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When Assets (Such as Real Estate) Become Liabilities

Discussion in 'Real Estate & Other Investments' started by Scorpio, Dec 30, 2016.



  1. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    When Assets (Such as Real Estate) Become Liabilities
    December 27, 2016

    It will be the middle class that accepted the notion that "real estate is the foundation of family wealth" that will be stripmined by higher taxes on immobile assets such as real estate.

    Correspondent Joel M. submitted an article that struck me as a harbinger of the future: In Greece, Property Is Debt:

    "At law courts throughout Greece, people are lining up to file papers renouncing their inheritance. Not necessarily because some feckless uncle left them with a pile of debt at the end of his revels; they are turning their backs on what used to be a pillar of Greece’s economy and society: real estate.

    Growing personal debt, declining incomes and ever higher taxes as Greece’s depression grinds on have turned property and the dream of easy money into dread of a catastrophic burden.

    After many years in which only very valuable properties were taxed, many Greeks went from paying almost no taxes on real estate to not having enough money to pay.

    In 2010, property taxes accounted for 0.26 percent of gross domestic product, while this year they are around 2 percent, according to state budget figures. 'Suddenly, the state treated the Greeks as if they were rich, at the precise moment that they ceased to be rich.'

    Among the many disruptions of the past few years, this one shows how traditional conceptions — and a sense of security — can be shattered. With a history full of wars, bankruptcies and rampant inflation, Greeks had always seen land as a haven.

    But it is private debt — at 222 billion euros last year — that may prove an even greater danger. This shows in government revenues. With the unified tax, ownership of every kind of property is now subject to taxation.

    It will be very difficult for the Greeks to get out from under this mountain of debt. Delinquent loans, which at the end of June made up 31.7 percent of all housing loans, were a mere 5.3 percent of the total in 2008."

    The self-reinforcing dynamics in this narrative profoundly reverse time-honored concepts of value: assets that once held or gained value now carry high costs of ownership and lose value.

    1. Governments desperate for tax revenues raise property taxes, which add costs that eventually depress sales and future price appreciation.

    2. High debt levels and high property taxes trigger foreclosures and forced sales that further depress the market with high inventories of unsold/unrented homes.

    3. As sales decline, appreciation can no longer be counted on to enrich owners. Instead, owners fear declines in value and higher taxes. This further depresses sales.

    4. High debt levels become even more burdensome as property values fall.

    5. Rather than offer a means of building and protecting wealth, real estate becomes a liability that destroys wealth via payment of taxes and declines in value.

    While it can be argued that Greece is a unique situation--a cumbersome, costly bureaucracy of land transfer coupled with soaring taxes--perhaps Greece is simply early to the party.

    [​IMG]

    Governments everywhere are facing fast-rising pension and healthcare costs, and the need for more tax revenues will skyrocket once the global recession trims income, payroll, business and sales taxes.

    Additional taxes on assets that can't flee the country--i.e. real estate--become extremely attractive.

    Once an asset class shifts from being a means of wealth preservation and appreciation to a financial risk and burden, a self-reinforcing feedback loop reduces demand and increases supply, pushing prices lower--a decline that then causes more people to sell before prices drop further.

    The nightmare scenario for recent buyers is a sharp tax increase that crushes the market value of their home, putting them underwater, i.e. their mortgage is greater than the value of their home. Faced with ever-increasing property taxes and further erosion of value, what's the advantage of holding onto the property?

    Anecdotally, stories of owners destroying buildings to lower their property tax appraisal emerged in America's Great Depression, as owners desperate to lower their property taxes destroyed their assets (buildings on the land) as the only available means of keeping their property.

    Which asset class attracts new taxes will be different from nation to nation, but we can anticipate that governments will go after assets that are currently considered safe and that can't flee to low-tax havens.

    Mobile capital can flee to safer, lower tax climes, and the super-wealthy can buy legislative tax breaks on their wealth. It will be the middle class that accepted the notion that "real estate is the foundation of family wealth" that will be stripmined by higher taxes on immobile assets such as real estate.

    This essay was drawn from Musings Report 45. The Musings Reports are sent exclusively to major patrons and contributors ($5/month or $50 annually) every weekend.


    Join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

    Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print). For more, please visit the OTM essentials website.

    http://www.oftwominds.com/blogdec16/assets-liabilities2-16.html
     
  2. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    Property tax is ongoing robbery and you the owner is a sitting duck.
    It is the #1 way the elite keep you the dirty peasant in your place.

    Trying to improve your lot in life is fine, owning a lake house or cabin in the woods is great.
    Just be prepared to be kicked in the balls repeatedly by useless scum communist party members for the rest of your life.

    .
     
  3. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    I tore down a building on my property just to cut my taxes in half.
     
  4. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    I doubt if this goes anywhere.

