size parcel that provides $2500 annually in agricultural or horticultural revenue.

Not to mention all of this is likely to change very quickly in the next few years. Much of it being unmanaged forest.

The tax advantage is great, not minimal, especially if non-agricultural. Speaking personally, the tax advantage for the 32 acres out of 34 (two for house and driveway) is very significant. How much farmland is under 10 acres?

Much of it being unmanaged forest

Which is it ... farmland or unmanaged forest?

likely to change very quickly in the next few years

Doubt it!


Can you provide the statute for Current use II?

Can you provide when the statute RSA 79-A was changed.

http://www.gencourt.state.nh.us/rsa/...TOC-V-79-A.htm

Current use is the means for encouraging the preservation of open space and conserving the land, water, forest, agricultural, and wildlife resources. Property owners with 10 or more acres of land, which are left in their natural state may apply.

https://concordnh.gov/295/Current-Use

BASICS
• Parcel must be at least 10 acres or provide $2500 in annual agriculture or horticultural products.

https://extension.unh.edu/sites/defa...76_Rep1099.pdf


What are the requirements for enrollment in Current Use?
A parcel of land that is 10 or more acres in size and is farm, forest or unproductive land. There are a few exceptions to this requirement such as: tree farms of any size, land used to grow an agricultural or horticultural products with at least $2,500 gross income per year and wetlands of any size.

http://www.nhspace.org/faq.shtml#1


https://www.nhmunicipal.org/town-cit...ral-operations

Also, view tax ...

"New Hampshire does not have a special statewide tax for properties with a scenic view. However, local tax officials may judge that a property with a scenic view is worth more money, which results in a bigger property tax bill."

"Since a home’s location impacts how much it is worth to homebuyers, a scenic view may increase the home’s value in the eyes of the tax official. If a property with a scenic view gets a higher appraisal, the property owner will have a higher tax bill. However, there is no special tax specifically for properties with scenic views. All property owners pay the same statewide property tax rate."

https://www.citizenscount.org/news/d...-have-view-tax


Please ... not the "semantics" issue to try to prove a point.

[Woody38]

100% invested in stocks and have always been even though financial advisors said I need bonds which they say yau cannot lose money on. Apparently they only refer to bonds like airports. municipals, ports and the like. All I can say is that the measley amount I invested in stocks has provided a great retirement and still continues to grow despite the sum withdrawn every year. Also own real estate and in my mind real estate is not a good investment.

___________________________________

I am a retired workaholic and continuing aquaholic

[John Mercier]

Most of Current Use is unmanaged forest.
The Recreational Discount does not add significantly to the savings after going to Current Use I.

And again, there is no view tax. It is simply based on the market value of home with a view being higher than one that is not. Basically people will pay more for the property with a view, the same way that people will pay more for waterfront. Which is what you quoted. It impacts the market value.

And the change... it is already being discuss.
https://www.nhbr.com/current-use-sys...-to-taxpayers/

''The current use program assesses forest, farm and idle or unproductive land at its current use rather than ad valorem, or fair market, value. Undeveloped parcels of at least 10 acres qualify for current use assessment. Forest covers 2,623,405 acres, or 87%, of the land in current use. The 204,353 acres of farmland account for 7% of the total and 180,698 acres of unproductive land and wetlands make up the balance.

In addition, cultivated plots of any size generating documented annual income of $2,500 from the production and sale of agricultural or horticultural produce also qualify.''

As for the recreation use discount...
It is 20% off from the Current Use I discount.
So if I have an $80,000 ten acre lot in top prime farmland, it could be assessed as high as $4250 according to the current rates. The CU II would only lower that by $850 to $3400.

Figuring a $20 mil rate, initial taxation would be $1600, CU I would be $85, and CU II would be $60.80
As you can see, CU I is the real workhorse... while going to CU II only saves $24.20

The scope of the program to lower development pressure, retain farmland, and forest for the paper industry has either failed or been a bit dismal in its overall results. Active farmland within the program has fallen and the paper industry isn't coming back.

I expect the changes will be within the context of the management and pricing structure of the program rather than a complete scrapping of the program. I would guess that actively manage farmland being a small part of the program will see the fewest increases and forest land without managed stewardship would see the highest - if they even decide that option should be allowed.

There has even been some chatter reported on by the various media outlets of a possible lawsuit against NH claiming that since this is a State program, it falls under Part 1 Article 28-a

[Descant]

Originally Posted by John Mercier

...There has even been some chatter reported on by the various media outlets of a possible lawsuit against NH claiming that since this is a State program, it falls under Part 1 Article 28-a

I'd have to check dates, but I think current use laws pre-date the passage of Article 28-a. If so, that argument doesn't fly. My friends in the legislature are constantly on the look out for 28-a since it is an easy way to kill a new programs that force towns to add more programs that are unfunded mandates.
28-a is a great part of the NH Constitution.

