It is that time of the year and we have just received the notice of proposed property taxes for our various properties in Florida.
Florida's homestead law complicates the real estate tax situation. Florida's homestead law provides protection against forced sale of one's primary home. One of the reasons O.J. Simpson lives (or lived, he is in jail at present) in Florida is because of the generous protections from creditors provided for one's primary dwelling no matter how big or expensive.
For our purposes the homestead law provides a tax exemption from our real property taxes. A family with a homestead property receives a $50,000 tax exemption for all real property taxes except for school taxes (for which $25,000 of that exemption applies). So a family with a home valued at $200,000 would only pay taxes on $150,000 of the value and $175,000 for the school district taxes.
Even more important though is the protection provided against the rate at which taxes can increase from year to year. For a Florida homestead property, the rate at which taxes can increase is 3% or the rate of inflation which ever is less. For 2012 that increase is 3%. So, that means, when we receive our proposed taxes for our primary home there are two numbers for our home, the assessed value (which is the market value for our home and land less the $50,000 homestead tax exemption) and the taxable value. The taxable value can only rise by a maximum of 3% year over year and that is the number we pay taxes on. For our Florida investment properties the assessed value and the taxable value are the same and there are no exemptions.
While the Florida real estate bubble deflation has been hard on our net worth, the upside (gotta look on the bright side) has been that the assessed value went down on all of our Florida properties, which means that our real estate taxes and overall carrying costs have gone down. Now that property values are starting to edge up we have the 3% tax rate cap protection for our primary home so it will be quite few a years untill we are paying taxes at the level we were paying back in 2007 and 2008 (at least on our primary home).
For some long time Florida home owners, during the recession their real estate taxes continued to go up because there was such a huge gap between their assessed value and taxable value. For folks like us, landlords to three Florida properties and our primary home was purchased in 2004 our real estate taxes have come down to be similar to the rate that the long term residents of our neighborhood pay. We live in a very eclectic area so the disparity in real estate taxes is not as glaring as newer construction areas, where you could have, during the boom time, two identical sized homes with one owner paying $4000 in real estate taxes and the other non-homesteaded resident paying $8000 in real estate taxes.
Friday, August 31, 2012
Thursday, August 30, 2012
Financial Poker Face
I recently ran into my former assistant out and about. This is a sweet woman, single mom, about my age. Because we worked closely for a few years, I have general knowledge of her financial status.
Anyways we were catching up on respective news and she proudly announced that she had a new car. She goes on to tell me its the same brand as my car, one model level down from mine. Of course I had to ask, new or used? New, she tells me. And this is where I fail, I make a face of disapproval.
When we were working together she had a late model small SUV, nothing that needed replacement in my mind. But, I have no idea as to what happened to it, maybe she got in a car accident or maybe it required an expensive repair. So, I start calculating how much the car cost and then I move on to calculating the cost of a 5 year loan, and what she would have probably have gotten for her trade in . . . and I come up with probably at least a $450 payment per month. And, I make that face of disapproval.
And she knows me well enough to know I'm one that hates debt and that I am much more structured and conservative when it comes to our personal finances. So she knows what I'm thinking when I make that face.
Frankly, I shouldn't be so judgmental. Buying a new car may not be for me, but for most people it is an event to be proud of and to be excited about. Our financial path and plan is not appropriate for most people so I need to get over it when I hear people making financial choices that are different from ours. I shouldn't share my opinion (even non-verbally) unless someone asks for my advice.
Anyways we were catching up on respective news and she proudly announced that she had a new car. She goes on to tell me its the same brand as my car, one model level down from mine. Of course I had to ask, new or used? New, she tells me. And this is where I fail, I make a face of disapproval.
When we were working together she had a late model small SUV, nothing that needed replacement in my mind. But, I have no idea as to what happened to it, maybe she got in a car accident or maybe it required an expensive repair. So, I start calculating how much the car cost and then I move on to calculating the cost of a 5 year loan, and what she would have probably have gotten for her trade in . . . and I come up with probably at least a $450 payment per month. And, I make that face of disapproval.
And she knows me well enough to know I'm one that hates debt and that I am much more structured and conservative when it comes to our personal finances. So she knows what I'm thinking when I make that face.
Frankly, I shouldn't be so judgmental. Buying a new car may not be for me, but for most people it is an event to be proud of and to be excited about. Our financial path and plan is not appropriate for most people so I need to get over it when I hear people making financial choices that are different from ours. I shouldn't share my opinion (even non-verbally) unless someone asks for my advice.
Wednesday, August 29, 2012
Lease Break
Ugh, one of our tenants has decided to break her lease. Our tenant has a job opportunity that is requiring her to move and its an opportunity that she can't pass up so she has opted to break her lease.