    Drive to kill school property tax in Pennsylvania headed back to Legislature


    By Marc Levy, The Associated Press

    Posted: 01/03/17, 2:28 PM EST | Updated: 11 hrs ago

    HARRISBURG >> Debate over school property taxes in Pennsylvania is expected to return to the Legislature in 2017.

    Senate supporters say the Nov. 8 election provided the necessary votes to eliminate school property taxes entirely and replace them with other revenue streams.

    That would mean shifting about $14 billion in taxes from property owners, including businesses, to Pennsylvania consumers and workers through sales and personal income taxes.

    An Associated Press analysis of state data found that more than 70 percent of school property taxes were collected by the wealthiest half of school districts in 2014-15.

    Sen. David Argall, R-Schuylkill, will introduce the leading proposal, which would increase the income tax rate by 60 percent and hike the state sales tax rate by 17 percent while applying it to a wider range of goods and services, such as groceries, clothing, basic TV, and funeral services.

    In late 2015, the Senate defeated Argall’s legislation by a 25-24 vote with Lt. Gov. Mike Stack casting the tie-breaker. The vote split both parties and the Pennsylvania School Boards Association opposed it.

    But proponents say a pair of incoming Harrisburg-area senators elected in November are replacing two opponents.

    “We believe that gets us to the magic number of 26,” Argall said.

    WHAT’S NEXT?


    Argall said he will reintroduce the bill in the two-year session that began Tuesday. It would allow the collection of school property taxes only to retire current debt, would give districts an inflationary aid increase annually and would require voter approval for school boards seeking a local income tax increase.

    Argall said he has discussed eliminating school property taxes with Democratic Gov. Tom Wolf’s administration, but “the devil is always going to be in the details.”

    Wolf campaigned in 2014 as a proponent of reducing property taxes, in part to narrow the wide disparity between wealthy and poor school districts. The following year, he proposed a $3.2 billion property tax cut designed to provide the most help to higher-poverty, higher-tax school districts, such as Erie, Harrisburg, Johnstown, Reading and Scranton. The plan never got a vote.

    The governor hasn’t endorsed a plan to eliminate property taxes. His office said that while Wolf “could support taking steps towards elimination, the details of such a plan are very important, especially how and whether local communities would contribute directly to school funding.”

    It is unclear whether Argall’s legislation can pass the House.

    A Republican plan the House approved in 2015 was designed to reduce property taxes by about $4 billion. But Democrats said the bill would have helped wealthier, not poorer, districts, and it died in the Senate.

    WHAT’S THE PLAN?


    School property tax collections this fiscal year likely will amount to $13 billion to $14 billion.

    Argall’s legislation would increase the state’s income tax rate to 4.95 percent, from 3.07 percent. That increase would provide an estimated $5 billion, while someone earning $50,000 a year in taxable income would see their state income taxes go from $1,535 to $2,475.

    The remainder needed to make up the difference would come from increasing the state sales tax rate to 7 percent from 6 percent and eliminating exemptions on many transactions, including groceries, clothing, and shoes; legal, accounting and financial services; dry cleaning; funeral services; salon services; basic television services; trash pickup; liquor and beer by the drink; non-prescription drugs; and tickets to sporting events, concerts and other events.

    WHERE WOULD THE MONEY GO?


    An Associated Press analysis of state data found that more than 70 percent of school property taxes were collected by the wealthiest half of school districts in 2014-15, the latest data available.

    Of the $12.3 billion collected, nearly $9 billion of that was collected by the 250 school districts that are in the top half of average household income, according to AP’s analysis.

    Districts in the bottom half of household income collected an average of less than $4,500 in property taxes per student. School districts in the top half collected nearly $9,000 per student, or twice as much.

    The disparity is greater at further ends of the income spectrum. School districts in the bottom 10 percent of household income collected about $3,100 in property taxes per student, while school districts in the top 10 percent collected nearly $13,000 per student, or more than four times as much.

    Follow Marc Levy on Twitter at www.twitter.com/timelywriter. His work can be found at http://bigstory.ap.org/author/marc-levy.

    http://www.thereporteronline.com/article/RO/20170103/NEWS/170109953


    PENNSYLVANIA TAXPAYERS CYBER COALITION
    http://ptcc.us/
     
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  5. Usury

    Usury Gold Chaser Platinum Bling

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    I subscribe to the "Rich Dad" philosophy of assets/liabilities. Unless it's generating positive cash-flow for me, it's a liability. PERIOD.

    So the same is true of your car, boat, lawnmower and all your other "stuff" as well....that even includes your PM's.

    Now at the same time, all of the above can be a store of wealth that can be sold to re-coup it if/when needed (and granted some are better at this than others). I do also realize that is therefore the generally accepted definition of an asset. However if we could change everyone's thinking to the idea in my first sentence, we'd all be a lot better off, mostly just buying what we need and investing the rest. It'd sure eliminate a lot of the useless retail glut.
     
  6. andial

    andial Sir Midas Member Site Supporter ++

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    Ya know, i was having a pretty good day before i read that post brother.
     
