Great Day / Sad Day

[Donzi Minx]

Often make a quick pass on the property that my family owned for 52 years.
Two weeks ago my son and I drove past 16 Acorn Drive only to notice that all of the windows, decking, and interior had been gutted from our beloved cottage.
Yesterday there was an excavation hole for the new foundation. Although I have never had a bad day on the lake yesterday was indeed different as I put the throttle down to head over to Winter Harbor. A real piece of me that had grown up, enjoyed, and so looked forward to as "sanctuary" was now gone. Wisely the current owner is keeping the boathouse, dock, and detached two car garage. It hurt a lot when it was auctioned off, it hurt a little to see it completely gone. As it was four bedroom, two full baths, kitchen / living room I always thought it was big enough to accommodate anybody and that it would never be demolished as I had seen over the lake in many other locations, but how wrong I was.

[Biggd]

Originally Posted by Donzi Minx

Often make a quick pass on the property that my family owned for 52 years.
Two weeks ago my son and I drove past 16 Acorn Drive only to notice that all of the windows, decking, and interior had been gutted from our beloved cottage.
Yesterday there was an excavation hole for the new foundation. Although I have never had a bad day on the lake yesterday was indeed different as I put the throttle down to head over to Winter Harbor. A real piece of me that had grown up, enjoyed, and so looked forward to as "sanctuary" was now gone. Wisely the current owner is keeping the boathouse, dock, and detached two car garage. It hurt a lot when it was auctioned off, it hurt a little to see it completely gone. As it was four bedroom, two full baths, kitchen / living room I always thought it was big enough to accommodate anybody and that it would never be demolished as I had seen over the lake in many other locations, but how wrong I was.

That's a case in the Metro-Boston area. Houses that I always thought were great homes are being bought for crazy money and being town down to build million dollar McMansions. Depending on the town, these homes are $400K to 1 million tear downs. My family home which I moved back into is worth about $600K and I'm questioning whether I should put much money into it because it's probably a tear down.

[FlyingScot]

Sorry for your loss. A very unfortunate aspect of climbing real estate prices. I still remember when the new owner tore down my grandparents' lovely home in 1985. Like your place, it was a great

[thinkxingu]

One of the things I hate about NH is how much tax money comes from land taxes--makes keeping homes in families for generations very difficult.

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[coltgov101]

The same thing happened to our family. We owned property on the lake for 40 years. it was a wonderful little cabin that we all loved. When it was time to sell the next door neighbor bought it and tore it down. He never built anything, he just wanted to increase his lakefront footage. We had a nicer beach. I'll never forget that warm almost magical place.

[garysanfran]

Originally Posted by thinkxingu

One of the things I hate about NH is how much tax money comes from land taxes--makes keeping homes in families for generations very difficult.

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Yup. I notice because Meredith lakefront props. have increased in value 14%, the town feels it MUST raise taxes...WHY? The cost of running the town didn't go up 14%. So Meredith Town is going to extort more money based on owner's equity? Can't pay taxes with equity, so people will sell. It's happening to ANOTHER one of my neighbors right now. The kids can't afford the tax. They can afford the upkeep, but not the tax. So, is Meredith going to buy another high-rise firetruck for 750k? How about an austerity measure to save the homes of existing families?

Meredith...Justify this increase in taxes based on home values increasing! Let's jam town hall with phone calls inquiring why?. Be courteous... 603-677-4213. If you get a response, let us know.

[garysanfran]

"The State requires that property taxes be set at a certain percentage of 100% of the market value of the Town's real estate values. You are invited to come in and talk to the assessor about your situation"...was the reply I just got. Let's ALL make an appointment.

So, this equation is set by the State? Why does the State get involved in a local's tax rate?

[Dave R]

Originally Posted by garysanfran

"The State requires that property taxes be set at a certain percentage of 100% of the market value of the Town's real estate values. You are invited to come in and talk to the assessor about your situation"...was the reply I just got. Let's ALL make an appointment.

So, this equation is set by the State? Why does the State get involved in a local's tax rate?

I think what they are saying is that the state does not allow them to have more than one real estate tax rate and that rate is applied the market value of the real estate. If they can't justify the added 14% tax revenue from lake front, the town-wide tax rate should go down. However, if non-lake front real estate market value did not also increase 14%, lake front real estate owners will still pay higher taxes than they did before. Due to the tremendously high property taxes, NH is a terrible place to have a vacation home.

If you really want to keep a house in the family for generations to come, you'd be wise to create a trust fund that grows steadily and earns enough income to cover upkeep and taxes.

[FlyingScot]

For long-time owners--say those who have inherited the place that their parents bought for $50,000 decades ago--it's a two-edged sword. It's easy to feel the sting of the taxes. But on the other hand, your land is now worth 20X what was paid.

Similarly, another thing that makes it hard to keep the house in the family is that it's now worth so damn much.

