Taxes

[TomC]

Originally Posted by Descant

I guess a lot depends on the next generation, if there is one, and what their desires and abilities are. Absent the kids being a solution, I think of two ideas that may apply.
1. Reverse mortgage
2. Sell or donate the property with a retained residency clause

Handled properly, either of these might give you a lump sum of cash and minimal overhead costs going forward.

some good ideas... only thing about a reverse mortgage is that it is only applicable to one's primary residence. Of course a regular cash-out mortgage could also extract cash from the property.

[Biggd]

Originally Posted by TomC

some good ideas... only thing about a reverse mortgage is that it is only applicable to one's primary residence. Of course a regular cash-out mortgage could also extract cash from the property.

Pretty tough for a retired person in their 70's and 80's to get a regular mortgage with no income. I also think it would be difficult to get someone to buy it and let you continue to live in it without a substantial monthly rent. A reverse mortgage is probably your only option.
Just to clarify, my neighbor is moving into an assisted living facility in Peabody Ma. because his wife needs constant care. He needed 400K buy in money to reserve their apartment which he didn't have, thus the reverse mortgage. So, he needs to sell no matter what! The stock market taking a nosedive yesterday won't help the real estate market. The property is on the market for 1.25 million. By the time he pays off the real estate fees, reverse mortgage, and capital gains taxes there's not much left. It may seem like he will have a lot of money left, but those assisted living facilities get a hefty monthly rent that will eat into that money depending how long they both live.
My neighborhood is starting to turn over as a lot of my neighbors are in their 80's. Another one of my elderly neighbors cashed out last spring and sold his waterfront home this past summer for 1.55 million and bought a brand-new home in Meredith away from the lake for 1 million. Another one sold a family camp for 1.3 million and cashed out. It looks like they both may have caught the top of the market, JMO.

[MeredithMan]

Originally Posted by Biggd

Pretty tough for a retired person in their 70's and 80's to get a regular mortgage with no income. I also think it would be difficult to get someone to buy it and let you continue to live in it without a substantial monthly rent. A reverse mortgage is probably your only option.
Just to clarify, my neighbor is moving into an assisted living facility in Peabody Ma. because his wife needs constant care. He needed 400K buy in money to reserve their apartment which he didn't have, thus the reverse mortgage. So, he needs to sell no matter what! The stock market taking a nosedive yesterday won't help the real estate market. The property is on the market for 1.25 million. By the time he pays off the real estate fees, reverse mortgage, and capital gains taxes there's not much left. It may seem like he will have a lot of money left, but those assisted living facilities get a hefty monthly rent that will eat into that money depending how long they both live.
My neighborhood is starting to turn over as a lot of my neighbors are in their 80's. Another one of my elderly neighbors cashed out last spring and sold his waterfront home this past summer for 1.55 million and bought a brand-new home in Meredith away from the lake for 1 million. Another one sold a family camp for 1.3 million and cashed out. It looks like they both caught the top of the market, JMO.

Big-
At the risk of going off-topic, your neighbor had to put down 400K to reserve a spot at an Assisted Living? I've not heard of that before...we looked at a lot of Assisted Living places when we moved my in-laws into one, and the most that had to be paid up front was one month's rent. And you are correct, the rent is not cheap...I think it is like $18K/mo for both in-laws, (they charge by the person and by the services required for each).

[Biggd]

Originally Posted by MeredithMan

Big-
At the risk of going off-topic, your neighbor had to put down 400K to reserve a spot at an Assisted Living? I've not heard of that before...we looked at a lot of Assisted Living places when we moved my in-laws into one, and the most that had to be paid up front was one month's rent. And you are correct, the rent is not cheap...I think it is like $18K/mo for both in-laws, (they charge by the person and by the services required for each).

These are not nursing homes. They are high end apartments that you buy into and when you pass on, a percentage of the money goes back into your estate. They cater to couples where one is healthy and can continue to live an independent life while knowing your partner is being taking care of 24/7. There are many that require even higher buy-ins for the very wealthy.
There is one in Lexington Ma, Brookhaven, that was getting 400K buy in back in the 90's. I can only imagine what the buy in now is. I had a business at that time that was within a football field away, the residents were very wealthy.

[MeredithMan]

Ah, Ok. Understand. I wasn't thinking it was a nursing home, which is very different than Assisted Living. In my in-laws Assisted Living place, they have an apartment, but go to the dining room for all their meals and the staff gives them their medications and there is a pub and regular entertainment. There is no ownership/equity, however...just straight rental payments. I was not aware that there were places where residents could have an equity participation.

I learned something new today. Thanks!

[Biggd]

Originally Posted by MeredithMan

Ah, Ok. Understand. I wasn't thinking it was a nursing home, which is very different than Assisted Living. In my in-laws Assisted Living place, they have an apartment, but go to the dining room for all their meals and the staff gives them their medications and there is a pub and regular entertainment. There is no ownership/equity, however...just straight rental payments. I was not aware that there were places where residents could have an equity participation.