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  7. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    The 'nightmare house' for sale that comes with a live-in 70-year-old artist who can't be kicked out and doesn't pay any rent
    • A South Carolina home was advertised with an 'upstairs apartment cannot be shown under any circumstances' and mystery tenant who doesn't pay rent
    • Zillow post quickly went viral as the bizarre post sparked a flurry of conspiracy theories, from it being haunted, a 'murder house' or even a prank listing
    • 'I HAVE SERIOUS QUESTIONS ABOUT THIS NIGHTMARE HOUSE,' one Twitter user, Bekka Sup, posted after seeing the ad
    • The upstairs tenant is Randall McKissick, a 70-year-old retired artist, who has lived in the house for decades
    • He moved in as a struggling artist after his friend, then the homeowner, offered him the apartment which he has never paid rent on
    • Despite the quirky nature of the property, the $130,000 listing boasted it was a 'diamond in the rough'
    • The ad has since been changed and the home is currently 'off-market'


    Read more: http://www.dailymail.co.uk/news/article-4516356/Nightmare-home-sale-tenant-never-paid-rent.html#ixzz4hNshNSjx
    Follow us: @MailOnline on Twitter | DailyMail on Facebook
     
  8. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    Pretty much every asset is being turned into a liability these days. Many are learning now that the only real asset is to have the biggest victim card at the table.
     
  9. hammerhead

    hammerhead Not just a screen name Gold Chaser

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    I don't consider my residence an asset. I do have equity but the house is nothing but a money eater. Been trying to get it up to snuff just to put it up for sale. Still have a ways to go. If I can hang on long enough to sell it. I want to get a shit box fixer upper. Need to get wife on board for that.
     
  10. Treasure Searcher

    Treasure Searcher Gold Chaser Platinum Bling

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    Where I live, houses have not been worth anything for many years. Bought an $8,000 house and fix it up as funds allow. Invested my "would be house payment" cash into farmland. My farmland pays me. Of course, I have to use some of the farmland rent towards the house (upkeep, etc.) but I have to live somewhere.
     
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  11. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    The Greeks are being strip mined. Soon they will be homeless in their own country and they will be flooding Germany too. The slave class of Roman times is being recreated, updated of course. They learned from the black slave experience it is cheaper to rent or lease a slave, example the Scot-Irish immigrants, you could work them harder, if they got sick or can't work, you just get rid of them. They had to "take care" of the black slaves because they were a capital investment.

    Real Estate? As we all know, a sitting target for the government mafia. The school system isn't just an indoctrination camp, it serves up reliable voters to continue the theft. What teacher or administrator [more office staff than teachers in today's schools] is going to vote against property tax increases to fund the school scam? None. Ever notice they love hiring school superintendents from out of town or better out of state? They don't want them to have any skin in the game as to shearing the sheep.

    Get rid of government schools, now. They account for more than half of my property taxes, and almost every bill I get monthly has an additional school tax. Yet the parking lot for teachers is full of new cars. Teachers pension fund here is bankrupt but they keep taking more money. Things have gotten way out of line.
     
  12. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    I have an inclination to like the Penn. plan. Everybody will pay if they buy something or have income. More will participate in directly funding the school scam, pissing them off. Seniors with no real income nor doing much buying will get off light. Conspicuous consumers will pay pay pay. High earners will pay pay pay. Sounds good.

    Just think about this. I bought a low cost house that barely met our needs at the time. I was a low income earner. Yet I bought what I could afford and paid it off in 7 years on a 15 year loan. The whole time until today we scrimped and saved to keep the house in repair and slowly do upgrades to enhance our living here. Yet I am punished by increased property taxes [forever] for making improvements! If I blew the money every month on hookers and blow instead of taking care of myself and my property, I wouldn't have to pay. How does that make sense? Another example, I am taxed for having homeowners insurance. A person without homeowners insurance is not taxed. Yet if a tornado plows through and destroys both our homes, I have insurance to cover me and keep me from becoming a community liability. The guy who didn't have insurance is first in line for the government benefits [he didn't pay for] as he "lost everything".
     
  13. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    I agree with Ursury. A home IMHO is a liability. It is simple math. Sit down and add up all you pay to own the home over time. Property taxes, upkeep, mortgage and interest payments. Add all of it up. Then look up how much homes in your area that are the same sell for. Subtract that amount from the amount you have paid out so far. That is how much your RENT on the home you OWN really is. Adjusted for inflation I doubt there are many who show a real profit after sale. Exceptions of course are those homes in crazy markets like San Fran etc. I personally saw in the San Jose area in the early 1990s where a new house on one side of the street had a $500K mortgage and a just built house on the other side was selling for $250K. You can't make sense of a roller coaster market like that. Luck of the dice.

    The only saving grace is you don't pay tax on a certain amount after sale. Why? Because if you did it would collapse the real estate market big time.
     
