Real estate taxes for the elderly (house, legal, bill)

[riaelise]

Originally Posted by austin-steve

True,

But for certain situations, displacement and relocation can be more expensive than the accrued taxes. What I don't know for sure is what happens if:
a) The owner passes
b) The home is sold
c) the tax bill exceeds the proceeds of the sale.

I would think it would be like any other debt, like credit card debt, that the bill is owed by the estate but if the estate cannot pay, it simply goes away.

Now, if there are kids in the picture who want to inherit and maybe someday live in the house, they'd better do the math on all this.

Steve

Exactly what I'm thinking, and if what I am reading is correct, then that's messed up! My mother (in the thought process of relocation) wants to buy a house and have it willed to me, as her heir, when she passes. If I do NOT want to sell the house, but rather hold it for family purposes, we would get socked with a MONSTROUS tax bill (over $50K) since it would be accruing from day one until the change of ownership. If she lives into her 80s or 90s (which I pray that she does), the math definitely can add up and be very crippling to the new owner.

On the other hand, if she isn't working, she'd be living off investments and proceeds from the sale of her house in NYC. While substantial on paper, when doled out over the months, it isn't a lot at all. She is vascillating between wanting to pay for a home down here outright or carry a smaller mortgage. Either way, when you factor in property taxes, it stinks. Property tax payments of $400-$500 per month, or $4000-5000 if you don't escrow are quite hefty for someone who isn't employed and they're never-ending. At least the mortgage goes away once paid off! I could approach my mom about paying the taxes while she's alive, but I'd feel awkward about that because I'd hate for my mother to have to worry about such a big bill when she should focus on enjoying her remaining years. Chances are, I would not suggest that she pay the taxes while alive.

At the same time, if she does want to will the property to me and defers the taxes, then we'll get screwed later on in a big way. It's like the county forces many people to sell the properties because the tax bill would be very high and would take a toll on our personal savings. That's crazy and ridiculous. Real estate taxes should be at a reduced rate for seniors PERIOD. Forget the deferred crap. Also, once the person dies, then an amount (not the whole thing PLUS INTEREST and penalties) should be paid by the estate.

The above poster who stated that retirees should think twice about Texas is kind of spot on.

[scm53]

Originally Posted by riaelise

Real estate taxes should be at a reduced rate for seniors PERIOD. Forget the deferred crap. Also, once the person dies, then an amount (not the whole thing PLUS INTEREST and penalties) should be paid by the estate.

There is no penalty because of the over 65 deferral. If one thinks the 8% interest rate is onerous, then they are free to get a HELOC to pay the taxes at rates just under 4%. But the bottom line is, Texas schoolchildren depend upon property taxes to fund their education. That is the system we have here, for better or worse. To preserve the value of an estate by reducing the deferred taxes is taking money from those schoolchildren to give to the heirs. Sorry - can't go for that.

[riaelise]

Originally Posted by scm53

There is no penalty because of the over 65 deferral. If one thinks the 8% interest rate is onerous, then they are free to get a HELOC to pay the taxes at rates just under 4%. But the bottom line is, Texas schoolchildren depend upon property taxes to fund their education. That is the system we have here, for better or worse. To preserve the value of an estate by reducing the deferred taxes is taking money from those schoolchildren to give to the heirs. Sorry - can't go for that.

How is that "giving to the heirs"? I'd probably not sell my mother's home, so there's no money going into my pocket. Yet if I don't sell it, then a very substantial tax bill would be due that can be an onerous burden. I'm not saying that taxes shouldn't be paid at all..I'm saying that they should be reduced for senior citizens. I feel $400/mo. is too much for an older person on a fixed/limited income.

[Trainwreck20]

Interesting. But assuming a 2.4% (of value) annual tax bill, and historic 4.5% annual appreciation (in Texas), it doesn't seem like the tax bills would ever outrun the value of a free-and-clear home, unless compound interest starts kicking in.

To make the equation more complex, most people availing themselves of the deferral will have the senior tax exemption, that will keep the deferred taxes somewhat lower than a non-senior. Just because you defer does not mean you can't claim the various exemptions.

[Trainwreck20]

I'd probably not sell my mother's home, so there's no money going into my pocket.

Yes, the unpaid taxes would be going into your pocket.

[gpurcell]

Originally Posted by riaelise

I'm not saying that taxes shouldn't be paid at all..I'm saying that they should be reduced for senior citizens. I feel $400/mo. is too much for an older person on a fixed/limited income.

Um, freezing them at 65 is a reduction, a big one. Be content with it.

[G Grasshopper]

Can you take the homestead, disabled and over 65 exemptions all at the same time (in Austin, not Georgetown?) I have an understanding that you can only take disabled OR 65, but I could be wrong.

[10scoachrick]

Originally Posted by BocaJunior

I think you're right - pretty sure they're the same exemption. 100% disabled veteran might be different. You can always call the CAD and they'll let you know, they're surprisingly easy to work with for a government entity.

No reason to mention Homestead as a benefit for seniors...it's available to anyone who qualifies...AND it's not a heck of a lot of money in any event.

AND a freeze is not a 'reduction'...it simply caps the INCREASE potential.(Not the correct term since no already existing amount is actually 'reduced'.)

[CptnRn]

Originally Posted by G Grasshopper

Can you take the homestead, disabled and over 65 exemptions all at the same time (in Austin, not Georgetown?) I have an understanding that you can only take disabled OR 65, but I could be wrong.

That is correct, you can only take one, he disabled or over 65 exemption.

[riaelise]

My question is this: if we do not intend to sell my mother's house, then there will be a nice, large tax bill waiting for us, right? I also agree that a "freeze" is not a reduction and it comes down to two things - either the senior pays the taxes each year or the estate will have to if they do not intend to sell the house. Something to consider when you are future planning. I'm not saying this because I plan to make any profit off the sale of my mother's house because I do not intend to sell her house and would like to keep it in the family.