Mr. Sam normally handles the interactions with our tenants, because I can be too tough and over the years he has done a better job at working and managing our tenants. This is our plan, we will review the lease and abide by the lease. I'm sure you are thinking, of course you'll abide by the lease, well Mr. Sam can be too nice and not charge fees that we ought to be charging. So, because we only got notice late in the month, we will charge her the last month of rent (which we have in our tenant account) because we won't be able to lease the unit before September first. If we rent the place quickly (i.e. mid-month) we will refund part of her last month's rent, meaning we won't collect the rent twice for the same unit. We also will charge her the lease break fee (which we also have in our tenant account) since she is breaking the lease. The lease break fee covers the expense of advertising the unit and any other expenses related to re-renting the unit (i.e. there is a utility fee for transferring the utilities back to our name).
Tuesday, August 28, 2012
Refinance - Part 8
We finally heard from the mortgage broker. Our loan application has made it through underwriting and we have been approved.
Hooray!!
We do have to provide a few more documents. We refinanced one of our rental properties in 2011 so we need to provide some documentation related to that refinance. We also need to provide our most recent bank statements since more than a month has gone by since we provided the prior documentation.
We hoped to have the paperwork wrapped up shortly and then on to closing.
Hooray!!
We do have to provide a few more documents. We refinanced one of our rental properties in 2011 so we need to provide some documentation related to that refinance. We also need to provide our most recent bank statements since more than a month has gone by since we provided the prior documentation.
We hoped to have the paperwork wrapped up shortly and then on to closing.
Wednesday, August 22, 2012
2012 Goals - Mid August Update
(1) Max out 401k(s) - $25,347 (75%)(goal is $34,000)
(2) Max out IRA(s) - $5123 (51%)(goal is $10,000)
(3) Add to e/r fund - $6400 (64%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $800 (16%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)
Total - $40,210 (58%)
At present we are about $4900 behind on our 2012 goals. We have made progress on funding our 2012 IRAs, one is now fully funded, as I have been putting our monthly home mortgage principal prepayment of $415 towards the IRA while we wait on our Refi. As previously mentioned, Mr. Sam will max out his 401k in September so we'll have some extra cash available to put towards our goals that are lagging behind.
Tuesday, August 21, 2012
Other Homework
In addition to working on getting term life insurance, we are also FINALLY working on getting our car insurance consolidated. We have been married for five years now, and getting our car insurance consolidated with one company has been on our "to do" list since then. Neither of us are particularly happy with our respective car insurance companies, mine is Allstate and his is Progressive, so we have a quote from a new company that will give us more coverage for less money for the two policies.
We also have a third car, an antique, which will have to stay on a separate special policy (which is very low cost).
We also have a third car, an antique, which will have to stay on a separate special policy (which is very low cost).
Monday, August 20, 2012
How Charitable?
This morning I caught an
NPR segment on the geography of giving.
The Chronicle of Philanthropy has some great data that you can drill down into. Some of the data is restricted to those that subscribe, but much of it is available to the public.
Florida ranks # 15 in giving for percentage of discretionary income. And, I think that is an interesting way to measure giving. We rank fourth for total giving, which makes sense when you think of Florida population. Overall, Florida's population is older and we have pockets of great wealth.
Thinking about our own level of giving, I think we could do better. I know, because I've kept track of my personal finances for years and I used to give more when I was less focused on my (now our) personal finance goals. Now that we set regular and focused goals, if we have "extra" cash available, I am much more likely to put those funds towards our personal goals rather than charitable giving.
This is how we give: First, I make a monthly regular contribution to the children's charity that I am involved in. This giving is set up to go automatically to our credit card and then I pay it off each month. We give $40 a month, which is $480 a year. I have to say, that automatic giving, like automatic savings is really a great way for me to give because I don't have to think about writing a check. Once the giving is set up, I don't think about it all.
We also give money at Thanksgiving for our turkey give away (same organization), we normally give $100 in November. We also give $100 to the annual fundraiser (same organization) which is also in November (I am on the board, so we strive for 100% board participation for our annual fundraiser, because that level of participation helps with grant writing). We also normally sponsor a family at Christmas time, which means buying basic supplies and a few gifts for the family (same organization) which runs around $200. So, to one organization we normally give close to $900 a year.
Second, we have two health/disease focused charities that we give to. These are organizations that focus on support, research and finding a cure to two diseases that impact my family. We normally give at least $100 a year to both, for a total of $200.
Third, I'll give $20 here and there to support friends that are fundraising. Plus, we always buy Girl Scout cookies and support the kids in our neighborhood that are doing fundraising. Finally, at Christmas time we have, for the past few years, bought everyone in our family a Christmas wreath which is shipped to them as part of the local marching band fundraiser (that normally runs $100+). So with miscellaneous giving and the Christmas wreaths, that adds another $200 to our yearly total.
So, our grand total runs us about $1300 in giving. I've decided that I am going to increase my monthly giving from $40 to $50. How about you, how much do you give and how do you give?
Very interesting to learn that lower income folks actually give away a bigger percentage of their discretionary income.
- Households with incomes of $50,000-$75,000 donate on average 7.6 percent of their discretionary income.
- That's compared with about 4 percent for those with incomes of $200,000 or more.
Also, "red" states give more than "blue states. Religion seems to play a large factor in this division. Red states are more religious and citizens of those states give more to their church. Utah ranks number one in giving, and that is due to the high Mormon population and the tithing to their church. Personally, I'm not sure giving to church, in general, should count as charitable giving. Certainly some of those funds goes to the church's charitable mission, but a good chunk of it goes to support the church on an administrative level (the upkeep of the church, heating and A/C, the pay for the preacher, etc.)