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  14. solarion

    solarion Gold Member Gold Chaser

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    I think that's right. The parasite class in Greece is currently doing the equivalent of eating their seed grain, a situation which obviously cannot last.

    One look at major cities in decline in Amerika(Detroit & Chicago), will show a similar trend. The parasite class can never steal enough resources, can never stop growing and strangling its host.
     
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  15. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    I don't believe teachers, teacher unions & school boards deal in reality. They seem to believe that they can keep picking from the property owner vine without the fruit running out. Here's a good example of how they think..............

    Bucks, Montgomery school leaders say House bill could cost districts millions in tax revenue


    School officials are irate over a proposal in the state House to restrict the right of districts to challenge property assessments.

    If passed, House Bill 1213 could potentially cost the 500 districts in Pennsylvania $677.4 million a year, according to an analysis of revenue for the 2015-16 school year by the Pennsylvania School Boards Association.

    "It's just one more thing being recommended in the House to undermine public education in Pennsylvania," said William Harner, superintendent of the Quakertown Community School District, who listed escalating pension and charter school costs as state-mandated budget items forcing school boards to raise property taxes. "We've just gone through a budget cycle that was tough for students, parents, teachers and the rest of the community, all brought on by the leadership crisis in Harrisburg. The ability to pull a rabbit out of the hat is gone for most school districts."

    "It's like being punched in the head continually," Central Bucks Superintendent John Kopicki said of measures in the General Assembly. "I don't understand the logic behind the bill."

    The bill is sponsored by state Rep. Warren Kampf, R-157, who represents parts of Chester and Montgomery counties. It has 11 GOP co-sponsors, including state Rep. Robert Godshall, R-53, of Hatfield.

    In his February memorandum seeking support for the legislation, Kampf states the Uniformity Clause in the Pennsylvania Constitution does not allow a county to single out a property for a reassessment, the Pennsylvania courts have allowed school districts to pick properties they deem undervalued for taxing purposes and seek more money through what's called a "spot appeal" of the county's assessment.

    "A significant number of school districts now routinely appeal the county assessments of individual properties to increase the revenue they use to balance their budgets," Kampf's memo states. "These spot appeals are of properties where no improvement has occurred, or any change by the county assessor has happened."

    In describing the real estate assessment process, the Pennsylvania General Assembly's Local Government Commission said that while a county assessment office may not revalue a property following its sale, such a sale "may alert a taxing district, such as a school district, to appeal the (county) assessment based on the sales price."

    Such a practice by school districts, according to Kampf's memo, "literally has the effect in some cases of hammering a property owner with a huge tax increase after he has decided to buy the property and participate in our state economy. It strikes me as one of the most anti-competitive government practices in existence today.

    Godshall, who said he served on the Souderton Area school board for 17 years, said he's going to take another look at his co-sponsorship after receiving phone calls from area superintendents.

    "It's a matter of fairness," Godshall said about his co-sponsorship of the bill. "That was my rationale."

    In a 2014 report, the Pennsylvania Apartment Association said school districts have used the spot appeal process to get more tax money out of apartment complexes the district deems undervalued.

    "Current law provides no restrictions and school districts answer to no one regarding their reasons for picking one property owner over another for appeal," the association said in its report, which at the time was prepared in support of a House bill that had the same goals as the one now before the General Assembly.

    State Rep. Tom Murt, R-152, of Hatboro, was the lone Republican on the Commerce Committee to vote against the current bill, which is expected to go before the full House following a 19-8 committee vote earlier this month.

    "I was not convinced that that bill was a fair approach to the problems of assessment," Murt said. "If we started down that road, many of the districts I represent were going to be adversely impacted.

    "I have not seen, nor have I been shown evidence, that the school districts I represent in eastern Montgomery County have misused or abused their legal right to request a reassessment of a property."


    Edward Tate, president of the Council Rock school board, said, "Any action in Harrisburg that limits the ability of a local school board to govern its business is a mistake. Property owners have a right to appeal assessments, and often do. School districts and school boards should have the right, similarly, to contest those appeals."

    PSBA's analysis shows that other than Philadelphia and Pittsburgh, the legislation would hurt North Penn the most. It would cost the district $11.5 million a year.

    "This would cripple our ability to fund our schools," North Penn Superintendent Curtis Dietrich said. "It's an extremely one-sided piece of legislation. It's written to benefit big-box stores and apartment owners. It would hurt homeowners and school districts."

    According to the PSBA analysis of the bill, other districts that would be hit hard include Bensalem ($9.1 million), Central Bucks ($6.5 million), Neshaminy ($6.4 million), Pennsbury ($5.6 million) and Hatboro-Horsham ($4.95 million).

    "You tell me how I make up $6.5 million without raising taxes," Central Bucks' Kopicki said.

    In a letter to members of the state House, John M. Callahan, PSBA's assistant executive director, stated that "this restriction in the ability to generate future local revenues will harm schools that are already grappling with overall declining state aid and unfairly shift the property tax burden to homeowners. ... All other property owners in a school district have to bear the tax burden of under-assessed properties."