[John Mercier]

Originally Posted by Woody38

100% invested in stocks and have always been even though financial advisors said I need bonds which they say yau cannot lose money on. Apparently they only refer to bonds like airports. municipals, ports and the like. All I can say is that the measley amount I invested in stocks has provided a great retirement and still continues to grow despite the sum withdrawn every year. Also own real estate and in my mind real estate is not a good investment.

___________________________________

I am a retired workaholic and continuing aquaholic

Because in most cases, bonds could be a buy & hold strategy thus only risking inflationary losses. TIPS & iBonds would remove the inflationary aspect... but it is more for investors that will need to draw on the money in a shorter time frame, but want more of a return than can be achieved in cash equivalent investments.

[Descant]

Originally Posted by Woody38

100% invested in stocks and have always been even though financial advisors said I need bonds which they say yau cannot lose money on. Apparently they only refer to bonds like airports. municipals, ports and the like. All I can say is that the measley amount I invested in stocks has provided a great retirement and still continues to grow despite the sum withdrawn every year. Also own real estate and in my mind real estate is not a good investment.

Agreed. The old saw about 40% of your portfolio being in bonds doesn't do anything for me. In the Obama years we were overweight utilities because we needed some reliable income. Since bonds were paying 1%, and utilities were at 3-4%, utilities became growth stocks for awhile. Of course, you can buy low grade bonds that pay more, but then you're into risky stuff and probably better off with Blue chip stocks. Real estate can be OK if you want to hold it for 30 years and collect rents after the mortgage is paid. The key here is leverage. The tenants pay the principal, interest, taxes and maintenance while you build equity. It may take a few years to learn to be a profit making landlord. Some RE investors never learn that. To me, because of the long time frames, RE is something to start when you're 30, not 60.

[longislander]

And the change... it is already being discuss.
https://www.nhbr.com/current-use-sys...-to-taxpayers/

From that same 2019 NH Business Review article ...

https://www.nhbr.com/current-use-sys...-to-taxpayers/

"“Land conservation is a foundational issue,” says Bob Giuda, a Republican state senator from Warren who has twice proposed legislation to study the issue"

The same senator that sponsored the Windham election fraud audit fiasco.

Then," when the Current Use Board met in June, Rusty Keith, a former selectman from Lyme, ..."

"Keith has suggested introducing a statewide current use tax, akin to the statewide education tax, to distribute the cost of the program proportionally among all municipalities. He noted that current use is a state program, governed by state statutes and rules"

Sure ... like what, the "Donor Town" concept, as in the Claremont lawsuits and decisions. Oh great!

I register to vote as an independent; not biased to either political party.

Current use
Here's a sample, not conjecture, reality, regarding 13.3 acres for my son, from the 34 acres I subdivided into two parcels, in Moultonborough. Current use property:

2021 Tax for 13.3 acres is $8.00. Not a typo ... eight ($8) dollars for the year.
Town land assessed value is $107,300

Moultonborough tax rate:

Year Total Town County School State Ed Median Ratio
2019 7.15$ 2.18$ 1.10$ 1.91$ 1.96$ 93.81
2020 7.13$ 2.11$ 1.15$ 2.09$ 1.78$ 92.50
2021 -

https://www.nhtaxkiosk.com/default.aspx

State statutes can be changed. Till then, current law (pun intended) is still valid.

Part 1, [Art.] 28-a. [Mandated Programs.] The state shall not mandate or assign any new, expanded or modified programs or responsibilities to any political subdivision in such a way as to necessitate additional local expenditures by the political subdivision unless such programs or responsibilities are fully funded by the state or unless such programs or responsibilities are approved for funding by a vote of the local legislative body of the political subdivision.
November 28, 1984

Note:" ... unless such programs or responsibilities are approved for funding by a vote of the local legislative body of the political subdivision.
November 28, 1984."

Those are towns!

https://www.nh.gov/glance/bill-of-rights.htm

[John Mercier]

Current Use is not a town ordinance. It is a state statute subject to Part 1 Article 28-a.

The town does not have a chose to enter or not enter into the Current Use program, nor does it set the assessment rates. Those are set by a State board.

If you use the 2020 tax rate of $7.13, the board has set the assessment rate of your son's property at $1122. That is about $84 per acre, but could be as high as $105 per acre if he has CU II reducing it to the $84 per.

If the Court found that it is a State controlled program, the State would need to pick up the costs through some means. What that means is remains to be seen. Is it an increase in the SWPT with an actual transfer of funds, or by some other means. That would be up to the Legislature/Governor reacting to the Court finding.

It is really not a matter of how we vote.