I learned something new today. Thanks!

This couple picked this particular facility because it was close to their children.
I know this is off topic, but this is what many elderly owners face when taxes go beyond what is affordable to them even though they own the property out right and waterfront is not a priority any longer.

[FlyingScot]

Originally Posted by Biggd

This couple picked this particular facility because it was close to their children.
I know this is off topic, but this is what many elderly owners face when taxes go beyond what is affordable to them even though they own the property out right and waterfront is not a priority any longer.

I'm pretty sure my parents live in this very facility--Brooksby Village? With all due respect, your posts are a tad misleading. The target Brooksby buyer is moving in because they are no longer able/willing to maintain their house. The basic economics are that you sell your home and use the proceeds to buy a condo. As noted above, your children sell the condo at a controlled price when you die. You're not going to make $ off your condo, but this is not an economic hardship, it's just being old. So unless the couple is different than the typical Brooksby buyer, I think this is different than being forced off the lake due to taxes.

Brooksby is a very nice place for folks no longer able to maintain a house, and as noted above, they have various levels of nursing care available. Plus good food and social stuff--it's kind of like a college dorm for old people

[TiltonBB]

Originally Posted by FlyingScot

Brooksby is a very nice place for folks no longer able to maintain a house, and as noted above, they have various levels of nursing care available. Plus good food and social stuff--it's kind of like a college dorm for old people

I have an elderly friend who has lived at Brooksby Village for over 20 years. She and her husband sold their very nice home in an upscale community nearby and he has since passed It is a good social setting for people who are not as mobile as they once were. The monthly fee for a two bedroom is currently $3,511 after a buy in of $438,000 to $578,000 and includes meals, cable, internet, and all utilities and taxes. It is not for everyone but it is an option for many.

https://www.ericksonseniorliving.com...llage/about-us

[Biggd]

Originally Posted by FlyingScot

I'm pretty sure my parents live in this very facility--Brooksby Village? With all due respect, your posts are a tad misleading. The target Brooksby buyer is moving in because they are no longer able/willing to maintain their house. The basic economics are that you sell your home and use the proceeds to buy a condo. As noted above, your children sell the condo at a controlled price when you die. You're not going to make $ off your condo, but this is not an economic hardship, it's just being old. So unless the couple is different than the typical Brooksby buyer, I think this is different than being forced off the lake due to taxes.

Brooksby is a very nice place for folks no longer able to maintain a house, and as noted above, they have various levels of nursing care available. Plus good food and social stuff--it's kind of like a college dorm for old people

They aren't forced to sell because of taxes but he did tell me that his children couldn't afford to take the place over so that was a factor in their decision. They are fortunate that the property is worth a lot of money, but they were hoping to finish out their lives there. They added a handicap ramp to aid in their staying in the home but that was eventually not enough to keep them in the home.
At some point the waterfront becomes a burden more than a place of peace and serenity. But others in my neighborhood have cashed out because the cost of keeping their homes has exceeded their income level and the value to sell high was too tempting.
Everyone has their own crosses to bare.

[secondcurve]

Originally Posted by FlyingScot

I'm pretty sure my parents live in this very facility--Brooksby Village? With all due respect, your posts are a tad misleading. The target Brooksby buyer is moving in because they are no longer able/willing to maintain their house. The basic economics are that you sell your home and use the proceeds to buy a condo. As noted above, your children sell the condo at a controlled price when you die. You're not going to make $ off your condo, but this is not an economic hardship, it's just being old. So unless the couple is different than the typical Brooksby buyer, I think this is different than being forced off the lake due to taxes.

Brooksby is a very nice place for folks no longer able to maintain a house, and as noted above, they have various levels of nursing care available. Plus good food and social stuff--it's kind of like a college dorm for old people

The one hidden danger with places like brooksby is you aren’t actually buying a condo. Said another way there is no security for your “buy in”. If Brooksby goes bust you have an unsecured bankruptcy claim. It’s happened in the past. See the attached article https://www.fa-mag.com/news/american...ust-80550.html

[FlyingScot]

Originally Posted by secondcurve

The one hidden danger with places like brooksby is you aren’t actually buying a condo. Said another way there is no security for your “buy in”. If Brooksby goes bust you have an unsecured bankruptcy claim. It’s happened in the past. See the attached article https://www.fa-mag.com/news/american...ust-80550.html

Very interesting. I did not check this before they moved in, but Brooksby has all the qualitative signs of a well financed stable place, and I've had aunts and uncles living there for decades. If I had to do this again, I would check more carefully on their parent, as you suggest. (Separately, I would not say that a condo is risk-free wrt exposure on others' potential financial woes.)