    Quakertown's Harner said having this legislation lumped together with pension costs and charter school expansion "puts the school district and other taxpayers at risk of having a school system lose significant revenue and, in turn, programs. When you cut student programs, you cut property values. The indirect cost to other taxpayers is property values going down."

    In a phone conversation, Kopicki could barely contain his outrage. "How in good conscience can they do this knowing it takes $677 million of property tax money away from our ability to educate children. They need to understand that by doing this they're hurting children. It's borderline obscene."

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 44 cents a day.

    Gary Weckselblatt: 215-345-3169; email: gweckselblatt@calkins.com; Twitter: @gweckselblatt

    http://www.buckscountycouriertimes....44-ada3-6a42b17281e5.html?hp=mid-threestories


    Here's What some people are trying to do about property tax insanity in PA:

    http://www.ptcc.us/solution.htm
     
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  16. solarion

    solarion Gold Member Gold Chaser

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    ...and that's the attitude these disgusting parasites always take. "All your base are belong to us!" "...then we'll decide how much of YOUR stuff we'll graciously allow you to keep..."
     
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  17. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    I have 2 houses. First one is paid off and the second one is a plan we started 25 years ago by buying a 90 year old shack on 1 acre in the national forest and then piece by piece over time buying up the land around it and paying that off as we went. Usually getting control of 3 or 6 or 11 acres at a time on land contract and then paying it off within a year or less.

    Once we had the land we had all the parcels combined into 1 large parcel and borrowed/mortgaged to build a nice house on it using the land as collateral. That one is almost paid off too, 5 or so years to go.

    Property taxes on our "second home" are fucking astronomical. When we saw our special property tax rate for having the fecking gall of trying to invest in property in our home state and better our lot in life we both said "well, fuck this."

    We both quit trying to earn big money. We both just work part time now, I never even tried to get back into tool and die after being laid off.
    We just make enough to get by and said feck the rest.

    Because we kept hard on the zero debt rule throughout life we live great and are doing what we want. We are far from rich you won't see any vacations to europeistan or shiny 28 foot pleasure boats around here but we live well. We eat a lot of chicken though!
    Once we no longer have to work in the city we'll sell house #1 and move into the house we built and love full time.

    Moral of my rant? Every step up the ladder gets you 3 or more leeches hanging off your back. When your load of leeches gets too heavy don't be afraid to put some salt on them until a few let go.

    Have a goal and work to get it, then don't be afraid to back off and enjoy life.
     
    Last edited: May 22, 2017
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  18. the_shootist

    the_shootist The war is here on our doorstep! Midas Member Site Supporter ++

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    Real estate will always have the property tax anchor around its ankle. The only real estate I own is where I live. I can maintain it and afford the high property taxes. When I no longer can I'll make adjustments and get rid of it for something less costly. One can never completely own real estate in the country. You will always owe on it....ALWAYS! That's become the American dream
     
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  19. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    It's expensive, it's a lot of work, it's a worry at times and we took some risks along the way but having a nice cabin up north on your own land is also flat out fucking awesome! The benefit outweighs the hassles over all.

    .:2 thumbs up:
     
  20. Ensoniq

    Ensoniq Non-Black Member Midas Member Site Supporter ++

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    I'd rather not pay real estate taxes but 1/2% isn't that bad when it comes with streets, city water and the like. I recently move 10 miles away from a place that was 1.2%

    If I didn't want such things I'd feel differently

    Not everybody wants a huge expensive house but some do
     
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  21. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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    Buckingham homeowners' battle with Toll shines light on widespread water damage problem

    When Kim Shaffer and Dave Wolk moved into their Buckingham home in August 2002, they felt they had achieved a lifelong dream.

    They said the estate home, built by Toll Brothers, signified their years of hard work had paid off.

    "It meant something," said Shaffer. "I was excited when we learned we were going to move into a Toll home."

    Now, however, the couple and some neighbors in their Buckingham Forest development are battling Toll Brothers over what they say is water damage beneath the stucco and brick facades of their homes — damage they and the housing inspectors they hired attribute to improper building practices. Some homeowners say they face repair bills of $100,000 or more to homes that are rotting from the inside out.

    Toll Brothers is replacing the exteriors on some newer homes in the neighborhood, but has refused — in most cases — to fix houses that are more than 12 years old. That's the time limit state law sets for holding builders liable for construction defects.

    "Our homeowners enjoy the full protection and the right to make claims under the longest warranty in our industry — 10 years," the company said in a statement. "Toll Brothers has committed to repair all homes within our warranty, and we have also committed to repair these water intrusion issues on homes in Pennsylvania that are up to 12 years old. The law in Pennsylvania provides an outside date beyond which claims may not be asserted — 12 years from completion of construction."

    That's leaving Shaffer, Wolk and some other residents of Buckingham Forest fuming.

