I agree with @bearcatfan. I think it would be very difficult to cancel a benefit that an older person is collecting, and much easier to change it for people not collecting. However, they could decide to tax the living daylights out of it, which would make that benefit virtually useless anyways.
As far as taxing the living daylights out of people, in Washington state, property taxes are set to skyrocket, particularly in King county. The politicians never fail to raise taxes, and the brainless voters keep voting in every property tax increase. This one is going to be a serious shock to people, though. I am relieved that our federal tax break is going to cover it, but annoyed that the massive spending just keeps on, itās never enough. While right now we can afford tax increases, I wonder how we can continue this into retirement without getting taxed out of our home. We are going to have to raise rents on our tenants, and we will let them know exactly why.
Yup, bus. Assessed property value went up 12%, and tax rate is going up 17-21%. Does not look that great for the school levy on the local ballotā¦ kid is locked into her lease in early December and her LL is probably kicking herself for not upping their rent (but they all are good and neighborly tenants).
Yup. Property taxes could be a big unknown for retirees in places where there is no cap on these taxes or property value.
Supposedly if everyone elseās property values went up at the same rate, they can only raise the pot by 1% or something like that, but it never works out as such. Especially with all the additional levies. Donāt people realize they are taxing themselves into oblivion? Or maybe they think someone else is going to pay it. Our representatives keep making affordable housing a big issue (and trying to tax us more to provide it), but seem to be completely unaware that they are piling on to make housing even more unaffordable. Crazy. Iām afraid our property taxes will easily exceed 30K, with no end in sight. I wonder if we can āunfinishā our basement and knock out a couple of unused bedrooms and bathrooms to lower the appraised value. They also never lower our property taxes when we contest them, with current appraisals and sales.
No one ever wins a property valuation contest. I researched so many properties when. We were house hunting, and have seen many such unsuccessful tries in the public records. Yeah, one way to solve homelessness is by making housing less affordable. Eye roll.
In my state thereās an appeals process which takes it out of the local taxing authorityās hands, which might be more fair.
I am challenging the assessment on my Cape Cod house, I found material issues on the property card that describes the property. It should be a slam dunk. The land is 65% of the value though, and that part isnāt really arguable - itās about the same as my neighbors and there are no sales comps, there are no undeveloped lots on the water and havenāt been for years. So the best I can hope for is about a 5-10% reduction.
A Bloomberg article from 2016 showed how easy it would be to eliminate the SS shortfall -with a combination of 2,3 , or 5 small steps.
Solving this problem is NOT rocket science.
The solutions are laid out like, puzzle pieces, toward the end of the article.
"A better way
Instead of enacting one big, draconian change to save Social Security, the president and congress could restore solvency to the system by combining several smaller, less painful fixes. Actuaries at the Social Security Administration have analyzed more than 100 individual policy provisions and provided estimates of the financial effect of each on the long-range solvency problem. While simply adding the financial effect of one provision to another does not give an exact measure of a combined proposal, it can give a back-of-the-envelope estimate of the size and scope of the provisions needed to keep Social Security afloat for at least 75 year
In 1983, when Congress and President Ronald Reagan last tackled Social Securityās difficulties, the combination of several changesāincluding raising the retirement age, gradual tax increases, and cost-of-living adjustmentsāremedied the system. A similar plan could be crafted today, one that inflicts only modest pain on each side of the political aisle. Every year that elected officials delay, the less effective the remedies become. There will be ever-fewer workers to share the burden and more retirees counting on a level of benefits that canāt be sustained."
You are talking my biggest concern for retirement, property taxes. When I moved to the Midwest 30 plus years ago I was thrilled to be in a state and city that did many good things for its citizens. Higher property taxes were reasonable payment for this quality of life. Property taxes have gone up in massive increments over the years as my property values have risen and I am no longer thrilled. My income has gone up as well, though not 5 times where I started out. I left my big house largely due to increasing taxes. I am hoping my current small house does not appreciate to the point where it is unaffordable.
One poster on this board, in the south mentioned that her taxes were frozen after a certain age. That would be welcome news in this area. I also think that freezing property taxes at a percentage of income would be fair to retirees and keep us in our homes. Yes, some of this is because I am single, and existing and paying those taxes on one income is more of a challenge. Even if single, I still need to live somewhere. But if and when property taxes become more than 20 to 25% of my retirement income, and are no longer deductible, as well as still rising, I will need to find something else.
I like the idea of capping property taxes once an owner reaches a certain age or capping it at a % of income. In our state property owners qualify for an exemption of $40K off primary residence property value once they reach 65, plus another $40k if blind. With property values skyrocketing in our state exemption amounts have not been adjustedāthey should be.
Fortunately in our state the property taxes are much lower than other statesā4 digits, not 5 or 6.
Oahu also taxes out of staters at a much higher rate if the property is valued over $1M or is located in the hotel zoned areas. Mauiās rates are higher - both for residents and non-residents.