[longislander]

Current Use is not a town ordinance. It is a state statute subject to Part 1 Article 28-a.

Who said current use is a town ordinance? How many times does anyone/everyone have to say current use is statutory. State law can be changed by the legislature and/or the NH Supreme Court case law stating the issue is unconstitutional.

Town ordinances are subject to town vote only if the vote does not conflict with statutes; e.g., zoning, parking ... All towns and governing bodies only have the authority provided by statute.

Example:Regarding masks in schools, vaccinations etc.
Even if a vote was is to overrule the school board, it would be "unenforceable". Statutorily, the school board decides. If the petitioners were to sue and get the NH Supreme Court to grant certiorari and hear the case, and the Court decides "unconstitutional", then case law is created, is then NH law.

If present lawsuits convince the NH Supreme Court that there are conflicting statutes: school board policy authority v. school health issues ...constitutionality?

My property mentioned (under Trust) is assessed at $1,159, with a tax of $8.
How many other 13 acre parcels are you aware of paying $8 in taxes that are not in current use; in this town or on this planet!

My original comment that started this conversation was edification of the advantages of utilizing current use. Even if the legislature decides to take-up current use change, it will have to deal with "grandfathering" and probable lawsuits.

[John Mercier]

My point is that since it is not town, Part 1 Article 28-a plays a role.
A lawsuit, depending on outcome, could alter or even scrap the program.

Since the property is intended as an investment, that plays an overreaching role in the decision on what to invest in, and what the timeline of the hold is.

And there is no ''grandfathering''. The biggest possibility of a lawsuit on that issue would be could the municipality do a 10% penalty against a property due to the fact that the property no long had the CU option.

[longislander]

My point is that since it is not town, Part 1 Article 28-a plays a role.

Your point keeps changing. What does

that since it is not town, Part 1 Article 28-a plays a role.

even mean? Statutes not enacted by the town? The NH Constitution is an overall guiding law?

A lawsuit, depending on outcome, could alter or even scrap the program.

I've already mentioned:

State law can be changed by the legislature and/or the NH Supreme Court case law.

Since the property is intended as an investment, that plays an overreaching role in the decision on what to invest in, and what the timeline of the hold is.

What property are you talking about? My property? It is not an investment property in the sense of making money. The 13 acres are a legacy property. It is an investment in the sense that it makes good use of money, legally. Any property bought is subject to the buyer's intent, investment or not. Please don't try to explain "investment". Just Google it.

And there is no ''grandfathering''.

Grandfathering in the general sense, not necessarily in the statutory sense would be considered by those making decisions. How could it not ... affecting so much property, and creating effects on so many citizens, towns, and the state itself.

The biggest possibility of a lawsuit on that issue would be could the municipality do a 10% penalty against a property due to the fact that the property no long had the CU option.

What? Do you understand the 10% penalty? Do you understand it is law ... now! The towns have no choice. There can be no lawsiut on something being discussed by whomever, if that is what you mean?

"The land use change tax rate is "10% of the full and true value" of the land that no longer qualifies for current use (RSA 79-A:7). The 10% land use change tax is not based upon the amount of taxes saved over the years in which the property was in current use."

https://www.revenue.nh.gov/current-u...15-booklet.pdf

Maybe you can reference your next "current use" point, that you'll undoubtedly try to make, referencing one of the following in the URL:

http://www.gencourt.state.nh.us/rsa/...TOC-V-79-A.htm

[John Mercier]

The property investment being discussed as the OP suggested.
He is looking to an investment property to turn in 6-12 months at a profit.

As for Part 1 Article 28-a... if it isn't a municipal program, our Constitution requires the State to pick up the cost for the program.
That is the NH Constitution. CU is not a municipal statute, so a Court finding would be the State has to cover the cost of the program should they decide to keep it.

The Court does not ''grandfather''. Taxation is annual, so the Court could ''stay the order'' to give the Legislature some time to act, but that would be limited once the legislation is considered unconstitutional.

I understand the 10%. I have used both CU I and CU II before.
Currently the legislation requires when a property is removed from CU, that a 10% of valuation to be paid. If the current legislation is found to be unconstitutional, and the program is scrapped. It may/may not be constitutional to charge the 10% penalty... since it is part of that current legislation. So the municipality could charge the 10%, but a landowner may file lawsuit to recover the 10%... as they did not choose to leave the program.

This isn't new to those of us born and raised here growing up in the farming and forestry community.

[longislander]

Your last post reveals nothing new, in more ways than one.

One doesn't have to be from the farming or forestry community to have basic reading and comprehension skills.

[LikeLakes]

Bigdog, you started the thread 5 days ago, have a lot of input, plus a few people arguing current use and how it impacts long term investment. Any thoughts now that people have weighed in?

[John Mercier]

He didn't stipulate a long term investment.
6-12 months.

