Property Grunt

Wednesday, April 06, 2005

Entering a World of Hurt: Real Estate Taxes

Here is a developing story on the mortgage tax situation.

It looks like the mortgage tax has gone up .05% (5 basis points) in Manhattan and 11 others counties*. The increases were included in the new State budget which was passed on time for the first time in 21 years. Although Governor Pataki has until April 21 to veto it, the hike is now being collected by the title companies.

New York is not the only place getting hit by the toll keeper. Last night NBC news featured a story on how real estate taxes are pricing out older people out of their own homes.

What is the cause for the higher taxes?

The average American home now costs $191,000, up 12 percent in the last two years. Property taxes are also going up, rising by an average of 10 percent since 2001.

During the economic boom in the 1990s, state governments piled up surpluses, but now they're strapped for cash and have less money to pass on to local governments. So localities are forced to spend more of their own money on police, fire departments and schools.

"We're still on pretty tight strings, so we're continuing to make efforts to provide services with the limited funds that are available," says Bert Waisanen with the National Conference of State Legislatures.

Presented on pg 56 in the book The Warren Buffet Way by Robert G. Hagstrom, Jr.
Buffet's position on inflation was

"Buffet maintains that inflation is a politcal not an economic phenomon. Because there is, as yet no permanent restraint on government spending."

The distribution of federal funds is definitely based on politics not on needs. If it was based on needs the mortgage tax would not be raised in New York and Wisconsin would not be getting enough to bankroll to half the state. It just shows that some lobbyists are better than others.

All of you real estate investors remember, you are ripe for the picking for the state once you start to own. If they are in need of cash you will be one of the first groups they will turn to. And when the government's mug is empty they will hit your barrels to get their fill.

So remember real estate is not the ultimate investment that those Robert Kiyoskai cultists touts it to be. Not only do you have to deal with taxes You are more vulnerable to predatory forces including squatters, lawsuits and other unsavory elements that wish to drain you of your financial resources.

So what does one do? Learn the how you can prepare for this situation. Watch Suze Orman, be frugal, watch your debt, take care of your health. The list goes on. BUT YOU ARE THE ONE IN CONTROL OF YOUR OWN LIFE AND ONLY YOU CAN PROTECT YOURSELF. ACCEPT THAT RESPONSIBILITY AND YOU WILL BE ON YOUR WAY.