Our assessed value and tax rate have been climbing steadily. Poor planning by the city has resulted in the need for a second high school less than a mile from the first. A large number of parcels are tax exempt - we’re home to a growing state university- and developers have gotten some sweet deals in exchange for building new student apartment complexes. I would like to move, but want to be close to my D and NoVa would be even more expensive. I tell myself at least I have the funds to pay the taxes!
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In MA (where Shawbridge is), assessments are supposed to be actual market value such as an appraisal would indicate, but in practice tend to be quite a bit less. Their goal is that the relative values of properties as indicated by the assessments are consistent.
So an actual appraisal would most likely not be helpful in this case. He needs to find comparable properties and see if they are assessed for less.
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One thing that always works for me …
Look at how they value your land as opposed to your neighbors’. My taxing district generically assesses everyone’s lot in a neighborhood at the same dollar value, regardless of size. I find that preposterous and argue that every time. I point out that my neighbor’s lot is 40% larger than mine, as well as on an enviable corner lot yet you assess my lot and his as the same, which any reasonable person would see as ridiculous. When they push back on the fact that his lot raises my lot’s value and so I should be happy about that, I point out that if you picked up my house and put it on his lot no one would argue that it would sell for more. I win every time.
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I never realized that a corner lot would be more desirable. I would have thought the opposite as the house is more exposed.
Our values are heavily weighted toward land, so even though a neighbor’s house may be in far better condition, the house value comprises only a third of the total assessment so taxes are in a fairly tight range.
It’s mainly because corner lots usually are larger.
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I had a corner lot once and yes it was a little bit larger, but I did not really care for the extra upkeep(mainly edging on the sidewalk)
I do find this thread interesting to go from worrying about RMDs to worrying about property taxes being too high.
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Technically corner lots are supposed to be more desirable due to extra privacy on one side. However we had a small corner lot in upstate NY and vowed to not do that again. 150 feet of sidewalk to shovel instead of 50 feet. And no easy way to nicely fence the “backyard” to keep the kiddo in.
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The thread meanders because the “formula” for retirement is so complicated with so many things to consider- real estate taxes, RMD, where to live, health insurance options, etc.
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DH and I talked about this last night, as we were preparing to write our quarterly tax payment. We disagree about what we should do when he retires. I mentioned that I’d like him to have dividends and interest redirected to the checking account for cash flow, and he can continue to do what he wants with investments. Its also because if something were to happen to him, I’d prefer that basic cash flow was in place (we have my SS, but not his, nor his small pension, that will stop accruing value in a year so we will decide how to take that, which isn’t very much, then). Too early for RMD. What have others done?
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IDK if any of you caught a recent news story, that if you underpay federal taxes (and there are two ways of looking at it on underpaying, see tax guidelines) they use to charge 3% interest but now they will be charging 8% interest on taxes owed.
I don’t have an answer to your question - DH retired before me by 11 months. We had ‘built up’ our checking account a bit, and Nov - Sept with my earnings, it kept our checking account from draining down too much. I took SS right at 65 (Oct 2021; not big amount due to being out of job market 18 years during prime income years), and we started DH’s SS and our annuity stream of cash March 2022. We have two new annuities that should be past the 1 year time frame for us to have cash stream w/o penalty – we have a ‘state of the markets’ presentation by our financial group, and then a week later we meet with our individual financial guy.
We are converting some funds from 401k to Roth IRA so that when RMDs hit for us (we are both 67 now) we will have pretty level tax payments. I am also having the federal taxes taken out of 401k as a separate amount - the required federal tax amount. I have to tell them we want $X amount, and a separate payment of the taxes.
