Friday, January 27, 2006

The Straw That Broke Our Backs

To add insult to injury, it now looks like tax millages are going to go way up because of the unfair and uneven way tax assessments have been adjusted post-Katrina. Which means our tax burden is likely to grow considerably. Earlier we were on the fence about what do with our home in New Orleans but now it is clear that it is time to sell and leave the city. This makes us incredibly sad since we'll miss our absolutely tremendous neighbors and the great culture and urban living. The only question is now is whether or not we sell immediately or try and hold out until August when we'll have been in the home two years and don't have to worry about the taxes on our home appreciation.

I am slowly starting to understand the federal government's lack of desire to help Louisiana. It seems like everything in this state is being done ass-backwards and while everyone knows it, absolutely no one is willing or able to work towards fixing it (in fact, there are many who take pride in it.) I too would be reluctant to give to a city begging for money with one hand while the other hand actively works to make is tax structure even more uneven, unfair, and biased towards the wealthiest few.

I wish I could say it is a battle we could stay and fight but at this point, I feel like the only true vote we have is with our feet. We are incredibly lucky that we are in both an economic aland logistical positions where we can chose to leave the city. Not that city has made it so that we could afford to stay if we really wanted...

6 Comments:

At 7:26 AM, Anonymous Randy said...

I would guess that the longer you can hold out the better your sales price (and the two year tax impllications are important too) spring of next year might be a good time if you can wait another year!

People might be spooked out of buying furing next hurricane season.

 
At 8:49 AM, Blogger Paul said...

Actually, I'm afraid that right now the home prices are spiked as high as they will go. Another hurricane strike this year will probably cause what remains of the city to collapse. And based on how I see the rebuilding process going, I suspect New Orleans is starting a slow slide downhill. So it may be better now to sell now while people are looking for something in the city at a premium.

The complicating factor is that we sunk so much into this house in restoring it that it would be very hard to document it all (so that it comes out of our profits selling). For that reason alone, it looks like we'll try to hold on to at least close in August. Ideally, we can put it up for sale much sooner and have a contract and closing in August.

 
At 2:25 PM, Anonymous Randy said...

Rent backs are relatively common, we ran into a couple of people asking for that when were house hunting out here.

Now that I am mostly through my Federal taxes I know we are paying around 330 a month in property taxes, but at least everyone is reassessed each year!

 
At 10:26 AM, Blogger @-}-}--- Phyllis said...

Paul, this news makes me very sad, of course, because we would like to keep you as friends and neighbors, but I certainly can understand all the uncertainties. Did you read the major article on tax assessment in yesterday's (or the day before's) T-P on NOLA.com? It sounds like some changes are on the way, but who knows how soon.

 
At 10:29 AM, Blogger @-}-}--- Phyllis said...

Paul, a second thought. Did you know that Lolita Werhan, who lives across the street, works in real estate? She might be able to advise you on your considerations.

 
At 11:11 AM, Anonymous matt and laura said...

You might look into a tax adviser.

I'm pretty sure you can exclude a certain amount of gain on the sale of a primary residence you did not reside in and own a full 2 years. It is prorated based on how long you lived there. As long as the gain is less than the prorated portion of your maximum exclusion ($500k for married couples filing jointly), you are not taxed on the proceeds.

See http://www.wwlaw.com/taxact.htm

See a tax advisor to figure out if you can exclude what you'd gain on a sale even if you don't wait.

 

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