Nevertheless, I would still recommend Brooksby unreservedly to any whose life-stage/financial situation fits

[secondcurve]

Originally Posted by FlyingScot

Very interesting. I did not check this before they moved in, but Brooksby has all the qualitative signs of a well financed stable place, and I've had aunts and uncles living there for decades. If I had to do this again, I would check more carefully on their parent, as you suggest. (Separately, I would not say that a condo is risk-free wrt exposure on others' potential financial woes.)

Nevertheless, I would still recommend Brooksby unreservedly to any whose life-stage/financial situation fits

I agree with your assessment. I’ve never heard anyone say anything bad about Brooksby and I have friends whose parents are there and they all say positive things about the community so it is highly likely Brooksby is financially solid. That being said, if I ever wind up considering that community or one like it I’d look at the credit profile of the entity as part of my diligence. On the way in the typical resident is leaving their home that they have often been in for many years while Brooksby is scrutinizing their financial condition so it is typically traumatic
for the soon to be resident and few think to ask about the credit of Brooksby. As a result, I wanted to share what I have learned about the industry.

[winnisquam]

Sanbornton waterfront. Tax assessment went up 112%, just over $2M now. Taxes went from $20K to $26K a year. Filed an abatement with solid basis of six larger properties and more frontage, denied!

We have 3 seasonal camps with an apartment over a garage on 2 acres with 175' of frontage all built between 1950 and 1974.

Their basis is market value. All dwellings are grandfathered so we can tear down and rebuild with year-round homes or sell the property with the same intent, so getting taxed on what we could do!

[Biggd]

Originally Posted by winnisquam

Sanbornton waterfront. Tax assessment went up 112%, just over $2M now. Taxes went from $20K to $26K a year. Filed an abatement with solid basis of six larger properties and more frontage, denied!

We have 3 seasonal camps with an apartment over a garage on 2 acres with 175' of frontage all built between 1950 and 1974.

Their basis is market value. All dwellings are grandfathered so we can tear down and rebuild with year-round homes or sell the property with the same intent, so getting taxed on what we could do!

My father inlaw had a camp in Sanbornton, not on the water but steps to the town beach. When he passed 10 years ago it was left to his 5 children, the oldest bought the other 4 out. I had just purchased my house in Meredith, I have water rights and a dock. He pays almost twice as much as me in taxes and his property and house is half the size. Across the street from him is a small camp, under 500 sq ft, on 200ft of prime waterfront with an outrageous tax bill.
When we were looking to buy, Laconia and Sanbornton were out of the question because of the high taxes.

[secondcurve]

Originally Posted by winnisquam

Sanbornton waterfront. Tax assessment went up 112%, just over $2M now. Taxes went from $20K to $26K a year. Filed an abatement with solid basis of six larger properties and more frontage, denied!

We have 3 seasonal camps with an apartment over a garage on 2 acres with 175' of frontage all built between 1950 and 1974.

Their basis is market value. All dwellings are grandfathered so we can tear down and rebuild with year-round homes or sell the property with the same intent, so getting taxed on what we could do!

Actually, I think you are paying taxes on a valuable piece of land. There is only so much waterfront and two acre lots with 175 feet of frontage and multiple foot prints are much sought after. It would be nice to broaden the tax base so government wasn’t so reliant upon property taxes. Unfortunately, that will never happen because the politicians would use such a change to increase tax receipts. Until something changes property owners are going to bear the burden.

[John Mercier]

Our State government runs on largely income and sales taxes, that are partially transferred to the municipalities to lower the property taxes.

The only thing currently in the works is court cases to remove the SWEPT retainment and another to possibly increase the State education grants.

[The Real BigGuy]

Originally Posted by winnisquam

Sanbornton waterfront. Tax assessment went up 112%, just over $2M now. Taxes went from $20K to $26K a year. Filed an abatement with solid basis of six larger properties and more frontage, denied!

We have 3 seasonal camps with an apartment over a garage on 2 acres with 175' of frontage all built between 1950 and 1974.

Their basis is market value. All dwellings are grandfathered so we can tear down and rebuild with year-round homes or sell the property with the same intent, so getting taxed on what we could do!

Did your assessment go up 112% or 12%? If it actually went up 112% that means it was assessed at less than $1M before.


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[BroadHopper]

Entry to one of these communities is income-based. You can buy a cottage with an HOA, or you can rent an apartment. I consider the initial investment as long-term care insurance. No matter what happens you are taken care of until passed. They use any income you have such as annuity, pensions, etc as well as your social security as factors for monthly rent. They even used Medicare and any supplement you may have to pay for medical costs. So the initial investment varies among individuals. When you pass, if you have extra money in savings and annuities, they will be passed to your heirs.

You need to check it out and not base your thinking on hearsay. I can live in my condo off campus should I sign up. If I need assisted living or nursing care. I'm covered. I also enjoy all the benefits of the community such as social events, gym, dining/cafe et al. I enjoy at-home care if needed. It's worth looking into in your late years.