This guy we have is a younger, newer associate of our financial group (not too young, 43, but lacks the experience and many qualities of the President who is 51) - President spun us to him due to growth of the company. I have to spell out to financial guy this time via email that he has to have certain things prepared for our sit down, not ask us ‘what questions do we have’. The last appointment was not much better than our first - even with communicating. I will spell out a reminder very clearly. He overlooked some things important to us. Also found emailing him was somewhat effective. His admin assistant, also found out her weaknesses - she didn’t communicate/ask him something that she clearly didn’t understand, but why she didn’t ask him IDK. Because she didn’t ‘get’ what I was talking about… it meant a delay in something being processed. Frustrating, but now I know to email him. They had an office ‘gem’ (executive assistant that knew everything on paperwork) that at age 55, went home, sat in a recliner, husband went into the kitchen - came back to the living room and found her dead in her chair; IDK if massive heart attack or stroke but totally shocking. Very sad.
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This has nothing to do with underpaying our taxes. We don’t do that. It was simply that this discussion came up because he was moving a large sum of $ from one account to another to pay the quarterly tax and it came up because of that.
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I imagine you know this, but you really do not want to have the Fed taxes deducted from the Roth conversion, if you can help it. Ideally, you will have unencumbered funds that can be used to pay the taxes on the conversion.
I imagine you also know to keep an eye on IRMAA when making the Roth conversion, since you are now on Medicare, I assume.
This year’s 8% late fee is significant. I sincerely hope that I calculated Safe Harbor correctly.
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Fed taxes coming out of 401k. I guess I didn’t explain it clearly. We have nothing coming out of Roth IRAs. I also don’t want my ‘unencumbered funds’ to pay that extra federal tax.
We don’t hit ‘high enough income’ to affect paying the Medicare B or breaking out of a federal tax category.
Our 401k is sizable, and we just keep it from growing ‘too big’. Spun out money at times to purchase annuities, as neither of us have any pensions.
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DH is kicking around the idea of retiring maybe by the end of the year. Will have to look at IRMAA when we go on medicare B, but doubt a big $ is avoidable.
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It’s a bit surprising how quickly it ratchets up, and how narrow those brackets are.
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its a first world problem
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You did explain it correctly. I understood that you were having your brokerage firm withhold some of the 401K money to pay the Fed taxes due on the Roth conversion.
I think you would be better served to pay the taxes out of your other funds as that will allow you to convert more to Roth which will then grow tax-free. Something to consider for heirs also, since they will have to deplete the IRA account within ten years and pay Fed and possibly state taxes at their own rates. Roth = no taxes.
Good news on not triggering IRMAA.
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Our financial firm does not manage our DH’s 401k - I have done it effectively for many years, and we actually do better with returns. Plus we don’t pay for their management fee.
But all the 401k is in stock funds - specifically 3 traded funds which hold mostly stock (former employer continues to pays ‘admin fees’, as DH is retiree; we also don’t need to use the administrative financial help that they encourage you to use as retiree which would be a significant yearly cost).
We don’t ‘need’ to convert more to Roth. W/O pension, in order to have cash flow, we have SS and money from annuities. We pulled out some money from our paid for home for 10 year 2.5% interest (I wish I had pulled more money out, but our monthly payment for that loan is only $1400/month) and that is a block of money we can use for home improvements or to help 2 DDs with down payment on a home, or for bulk of purchasing a small condo near DD/SIL/Gkids – whatever comes up first. So we have that money in investments that should be growing. Had the down 2022 year, and most recovery in 2023. Who knows what 2024 will bring.
We are not too close to needing to worry about depleting 401k. DDs will inherit Roth IRAs and if necessary, can pay other taxes out of those funds.
We are in a bit of a hold pattern due to the shoe needing to drop for permanency of DDs on their resident cities. DH has hobbies where our home is located, and we are happy living here for now (have been in this area for 40 years and in this home we built 30 years ago).
@thumper1 i think I understand what you are asking although the ensuing discussion has muddled what I’m thinking.
We have a regular deposit of cash into our checking account. Feels similar to a check from a job. I’d rather have small amounts put into the checking account and have it feel like it did when we worked.
Right now, we are holding off on social security.
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I also was unclear of the question.