    "I'd like to see Toll do the right thing, take care of the action that needs to be taken, fix the homes the way they were promised in the beginning, and move forward. Not just for us, but for all the neighbors," said Andrew Turk, whose 13-year-old house has water damage beneath the stucco, according to an inspection. Toll has rejected his warranty claim.

    Housing inspectors and construction attorneys say the problem extends beyond one builder and one development to involve homes across the country. Southeastern Pennsylvania, they say, has been hit especially hard by building failures — so much so that building scientists refer to the region as the "stucco failure capitol of the U.S." Stucco has been used on the exterior of many homes in Buckingham Forest, where the current asking price for homes is in the mid $600,000s.

    "We're seeing these failures because builders universally failed to build and construct these houses in accordance with the building codes that were in place at the time," said attorney Jennifer Horn. Her firm, Horn & Williamson, represents 250 families in the region in construction default cases, including some Buckingham Forest homeowners.

    "In a rush to build as fast as possible to make as much money as possible, these builders were doing three things wrong," she added. "They were not having appropriate oversight in the field. They're putting money before product and quality. And thirdly, most importantly, they're not paying attention to the details."

    Rob Lunny, of Lunny Building Diagnostics in Warwick, who said he's inspected 80 of the roughly 200 homes in Buckingham Forest, agreed. He said the failures are due to improper water management, not building materials. He said many homes he inspected have missing or improperly installed flashing — the strips of water-resident material installed around windows and doors, at roof intersections and other areas where water could enter a structure. He also said some gutters are too small to handle runoff and some homes lack elements to prevent water from seeping through exteriors. He said he's seen similar problems at other developments built by other builders.

    "This is not a stucco issue," he said. "This is a water management issue."

    Toll Brothers didn't respond to specific questions about Buckingham Forest or the allegations of its homeowners, and it's unknown how many homeowners in the development have filed warranty claims. The Pennsylvania Builders Association, a professional organization for contractors throughout the state, declined to comment on specific building materials or builders.

    "We firmly advocate for using best practices in construction material and installation," the association said in a statement. "PBA encourages its members to use the most current codes and management practices with all aspects of home construction and improvement."

    'A home with cancer'

    Wolk and Shaffer said they never had any reason to suspect there was damage beneath their home's stucco exterior until about two years ago, when their neighbor paid for a stucco inspection before putting his house up for sale. When that inspection turned up damage, which Wolk said the homeowner paid to fix after Toll Brothers rejected his warranty claim, the couple began to investigate. They and others quickly learned about homeowners' stucco woes — especially in southeastern Pennsylvania.

    Frank Hendron, of the Northeast Inspection Corp. in Delaware State, has been involved in code enforcement for decades, and helped write the national building standards for stucco application and water management.

    While he hasn't inspected any Buckingham Forest homes, he said, generally "there's a multitude of reasons (for exterior failures). The Northeast, first of all, is problematic for our weather pattern. We have all the seasons. We love that. The building doesn't love that."

    Frequent rain and wide temperature swings can wreak havoc on structures, he said, and if all building details aren't properly installed and integrated, a building may fail. "That's a problem that goes back to all builders," he said. "There's a huge lack of supervision. Most builders today don't build a house. They subcontract."

    Wolk and Shaffer said they were in denial until Lunny did a test that found high moisture levels near the chimney and around windows. The inspector blamed improper installation and design. It will cost anywhere from about $35,000 for spot repairs to more than $100,000 to remove and replace the stucco with vinyl siding, the homeowners said.

    "You sort of feel like you're living in a home with cancer," said Wolk. "You can't really see it. You're told it's there. You're not sure how to respond to it. Do I pay out of pocket to fix it and have the cancer go away?"

    But the issue isn't just with stucco homes.

    Chris White, who moved into Buckingham Forest with his family in February 2004, said Lunny's inspection turned up moisture damage under his home's brick exterior. Lunny's report also points out deficiencies that include improperly installed windows and missing "weep holes" in the brick to let water escape.

    "I have about $80,000 worth of window/door work, but the bigger scope is, the brick really needs to come off," said White. "It's really like a couple hundred thousand dollar issue to fix the entire home."

    White said he's submitted a warranty claim to Toll Brothers, but he expects it to be rejected because his home is beyond Toll's warranty period.

    Toll is repairing some homes in Buckingham Forest, which it began building off Forest Grove Road in the early 2000s. At least one of those homes is older than 12 years; Toll recently replaced a 14-year-old home's stucco chimney after inspections found mold in a child's bedroom closest to that area. Toll has refused, however, to replace that home's brick and stucco siding.

    "That was the Band-Aid," said Tamra Adams, who owns the home with her husband, Brett. "We still have the wound. The other damage you won't really know until you take down the sides of the house."

    Toll's costs rising

    In its statement, Toll said it no longer uses stucco in this region because it is "a challenging building application for this climate.