[Merrymeeting]

The original post is also not clear on whether the cottage was 3-season or year round.

We had a cottage/camp that we loved and used for 15+ years. We wanted to retire here at the lake and originally planned to lift and renovate what we had. But the reality was that the remodel was going to cost more than starting over, and by starting over we were able to get exactly what we wanted versus making many compromises. In the end, we tore down rather than remodeling.

[garysanfran]

PeterG wrote...

"But on the other hand, your land is now worth 20X what was paid."

Yup. SO what? That's a paper profit you can't pay your taxes with. And you don't realize that benefit until you sell. So, you sell your beloved Winnipesaukee prop. (pay cap gains tax) and move so someone more wealthy can move in? Thus making the town more wealthy for future tax increases.

And I still don't understand why a town has to raise taxes when their expenses have not gone up accordingly? Thus making the town more wealthy. Money to the Government, is like a heroin addiction. Always need more to achieve a better high.

California's Prop. 13 should be studied.

[garysanfran]

"If you really want to keep a house in the family for generations to come, you'd be wise to create a trust fund that grows steadily and earns enough income to cover upkeep and taxes. "

With what do you seed the trust fund? Future cash flow? Current savings?

The trust will pay income and cap gains tax yearly. So the fund you set up to pay your tax is getting taxed in the process. However, we all know the Govt. spends it wisely...Just look at the average govt. employee's retirement pension compared with the private sector. What? Your employer doesn't offer a pension?

[Dave R]

Originally Posted by garysanfran

With what do you seed the trust fund? Future cash flow? Current savings?

You would have to seed it with a lot of money, an awful lot of money.

Originally Posted by garysanfran

The trust will pay income and cap gains tax yearly. So the fund you set up to pay your tax is getting taxed in the process. However, we all know the Govt. spends it wisely...Just look at the average govt. employee's retirement pension compared with the private sector. What? Your employer doesn't offer a pension?

My employer offers a pension, but not sure what that has to do with anything.

[Woodsy]

Unfortunately, last I checked, there isn't any new waterfront being created... so the value of highly desirable waterfront continues to climb thru the roof... You can thank your wealthy neighbors to the south!

I didn't see that the town of Meredith has raised taxes..... the article I read in the Sun basically said the waterfront property assessments were up 14% or so. That has nothing to do with the town and everything to do with real estate market/economy. I would expect the actual tax rate when announced to hold steady or slight increase.

Woodsy

[neckdweller]

I'm not usually one to get in the way of a good rant and I don't have any love for government spending but...

-If the overall value of property in town goes up 14%, the town tax rate will not stay the same unless costs go up 14%. The town can't "get wealthy" by charging property owners 14% more than the town's budgeted spend. They can spend money at a higher clip because all that waterfront property gives them a nice tax base but they can't tax more and spend the same. I have a home in Moultonborough and they love to talk about the low tax rate but don't seem to mention the $1 billion + property valuation.

-Note the bolded words above. Waterfront property valuation will increase at a faster rate than non-waterfront property so those taxes are going to increase at a faster pace. If total spending goes up 4% in the same year that property was assessed, chances are your tax bill is going to go up more than 4%.

-While certain NH employees get a pension (teachers, fire, police and some municipal employees but not sure which), they have to contribute 5% or 6% of their pay to it and then the employer also kicks in a percentage. It's a weird hybrid of defined benefit and defined contribution.

-Lastly, I'm in the same situation. I inherited a house that is many multiples more valuable than when my parents built it in the 60's. Yes, the yearly taxes are more than they paid for the property but this is the very definition of a first world problem. At the end of the day I have a very valuable asset that I can choose to pay to keep or I can sell it and cash in. People may not feel like it because they are living in the asset and can't use it to pay the bill, but their net worth calculation says they are well off.

[FlyingScot]

Gary,

I'm sure you don't mean to sound like a guy who is upset that he's paying a lot of taxes as he flies cross country between two 7 figure homes, at least one of which he stumbled into as an accident of birth.

Drive a few minutes from your lake house, and it's easy to find hundreds of people who stumbled into much less.

[BroadHopper]

My dad sold our family waterfront cottage in the late 90's when the state started to evaluate tax assessment. Taxes gone up six fold in the years following the education funding mess. Many families had to give up their heritage homes

The cottage was built by my great grandfather in 1892. At that time the 2 BR 2 story cottage was considered a mcmansion. The cottage reminds me of the cottage on 'On Golden Pond'. Many memories were made there as family and relatives spend many summers on the lake.

Sadly the property tax was more than we could bear. The new owners did not waste time in converting to a year round home. There was a petition to the town to maintain the road year round and the road was paved for the first time.

