I think they should hold everyone’s refund checks until all retired people have gotten theirs. And only then if there is money left over, they can pay refunds to everyone else. 
Seriously, this isn’t the first time they have been in this position. Typically they resolve it before its an actual issue. But in case, filing return as early as possible would seem like the best option.
Yes, that is pretty cold-hearted. It is easy for you to say - well, the house is worth so much that selling it and moving to a new area should be a no brainer. Easy to do when you are younger or like nomadic style of living. Not so easy when your life is so embedded into a local network of friends and community. Personally, I never get attached to a place, so moving would not be a burden for me, but I know many older folks who would be emotionally devastated if they had to uproot and would never thrive in a new place. But sure, who needs those folks anyway? The sooner they keel over, the less burden on society they will have. The sooner they move, the sooner the Chinese investors scoop up their land and let it sit.
And reverse mortgage recommendations? Come on, you guys can do better than that.
“And reverse mortgage recommendations? Come on, you guys can do better than that.”
Like expecting other residents to bear your share of the tax burden while you sit on tons of home equity? It’s really not fair.
If your taxes are going up 30% a year, get engaged in local politics and figure out why and how to control spending. It certainly wouldn’t fly in my neck of the woods. Properties should be reassessed frequently but the mill rate should be adjusted accordingly as well.
There are some minor senior citizen tax breaks in my state, funded by the state gov’t and not the local towns, if property taxes or 25% of rent exceeds 10% of income. It’s capped at about $1000 per year though.
One reason to incentivize seniors to stay (at least in towns like mine with excellent school systems) is that it helps keep a lid on the number of kids in the school system. Public schools here are largely funded by property taxes (90+% in my town, and schools are like 85% of the town’s budget). Every time a senior moves out, someone with kids moves in, because why else would you pay the crazy property taxes? Every old-timer on my street that has moved has been replaced by a young family with kids. When we eventually move, I’m sure it will be the same.
That said, it’s hard to have sympathy for someone complaining they can’t afford their taxes because they are on a fixed income when they are sitting on $500,000+ in house equity. The taxes aren’t that high. There are options to tap that equity or even defer payment until you move or die.
Now maybe you feel like you shouldn’t have to spend your kids’ inheritance to be able to stay in your house, but I shouldn’t have to subsidize that either.
“One reason to incentivize seniors to stay (at least in towns like mine with excellent school systems) is that it helps keep a lid on the number of kids in the school system.”
In my area, the majority of school costs are also funded by property taxes. I’m sure it can vary by region but with a drop in school aged demographics, many communities actually wouldn’t mind attracting families with school aged children to keep their enrollments steady. With the baby boomlet come and gone, declining enrollments are a worry for many municipalities. Most communities need young people to continue to be viable. It affects not only local businesses but state coffers as well.
Not here where schools are definitely overcrowded, so having folks like us that pay a fair deal for the schools (local levies, anyone?) and only indirectly benefit from them are a sweet deal for the districts.
We had a modest decline (around 5% or so) in student population from 2005-2014 or so, but now enrollments are climbing, and in a few years elementary enrollment will exceed what it was in 2005. This ripples through middle and high school eventually of course.
It directly leads to higher personnel costs, which is the main driver of the school budget. More space is needed as well, which is a horrible cliff function where at some point increased enrollment forces you to expand or build a new school. We’ve tried expanding incrementally in the past using trailers, but that is not a great solution, especially in winter.
You call me cold hearted and then tag me with that drivel. Too funny.
Our school district had to build another HS and reshuffle enrollment at JrHSs. It is funny that some of our neighbors with HS kids vote against school levies while folks like us who have not had a kid in the school system for 10 years vote for them. We old ferts want them punks off the streets doin’ their homeworks. B-)
Our county offered a homestead exemption on part of the property taxes for first-time owners. That’s an incentive for us to stay put, as this is our first house. The county also limits the amount of annual increase. OTOH, our state taxes are pretty high, so it all balances out.
“You call me cold hearted and then tag me with that drivel. Too funny.”
Can you propose a solution that does not involve predatory lending or uprooting old folks out of the community?
And when I say that the land will be scooped up by Chinese investors, come and see what is happening here in some areas.
In my state towns are capped with a maximum tax rate of 2.5%, and towns can’t increase taxes as a whole by more than 2.5%/per year (individual taxes can go up more than that depending on how your assessment changes compared to everyone else).
To increase more than the allowed amounts, a town-wide referendum has to be passed, and it has to pass at town meeting.
When my kids were young, these overrides were pretty successfully passed as requested. Now… not so much. People have reached a limit. The town hasn’t even tried one in 6 or 7 years.
A request for a 30% increase in taxes would cause a revolt.
The schools in the newer developments are over-crowded; those in the older neighborhoods where costs are too high for the younger folks have declining student enrollments. Only kids who are geographic exceptions or live with grandparents or are somehow able to afford very expensive housing but not sending kids to private schools attend.