    "As we have publicly disclosed, Toll Brothers has received requests from homeowners in the region to inspect and remediate stucco and water infiltration issues on their homes," the Horsham company said. "This is an industry-wide problem."

    It's also a costly one.

    According to documents Toll Brothers filed with the U.S. Securities and Exchange Commission, the company estimated in fiscal year 2014 that it would spend $54 million on "known and unknown" warranty claims for stucco homes. About half of that was expected to be reimbursed by its insurance. By the end of fiscal 2015, estimated costs for such work rose to $80.3 million.

    "We believe these claims are attributable to local construction practices employed by independent contractors in this region," the company said in its 2016 annual report.

    When Toll ended its fiscal year last October, it estimated its liability had grown to approximately $324.4 million. Approximately $115.5 million of that would go to fix water intrusion at non-stucco homes, Toll Brothers aid.

    As of April 30, Toll said it has spent $171.8 million on water intrusion claims this year. Earlier this month, the company disclosed in a footnote in its quarterly earnings report, that the Securities and Exchange Commission is investigating its repair estimates. Toll said it would comply with the agency's request for more information, adding, "Management cannot at this time predict the eventual scope or outcome of this matter."

    Next steps

    Buckingham Forest homeowners whose warranty claims have been denied say Toll Brothers should have told them their homes might need repairs before the warranties expired.

    "This is negligence," said Mitch Goldstein, whose warranty claim for his 15-year-old house has been rejected. "When you don't do something you're supposed to do, it's negligence. They knew about the issue and never disclosed it."

    Goldstein isn't taking the denial quietly. He and Wolk have become leaders of an effort to rally their neighborhood into action. Dozens of homeowners have attended recent meetings at the Buckingham municipal building, where they've discussed options and heard from attorneys with expertise in construction defect cases. At least one meeting drew residents of other Toll Brothers neighborhoods who said they have the same problems.

    Wolk and Goldstein said they've both filed consumer complaints with the Pennsylvania Attorney General's Office. The office doesn't comment on complaints or investigations, but has acted against construction companies before. In October, the attorney general sued Montgomery County homebuilder The Cutler Group for what it said was faulty stucco installation and failure to respond to warranty claims. The lawsuit is pending; a spokesman for the office declined to comment on the lawsuit.

    Homeowners also are lobbying their legislators in the hope of changing state law to make it easier for homeowners to hold builders liable for defects, even after the 12-year statute runs out. While Hendron, the housing inspector, said Pennsylvania law also should require more frequent inspections of homes during construction, he added that proper home construction is the builder's responsibility.

    "(Builders') first responses are, 'The code official signed off, he said I did everything right,'" Hendron said. "That's not what the job of the code official is. It's not his job to oversee or supervise. He's not saying he was there every day. There were spot checks the state has delegated for him to check. It is the permit holder's requirement to build to code."

    Goldstein said some neighbors have started passing out flyers at newer Toll Brothers developments, encouraging owners to get their homes inspected before the warranties expire.

    "My ultimate goal is that everyone in this neighborhood is corrected, regardless of warranty," he said. "Make everybody whole; just do the right thing."

    Feeling trapped

    Danielle and Joe Steffe said they felt the same as Wolk and his wife did about their new home when they moved in, in 2003. "I bought a Toll Brothers home thinking I was buying a cut above," said Joe Steffe, a dentist.

    Not once did the couple think their brick home could have a problem until neighbors started talking late last year about their own water problems. A December inspection found water damage and a mold test found spores in the family room. A subsequent test by a Toll Brothers inspector, however, found no traces of mold anywhere except the basement. Still, the couple worry the presence of mold may be impacting their family's health.

    The Steffes, who are being represented by Horn and Williamson, recently entered arbitration with Toll. Arbitration is an independent process to resolve disputes outside the court system, and is often mandated in contracts. The Steffes hope Toll will agree to fix their home.

    "They sold us our home," Danielle Steffe said. "It was supposed to be perfect. You (Toll) did not meet your side of the bargain. You sold us a bill of goods, a house that was not sound structurally. I don't understand why you can't fix it. The house is 14 years old, not 54 years old."

    Enjoying our content? Become a Bucks County Courier Times subscriber to support stories like these. Get full access to our signature journalism for just 44 cents a day.

    Crissa Shoemaker DeBree: 215-345-3186; email: cshoemaker@calkins.com; Twitter: @CrissaShoemaker

    http://www.buckscountycouriertimes....e7-892a-ebfbda792e26.html?hp=mid-threestories
     
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  22. edsl48

    edsl48 Silver Member Silver Miner

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    REgarding school boards:

    "In the first place, God made idiots. That was for practice. Then he made school boards."

    MArk Twain
     
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  23. southfork

    southfork Mother Lode Found Mother Lode

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    Randy is another scum sucking leach, the owner apparently gave him life tenancy allowing him to stay till he dies, new buyer would have to honor the agreement.