And then he asked which town(s) around the lake.

People chimed in with stock and bond index funds - valuable plays but not what he even inferred - and then went off a tangent about long term investing.

A 6-12 month investment in property somewhere around the lake creates a hefty acquisition/carry cost. Will the expansion of valuation cover the acquisition/carry cost and provide a return? Hard to tell.

He would need a property that is in high demand with few other competing parcels.

Belmont, where I live, has open parcels - even some large ones - but we have also seen some of the developments sit idle for years and looking for buyers.

The Gilmanton property I got at a very good price - paid less than 50% of assessed value - and placed in CU II for seven years. I made money, but not sure that I couldn't have done just as well being in stocks. A lot less paperwork and I could have hidden it in tax-deferred accounts.
But he didn't ask if stocks were a better long term investment.

Raw land as a short term passive investment - at least in my experience - is very fickle. Active investors - like developers and builders - seem to do much better.

[John Mercier]

Originally Posted by mswlogo

Maxum's point is those generous programs may disappear.

I know half a dozen families that were "taxed" out of their home in NH over the years. And I know several planning on it. They know they can't afford to stay after they retire. I don't know of any in MA.

They failed to save and invest properly.
The numbers show this is the case with roughly 83 percent of all NH residents.
Even after paying off the mortgage, and lowering monthly costs, they have failed to save enough to reach replacement income through their investments.
A live for the moment and suffer the consequences of such later.

[longislander]

Current Use II - Recreational only requires access for hunting, fishing, and scouting. It does not require access for any other reason... nor does it require all three items to be met on an open access basis.

For an investment property with a quick turn for maximum ROI, it doesn't make much sense. The math simply does not add up.

My comment about current use was meant to address the tax factor of property. Some folks may not be aware of the savings. Our town tax collector once mentioned to me that she could not believe how much money could be saved by some residents if they went current use.

... the unpredictable carrying costs of property taxes ...

RE: current use.
Just Google it read for yourself.

https://www.revenue.nh.gov/current-u...-2021-2022.pdf


Short term investment advice on this website ... !!!
Surely you jest.

[John Mercier]

Originally Posted by longislander

My comment about current use was meant to address the tax factor of property. Some folks may not be aware of the savings. Our town tax collector once mentioned to me that she could not believe how much money could be saved by some residents if they went current use.



RE: current use.
Just Google it read for yourself.

https://www.revenue.nh.gov/current-u...-2021-2022.pdf


Short term investment advice on this website ... !!!
Surely you jest.

Then you should know that Current Use II only provides a minimal augmentation to the tax advantage... and that Current Use does not require 10 acres. It can be any size parcel that provides $2500 annually in agricultural or horticultural revenue.

Not to mention all of this is likely to change very quickly in the next few years. Much of it being unmanaged forest.

[swnoel]

Originally Posted by mswlogo

Maxum's point is those generous programs may disappear.

I know half a dozen families that were "taxed" out of their home in NH over the years. And I know several planning on it. They know they can't afford to stay after they retire. I don't know of any in MA.

I highly doubt that will ever be eliminated in our lifetime. The purpose of current use was to reduce sprawl. Then again I believe many owners of nice homes around the lake would welcome low income housing across the street from them.

[John Mercier]

Originally Posted by swnoel

I highly doubt that will ever be eliminated in our lifetime. The purpose of current use was to reduce sprawl. Then again I believe many owners of nice homes around the lake would welcome low income housing across the street from them.

It was not the purpose of current use.
Farmers were losing their property due to valuations that agriculture could not cover.
CU will most likely be amended to require each property to have a management plan.

[John Mercier]

Originally Posted by longislander

In NH, 10 acres and more, can be taxed at a reduced rate, if declared "current Use"; Google it.

An additional reduction, if declared recreational use, in current use; e.g., letting snowmobilers go thru the property, etc.

You can restrict motorized vehicles and still claim current use with the low tax rate.

Actual Example for "current use":
Bought three years ago, 34 acres in Moultonborough that was in "current use" and annual town property tax was $24; not a typo ... twenty four dollars per year for 34 acres on land.

Took out of current use, a little under 2 acres for new-build house and driveway from the 34 acres. Was Taxed 10% of the assessed value of the just under 2 acres, and the rest on the property was still current use with very low tax rate.

On-going tax rate reflects just under 2 acres at regular assessed tax rate and balance of the 34 acres tax at the low current use rate.

Anyone with ten or more acres of vacant land should be looking at "current use", to pay a very reduced annual town tax.

Current Use II - Recreational only requires access for hunting, fishing, and scouting. It does not require access for any other reason... nor does it require all three items to be met on an open access basis.

For an investment property with a quick turn for maximum ROI, it doesn't make much sense. The math simply does not add up.