There aren’t easy answers when funds are tight. If the house is big enough, room(s) can be rented out to help subsidize maintenance and property taxes and/or for help with errands and other things that elders may have difficulty with. Yes, there are issues with caps and subsidies.
You can’t discount all reverse mortgages completely. Sure, some of been less than kosher in the past but if researched and chosen carefully (as with all loans and most financial matters, do your due diligence and caveat emptor), it can be a helpful and viable option for some who are looking to convert their home equity into cash to help with present day expenses while retaining the ability to stay in their homes.
Here’s some basic info on pros/cons and reforms:
https://www.aarp.org/money/credit-loans-debt/info-04-2013/are-reverse-mortgages-helpful.html
I would suggest consider offering to sell the home to a SOLVENT family member before getting a reverse mortgage. The reverse mortgage does take a LOT of fees and does indeed need to be researched carefully. Some are better than others. It is ONE tool, but needs to be carefully selected for the appropriate customer who fully understands the pros & cons.
This is true, but I’m not entirely comfortable with the government expecting people to gamble their retirement based on actuarial self-analysis.
Exactly. And to those that maintain that the government would never reduce a benefit once it’s being collected, do you really believe that a retiree with a $200k/year AGI or a $3M retirement account would be exempted from means testing just because they’d already drawn their first SS check?
Years ago we concluded that SS wouldn’t survive in a form that would provide us much benefit, aggressively funded our retirement and other investment accounts, and eventually transitioned completely off “employment”.
I’ve appealed many assessed valuations, most recently last year, and have never lost. I once purchased a lot for $32,500 but the county insisted it was worth $118,000. They wouldn’t budge, so I followed the appeal process all the way through and eventually prevailed. The following year I bought the lot next door for a similar price. The assessor fought me again, and lost again.
Last year I purchased a couple building lots near our new home in Island County, Washington. Knowing that our primary residence would soon be re-assessed, and not wanting to get on the wrong side of the assessor, I was reluctant to appeal the valuation of the building lots. So I decided to submit the appeal but not go to the hearing, and just let the chips fall where they may. It worked out fine. My appeal was granted.
My sentiments exactly. I can easily adjust my income down to any level without affecting my standard of living. In fact I’m doing so this year in order to get an Obamacare subsidy. I feel a little guilty about it, but as Judge Learned Hand (gotta love the name) famously wrote:
I’d like to think the judge would agree that same goes for ACA subsidies.
You are a multimillionaire and get ACA subsidies?!
Perhaps I should change my screen name to Thurston Howell III.
I didn’t write that I was a multi-M and would rather not have that discussion here. When I posted above about $200 AGI and $3M in retirement accounts it was hypothetical, not personal. But yes, DW and I are receiving AA subsidies.
People like us, who are jobless and live off our investments, can easily control our taxable income.
It’s also realistic that the very wealthy can qualify for ACA subsidies, which are based on income, not wealth.
To clarify, I always vote for school bond issues and am happy to pay reasonable to high property taxes. One hopefully as I have done, buys an affordable house and plans for the maintenance as well as taxes. The wild card is tax increases that exceed income potential. This is not greed and expecting to be subsidized by yong families, any more than I am subsidizing two income families as a single homeowner. To be fair, this is an issue in my high tax state that is not a recommended retirement state. I see my single neighbors terrified of loosing the houses they have lived in for decades because the careful work on neighborhood development has made the area popular, and assessed values have skyrocketed. I am glad to se that Hawaii has some controls in place for property taxes. Across the board limits for retired folks that may be sitting on a pile of money and double pensions are not equitable. Expecting me to (in a few years) pay over 5 figures in property taxes and increasing to who knows where on a single RN retirement income is also not equitable.
Reverse mortgages is not recommended for any but the desperate or very elderly. As stated by the article posted, one in 10 are in default,and fees are high.
There are massive differences between the access to ACA financially in the states this took the subsidies and those that didn’t. More power to you, Sherpa. We all should have health care. I have a friend in a subsidy state that does the same and has a excellent care. D was on the ACA last year in our non subsidy state at the end of grad school. Her internship pay in the summer put her over the poverty level and her fees were set to go way up with a $6000 deductible. Fortunately she took a job in January with benefits.
“Expecting me to (in a few years) pay over 5 figures in property taxes and increasing to who knows where on a single RN retirement income is also not equitable.”
Are you saying 6 figures or more than $10K? If the latter, that isn’t unusual around me.
Since we’re on College Confidential…to me, giving breaks or caps to Seniors on property taxes would be like colleges not considering a family’s assets when giving out need based aid and relying only on income to determine that. To me, it’s kind of the same thing. If you own property in a town or city, you should have to pay your share. I don’t think most here would be too happy if folks with substantial assets yet low income received paid nothing for college for their children.