     
  24. Scorpio

    Scorpio Скорпион Founding Member Board Elder Site Mgr Site Supporter ++

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    this is so true,

    we have a few here who have exited the hampster wheel and looked back to see it for what it really was
     
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  25. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    Randy may have found other ways of paying the rent that we arent privy too. there's more to live than money
     
  26. Cigarlover

    Cigarlover Gold Member Gold Chaser

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    When I was younger (Shit I am sounding old) people knew that Gov jobs were low paying but the benies were pretty good. Somewhere at some time something happened and all of a sudden Gov jobs are the jobs paying well and with great benies and a pension. The private sector used to offer all of those things until they were priced out of the country. Now the corporate burden falls on the middle class. The only way I out that I see is to let em all crash and burn. Unfortunately they will tax everyone else to death first. Unless of course people start getting involved.

    Not long ago there was a special vote for a special tax on all property owners for some special programs for the poor(Mostly lazy) Out of 45,000 voters less than 5k voted and we lost by 300 votes so now I have a special tax added to my property tax bill because 2300 people out of 45,000 voted for it. I suspect most didnt even know about it.

    So here's a question, if you can get enough signitures to get things voted on and added to the property tax couldn't you also get enough signitures to get rid of the property tax altogether?

    In regards to home ownership. The last study I looked at showed the 15 years of home ownership was the break even point. If you owned your home less than 15 years you were better off renting.

    Il is going through some troubles right now as well as CT on the brink. PR already defaulted. PR is never mentioned anymore now though. Not sure what happened with that. Its all getting interesting though.. Been seriously considering selling everything and moving onto a sailboat and just cruise.
     
  27. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    ^^^^^^^
    I have considered buying a boat or a houseboat and living on the Ohio river [bank]. Don't know the tax implications.
     
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  28. Irons

    Irons Deep Sixed Site Supporter Mother Lode

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    An easy way to describe this to even young people who don't have any real estate yet is this:

    Imagine you just saved up enough to put a down payment on a car/truck that you have wanted forever.
    So you go to buy it all excited because finally you are going to be somebody.

    Then you find out your licence plates are going to be $200 a year and your insurance will be $3800 a year.

    .
     
    Last edited: Jun 19, 2017
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  29. Uglytruth

    Uglytruth Gold Member Gold Chaser

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    When you own property in more than 1 county and your NOT allowed to vote in that county on things like school taxes etc...... Taxation without representation.
     
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  30. GOLDZILLA

    GOLDZILLA Harvurd Koleej Jeenyus Midas Member

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    Alot of these scams involve anyone over 65 not having to pay the school tax, so they are all for it and vote for it every time.
     
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  31. edsl48

    edsl48 Silver Member Silver Miner

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    That's how they do it here in Illinois. There are income limitations, as always, but seniors citizens in general vote so they are always preached to how "they paid their way and so a tax hike wont affect them" and then top it off with "it's for the children" every time and they vote for tax hikes every time after being deluded that it's to make a utopia for their grandchildren. I could write a big essay on this but for sake of brevity won't because I know most here already know how the property tax for schools shakedown works.
    Every time I hear the old "we paid our way" though it burns my a** because as a senior citizen I know it is all hogwash because my parents and their friends never brought up things like that. My fellow baby boomers have become great at spending other peoples money and I better hush because I am on the edge of ranting.
    me >> : X
     
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  32. gringott

    gringott Killed then Resurrected Midas Member Site Supporter

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    ^^^^^^^^^^^
    Nice non-rant.
    I will say during my time of "growing up" my parents did not complain about property taxes etc. Of course school teachers were poorly paid at the time, property taxes weren't even close to as high, and there was a lot less bureaucracy in the school system. A trip to the local high school a few years ago opened my eyes, they had pasted on the hallway walls puff pieces about the teachers and staff at the HS, not the janitors or cooks who work hard, but the teachers and hangers-on. I was shocked at how many people were not teaching but holding down made up positions. At least 25 or more percent.
     
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  33. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  34. latemetal

    latemetal Platinum Bling Platinum Bling

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  35. searcher

    searcher Mother Lode Found Site Supporter ++ Mother Lode

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  36. Treasure Searcher

    Treasure Searcher Gold Chaser Platinum Bling

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    There is probably not any tax implications for a houseboat, but you will probably have to deal with a state DNR, since the house boat would be on a river.

    State DNR's are the most tyrannical agencies that have ever existed.
     
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  37. <SLV>

    <SLV> Gold Member Gold Chaser Site Supporter

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    I just bought a second home in northern WI on the Flambeau River. Sale price was $45k, and the taxes are $2,500 per year. The "assessed value" is $105k, but we have been notified that the entire city is being revalued over the next few months. I'm scheduled with the assessor in 3 weeks. We'll see what it comes down to. I have a feeling that they will lower the valuations then increase the tax rate to compensate.
     
  38. hammerhead

    hammerhead Not just a screen name Gold Chaser

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