Iām not a fan of giving exemptions/caps for retired folks. Many have assets if not exactly income. I think it unfairly shifts the burden to younger residents. If communities want to be viable, they need to attract younger people, a workforce. I never understood the complaints of āIām on a fixed incomeā. Most employees, especially those in lower SES brackets, donāt have the option of deciding to increase their income to make up for rising property taxes any more than retired folks do. Many working Americans have had years of zero to little income growth. Theyāre income is pretty āfixedā, too.
Itās true that many/most working folks are struggling to pay all their bills with a young family. We do have more disposable income now than when we had lower income and kids with expensive es expenses. Some seniors though can barely make ends meet and canāt take on more jobs to fill gaps between income and expenses.
Maybe allow folks to apply for low income tax cap?
Sounds like some people think that living in a house that appreciates quickly and has high taxes is something of a right that should be subsidized in old age by other people. Data I have seen indicates that 65+ age group has a lower poverty rate than average. So other age groups should subsidize people who are less likely to be poor?
Maybe its just me but I would say if you canāt afford your property taxes, move. There are plenty of places with lower property taxes. But you really like your house and want to stay there? I want a BMW 760 but want to pay Honda Civic prices. Can I have a subsidy for that?
If you look at unfunded state pensions (worse in some states than others), choices are reducing benefits (not legal at the present because states canāt file for bankruptcy protection), tax increases, reduced other state spending or a combination of tax increases and other spending cuts. Seems unlikely that tax increases will not play a role (for from what I can tell, a lot of people posting in this thread based on assets/income in retirement). And thatās just to pay for current obligations. Says nothing about rebuilding infrastructure, improvements, etc in terms of additional spending in the future.
At 65 and living primary residence for 10 years we have $100,000 off the first $200,000 of value. This is yearly dependent on the state budget. Some years it was there, other years not there. We qualified the first time this year after an application process. And it looks good so far.
We have a state income tax. We are listed in the decent states to retire but not best ( or worst).
We are staying put. We have come to love the weather and outdoors. That said, retirement helps a lot taking advantage of the part of the day that is great.
āMaybe its just me but I would say if you canāt afford your property taxes, move. There are plenty of places with lower property taxes. But you really like your house and want to stay there? I want a BMW 760 but want to pay Honda Civic prices. Can I have a subsidy for that?ā
A better analogy: it is still the same Honda that has been paid for but now you have to pay a beemer price for it to be able to keep it.
I donāt advocate for having an automatic property tax reductions for folks over a certain age or at a certain income level, but in places where RE rapidly appreciates like in certain areas here like at 30-40% a year, something needs to be done. CA did it a while ago.
And it is definitely a parameter that needs to be taken into consideration when planning for retirement. If your property tax in retirement goes up 30% in one year, what would you do? Stay put and curse the younger folks who want better schools for their kiddos or move?
A house is never paid for. There are always ongoing maintenance, repair and updating costs and property taxes.
Seems ironic that on a site where we regularly see people saying they want to go to school X but cannot afford school X, the accepted advice is there are a lot of good schools out there so you should find one you can afford. But when it comes to housing costs in retirement, the request is for other taxpayers to cut me a break.
If a young couple lives in a house and their incomes are not keeping up with increasing costs of maintaining the house (including quickly rising property taxes), would the suggestion of the gallery here be to give them a tax subsidy? Seems to me the advice would be to move to a house you can afford. Not sure why that answer should change when the person in question is retired.
Maintenance etc. can and should be planned for. How would anyone plan for tripling of their property tax in letās say 5 years? Is that what you all price into your retirement?
Two separate issues. One, what cost increases are you contemplating in your retirement plan. Two, what will you do if given costs exceed those expectations.
And some may call me cold hearted but I am having a tough time mustering up much sympathy for people living in houses that appreciate 30-40% per year.
Ideally, one planning for retirement should plan for such contingencies. Thatās why you should save more for retirement than what you think you might need. Because, whether it is property taxes, healthcare costs, or something else, there is a good chance you will need it.
Iāve seen posters here comment that they think financial firms are to aggressive in their recommendations on how much folks should be saving. Personally, I donāt think they are, for reasons such as this.
For those seniors caught in a bind with rising costs yet equity in their home, there are options like reverse mortgages and such. Again, why should young people be burdened with rising taxes when Joe and Judy Senior are sitting on a huge pot of gold in the equity in their home? Many communities already have a hard time attracting people like firefighters and teachers in their communities because affordable workforce housing is scarce. Dropping a larger percentage of the local tax burden in their laps would only exacerbate the situation.
Speaking of taxes, Iām concerned that the debt ceiling limit may interfere with tax refunds. They thought the debt limit would be reached in late March or early April, but now Mnuchin is saying that he is starting emergency measures this week and that the debt limit will need to be raised by early March. I am working on taxes this weekend since it seems likely that refunds may be delayed this year. Particularly if you get past mid-February.