The Chronicle of Philanthropy has some great data that you can drill down into. Some of the data is restricted to those that subscribe, but much of it is available to the public.
Florida ranks # 15 in giving for percentage of discretionary income. And, I think that is an interesting way to measure giving. We rank fourth for total giving, which makes sense when you think of Florida population. Overall, Florida's population is older and we have pockets of great wealth.
Thinking about our own level of giving, I think we could do better. I know, because I've kept track of my personal finances for years and I used to give more when I was less focused on my (now our) personal finance goals. Now that we set regular and focused goals, if we have "extra" cash available, I am much more likely to put those funds towards our personal goals rather than charitable giving.
This is how we give: First, I make a monthly regular contribution to the children's charity that I am involved in. This giving is set up to go automatically to our credit card and then I pay it off each month. We give $40 a month, which is $480 a year. I have to say, that automatic giving, like automatic savings is really a great way for me to give because I don't have to think about writing a check. Once the giving is set up, I don't think about it all.
We also give money at Thanksgiving for our turkey give away (same organization), we normally give $100 in November. We also give $100 to the annual fundraiser (same organization) which is also in November (I am on the board, so we strive for 100% board participation for our annual fundraiser, because that level of participation helps with grant writing). We also normally sponsor a family at Christmas time, which means buying basic supplies and a few gifts for the family (same organization) which runs around $200. So, to one organization we normally give close to $900 a year.
Second, we have two health/disease focused charities that we give to. These are organizations that focus on support, research and finding a cure to two diseases that impact my family. We normally give at least $100 a year to both, for a total of $200.
Third, I'll give $20 here and there to support friends that are fundraising. Plus, we always buy Girl Scout cookies and support the kids in our neighborhood that are doing fundraising. Finally, at Christmas time we have, for the past few years, bought everyone in our family a Christmas wreath which is shipped to them as part of the local marching band fundraiser (that normally runs $100+). So with miscellaneous giving and the Christmas wreaths, that adds another $200 to our yearly total.
So, our grand total runs us about $1300 in giving. I've decided that I am going to increase my monthly giving from $40 to $50. How about you, how much do you give and how do you give?
Friday, August 10, 2012
Recycling Bandits
Today, Friday, is recycling day in my small City. We utilize a single stream collection system. Which means that all our recycling, paper, cardboard, plastic, glass, cans, etc. is put into one large bucket. Then the City utilizes an automatic pick up truck system that grabs the bucket and dumps it into the truck (which looks like the below image from another city).
The recycling program doesn't cost anything to the City, or the tax-payors, because the recycling program pays for itself by recycling and selling off the higher value recyclables. In fact, there has been some discussion about a program in which the City will start tracking the weight of each household's recycling and eventually provide rebates (that will go to cover cost of waste removal) based on higher levels of recycling.
As you know, we live in South Florida. South Florida has a large immigrant population (both legal and illegal). I have general objection to the Federal government not enforcing our immigration laws and the fact that the illegal immigrant population strains our tax funded resources. However, on a personal level, I generally have no problem with the illegal immigrants that make their home in our City. Most of these folks are hard working, family orientated, peaceful folks who are doing their best to make a better life for themselves and their children.
But, every Friday I see, without fail, a group of immigrant women who goes around and collects the cans from the recycling buckets. As far as I'm concerned this activity is theft from the City and from the citizens, because it is undermining our recycling program. On the other hand, I'm sure these folks probably don't see any harm in their efforts since what they are stealing from is trash. Some municipalities have criminalized recycling theft or scavenging but I can't find that our City has done so. As such, if there is no ordinance against the activity I'm not sure anything can be done at this point.
At this point, I'm thinking about reaching out to my local commissioner, what would you do?
The recycling program doesn't cost anything to the City, or the tax-payors, because the recycling program pays for itself by recycling and selling off the higher value recyclables. In fact, there has been some discussion about a program in which the City will start tracking the weight of each household's recycling and eventually provide rebates (that will go to cover cost of waste removal) based on higher levels of recycling.
As you know, we live in South Florida. South Florida has a large immigrant population (both legal and illegal). I have general objection to the Federal government not enforcing our immigration laws and the fact that the illegal immigrant population strains our tax funded resources. However, on a personal level, I generally have no problem with the illegal immigrants that make their home in our City. Most of these folks are hard working, family orientated, peaceful folks who are doing their best to make a better life for themselves and their children.
But, every Friday I see, without fail, a group of immigrant women who goes around and collects the cans from the recycling buckets. As far as I'm concerned this activity is theft from the City and from the citizens, because it is undermining our recycling program. On the other hand, I'm sure these folks probably don't see any harm in their efforts since what they are stealing from is trash. Some municipalities have criminalized recycling theft or scavenging but I can't find that our City has done so. As such, if there is no ordinance against the activity I'm not sure anything can be done at this point.
At this point, I'm thinking about reaching out to my local commissioner, what would you do?
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