Nine years after it was sold, the owner made a fortune selling the property. The third owner tore down the existing structure and built a huge mcmansion. The economy soured (late 2000's) and the property went into forclosure. It was one of those cases the bank padlocked the building and the owners could not get their belongings, that winter all the pipes burst and the building was a huge mess and mold and mildew set in in the spring. The property went up for auction and no takers. The house sat for a few years, there was extensive vandalism until the bank boarded up the windows and doors. What a mess.

7 years later, without notice, the property was sold. Again the building was demolished and a beautiful Adirondack style home was built. The trust that bought it paid about what my dad sold it for!

At one time I was admiring the structure from the road and the owner approach me as he was proud of the new structure. I told him my family were the original owners and we bought it from the railroad. He was very interested in the story. He ask if I would like to come inside to look around. I politely declined as I want the property to remain as it is in my mind. I'm surprised he was a bit upset. I bid ado.

It's been 3 years since the last build and the property is for sale for 5 times what the trust paid for it. I wish them well.

What a roller coaster this property been through since we sold it in 1998. Lots of money was lost.

[Biggd]

The second home market can be boom or bust. The next resession, prices will fall again. When the ***** hits the fan the vacation home goes first and everything resets.

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[Descant]

Too complex for this post, but NH Trust law is on your side. Talk to a NH CPA. Form a NH Trust. Emphasis on "NH".
How to fund the Trust?
Each generation needs to "buy" the camp by adding funds to the corpus as if they were buying the camp. Do it over time like a mortgage. You can't just inherit and think you're home free. You've inherited the right to maintain ownership, not to live there for free.

Summer camp only? Make it year round and rent at super cheap rates from September through June. That can cover the taxes. Island camp? Rent part of the season for big money (July and August), use it in June and September, until your financial position improves, or that of other family members improves.

Back to #1. It can be done, but don't base any decisions or plans on what you know about tax and trust laws from any other state.

[Woody38]

Sorry for your loss. There are things in life that make no real sense. Living on Cape Cod we saw ocean front homes (not really great homes, but nice) bought for a million and torn down somewhat. The exterior walls had to be left so everything was down except the 2x4's. They expanded or renovated and spent millions. Basically there was no way the children could afford to keep these homes. Thus.
When we lived in California homes were assessed at 25% of market value. Therefore one could look at any city, town in California and know the value.
That changed over time and then wonderful prop. 13 did a mess. So, you live in your house at that time and the taxes barely rise. Your children can live in and keep the house with the same tax situation. My sister has a million dollar house and they pay $1,200 in property tax. We have a similar situation (bought in 2009) and we pay $9,000. Really fair. Better yet, those people could sell their house, move into a million dollar condo and take the tax bill with them. Great if you are the one having it and a reason why some houses are never sold.

I am a retired workaholic and continuing aquaholic.

[garysanfran]

Originally Posted by PeterG

Gary,

I'm sure you don't mean to sound like a guy who is upset that he's paying a lot of taxes as he flies cross country between two 7 figure homes, at least one of which he stumbled into as an accident of birth.

Drive a few minutes from your lake house, and it's easy to find hundreds of people who stumbled into much less.

I mentioned neighbors having problems. Read some of these other posts. My heart goes out to them. By the way I drive a 1992 car and my boat was built in 1988.

And, my tax in San Francisco is slightly less than 1/4 of my tax in Meredith where I have no sewage, no town water and they don't plow my road in winter.

San Francisco seems to not be suffering for lack of revenue, they just approved $5mm to provide legal support for "undocumented immigrants".

[garysanfran]

I assume when you say "at least one place I stumbled into by birth", means my inheritance? My parents bought the land in 1960. It has seen great appreciation. I have a lot of siblings who couldn't afford the place. In order to keep it in the family, I had to purchase the place from them at FMV, and recently. So my siblings got the benefit of the appreciation, and deservedly so. I did not reap a 50X return.

[Woodsy]

Gary... You mention that your property tax is 1/4 of Meredith. However, you also pay a 9.3% state income tax, (1.5% city income tax?) and 8.5% sales tax....

If you bought out your siblings @ FMV... You get to keep the financial rewards of your initial share of the an increase in property value when you decide to sell, and any additional increase in value as well. (you don't have to split the $$ with your siblings)

I am glad you are in a good financial position to do this for yourself & your family, but no offense, but its apples & oranges comparing CA to NH. California is the ranked 10th in tax burden.... NH is ranked 46th..

Woodsy

[MAXUM]

Originally Posted by Woodsy

California is the ranked 10th in tax burden.... NH is ranked 46th..

Woodsy

That may be "technically" true but that stat is rather dubious when there are plenty of things that look, feel and might as well be taxes but manage to fly below the radar as fees. Still no comparison to California which is just plain off the reservation.

At least in NH if you have a 7 figures to play with you can buy a really nice house, compare that to San Francisco where you may be able to afford an upscale dumpster.

[Woodsy]

Maxum....

that's why I only listed the "big" taxes. Not the little ones like excise tax city sales taxes etc.

Woodsy