Not true where I live. Some people buy older, smaller houses in desirable neighborhoods…and tear them down to build way larger homes. Basically, they are buying the land. They aren’t interested in the smaller, older house even if it’s in live in condition.
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Or the other option is you make enough money to just live life and there’s really not much left to leave your children. This is the scenario for most people - it’s not that they’re squandering of their money.
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In the Northeast, if you are in a suburb with good public transportation to an attractive city/employment hubs, a tear down is a modest house where the setbacks and zoning (and not near wetlands) means that you can build a house that looks like the rest of your neighborhood (i.e. big, multi car garage with wide driveways). Even older homes get described as tear downs if they don’t have central air, bathroom in the hallway not en-suite, fixtures from 1960 EVEN IN PRISTINE CONDITION. Kind of sad.
I think the moldy, collapsing houses got torn down pre-2008 (when all financing stopped, ergo all construction stopped)!
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Most people accumulate wealth so they have financial security. It’s difficult to assess how much you’ll actually need because you dont know how long you’ll live or what medical costs may arise in the future,
A lot of people have excess wealth so they dont have to a burden on their children. And many of these people have extra money and pass it on.
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aribtary mains random choice or personal whim, rather than any reason or system.
The examples you provided are explained bcos that is what could pas the budget limitations. It was a compromise number. A perfectly good reason in politics.
Depends on how defined. Many tiny homes in CA have large lots where the land far exceeds the value of the tiny but still livable home. The land is worth $1m alone.
From a real estate professional perspective, those are not considered tear down homes. Just because a developer chooses to tear down an older home, that does not make it a tear down. It’s an industry term.
I live in a high cost of living area as well and see this sort of development occurring but a true tear down is hard to find. There is one for sale near me but the land does not perk so developers have not touched it. If I had over 3M to spend on a house in cash, I would do it, but that’s out of my budget even with a conventional mortgage. I know how to do it, however.
I just renovated a house that you would call a tear down (by the popular use of the term). It was built in 1935. It’s a beautiful, modern 3 bedroom now but I didn’t tear it down. Those size homes are hard to find because larger developers don’t want to build them.
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Perhaps, but its common in Silicon Valley for an individual – not developer – to purchase a tiny home on large lot and tear it down to the ground to build something much larger.
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Tell them if they don’t spend it you’ll give it to the “wrong” (for them) political party or to Charities they don’t approve of…
LOVE that you preserved a classic 1930s home 
Did you have to add a bathroom? (asks this lady who had a 1 bath 1930s starter home in NY)
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Yes, a bathroom and a small deck.
The main important things I had to do was repair/update the foundation, new roof, new windows, and new electrical/plumbing. It was a real renovation, not ginger-breading.
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You have previously mentioned in years past having been an academic with published research, non tenured public school teacher, private school teacher, and referenced being an essential worker with law, taxation, and estate planning subject matter expertise.
Adding to that a current real estate and renovation professional, wow and congratulations on all these successes!!
Thanks for sharing all of these experiences and expertise with those of us that have had much narrower career paths. Great to get your diverse and extensive perspective.
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Most of the law/tax stuff I learned from my partner. He’s the essential worker. The rest is me. I’ve changed careers a lot but I’ve been very fortunate. I’ve done the real estate stuff for the past decade.
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Way to give back!!
To better inform what school had a below 5% acceptance rate back then? That’s amazing, congratulations!!
In my neighborhood in an old part of a city (within 3 blocks in each direction of our house) no fewer than 6 smaller houses have been bought up, torn down and replaced with larger new builds in the year we have lived here. Not sure what shape they were in before but I don’t think that all of them were falling apart. There are also many others from the last several years which you can easily tell were also newly constructed. One street 2 blocks from me has 9/10 houses in a row that are newer construction.
I have very mixed feelings. On one hand I am happy people want to invest in the area and I get the desire for a larger home within the city, but I fear others being priced out. My own block has a lot of older people and I see this happening withing 5-10 years. Nice to see young families coming in but…
Not sure what the term in real estate is but here many of the smaller homes end up being torn down and replaced.
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If you haven’t figured out who I probably am by now, then you don’t know me and probably never will. I’d DM this to you but I see I can’t, so please feel free to delete if I’m not following the rules by responding.
If you want to DM someone whose profile is private - you can bring up the new private message tab in your own account and look them up via their user name to add to them to the new message you are creating.
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Yea, I too have mixed feelings on the changing neighborhoods with larger new single family homes replacing the quaint original homes.
In my town there is a big priority for higher density housing (similar idea, but the rebuilds have multiple dwellings.) I have mixed feelings on that too. I lean liberal and agree in concept with government encouraged lower cost housing options. But I’m also a bit relieved to not be nearer the bus lines since that’s where the denser-rebuild concept is concentrated.
Back in the day, when small houses were being bought, torn down and replaced by enormous expensive houses on relatively small lots, they were called McMansions in our area.
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@Iglooo, although I am sure that if we lower the exemption limit, we will collect more taxes, there are lots of things one can do with planning to avoid paying Federal estate tax if that is your goal and you have wealth/flexibility. Someone can set up a dynasty trust for your progeny with a modest gift or you can set up irrevocable trusts for each kid (they can be dynasty trusts as well). You can gift some money into that trust and use it to purchase assets that are likely to appreciate. The kids can establish businesses that are owned by the trust so all of the wealth that they generate will never be part of an estate. You can set up Roth IRAs for kids and they can make annual contributions – you could probably have your company hire them for enough work that they can make the contributions. The Roths could be used to purchase interests in early stage ventures (in which they and relatives are not employees or controlling owners (not sure exactly what the regs are). If one hits big, no income or estate tax. Everything has to be done carefully – all transactions done at arms length often with independent valuations.
When I last looked, one can set purchase life insurance policies with a variable payout (it can own a hedge fund investment for example). One can set up Irrevocable Life Insurance Trusts and the beneficiaries owe no tax on the payout. There was (and I think still is) something called a Crummey Trust (named after an accountant named Crummey, I believe) that allows one to fund an insurance policy in a trust without gift tax. It is a very funny charade.
There are also the more conventional ways of reducing/eliminating gift or estate tax: GRITs, GRATs, GRUTs etc.
I am not an expert in any of this, but for sure one can figure out ways to avoid federal estate tax if one wants to put in the time and money to figure them out.
All of these require specialized expertise and advance planning AND most require effective surrender of the assets or at least control over the assets (a dynasty trust set up correctly still allows you to be the beneficiary).
In my case, I live in a state that has its own estate tax with a threshold at $1 MM. My qualified plans are part of my estate and they are well over the state threshold but way under the federal estate tax exemption. So, unless I change my tax domicile, if there is in excess of $1 MM left in my qualified plans after I die, my estate will be paying state estate tax on that amount.
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Yes, you can employ those maneuvers and save some. But not all, and you end up paying sizable taxes. Just look at the amount IRS collects from estates. They collect more when the limit is lower, regardless of the maneuvers the wealthy employ. Had the maneuvers been entirely successful, the IRS collection would change much if the limit is lowered or not.