Latestarter's ramblings/musings/gripes and grumbles.

babsbag said:

The new ones are $$$$$...$$$$ But I wanted a truck with a higher towing capacity than my '01 Tundra so I started looking for a 2007 or newer with less than 100,000 miles. I would find them and they would be sold before I could get to them; and I was willing to drive 6 hours to get one and still couldn't make it work. I found this one at the local Toyota dealer. With only 36,000 miles it may be the last truck I ever own.

I have owned 7 different Toyotas over the years of various models. My boys and DIL also own Toys. Guess it isn't hard to figure out my preferences. I have also owned Ford, Chevy, VW, Datusn, and Honda but the Toys have been better body and under the hood hands down.

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I found a 2014 Tundra for 29k Crew Max version with 68,000 miles...or a double cab 2014 for 25k with 41,000 miles.....hmm

Kusanar said:

dumb question, but, if you are selling your place for more than you are buying another for, why do you need a loan?

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As far as i recall he hasnt owned his current house for long enough to pay it all off so i would asume a portion of the sale has to go to pay off his current home which makes him not have enough cash to buy the new house....or not enough to buy other things he wants/needs for the new property.

@Latestarter
Definitely go Ag and see about getting the 1acre parcel combined with the 18 whatever acre one. I wonder what they did with the rest of the acres...should have been 20acres.

Latestarter said:

Thanks @greybeard Right now it's broken into 2 parcels. 1 acre with house and 17.991 acres AG exempt. AG exempt does not carry over and can't be swapped into my name (I asked). I'll get the present tax structure till the end of this year. After Jan 1st till some time in April I have to go back to the county and submit application for AG exempt for me. The parcels are already set up and assigned numbers, so that part is relatively simple. Of course the new values will be establish based on my purchase price but right now tax on the house is $753/yr and on the land $37/year. If I go 100% residential w/homestead, my tax will be ~$2700/yr. NFCU will not lend on agricultural land/farms. I've explained that come January it will all revert to residential which is what I'm buying it for. And I have no control over the way the present owner has it set up. I'm not buying a farm. I'm buying my next home and it has acreage. I WILL be getting some animals for it but that doesn't necessarily make my purchase a farm, and is not a question on the loan application. It may become one down the road, who knows. Tax assessment will be hard to contest as they will be basing it off my purchase price. I'm just not sure how they'll break it up as far as what percentage of the purchase price is the house and 1 acre and how much is the remainder. Guess they'll look at/comp land/home prices. I'm guessing this home on 1 acre would be in the 80K range. The land would be in the 80-90K range. And I have no idea what the AG tax rate is. I'm not a TX vet, so can't use the land board. Wish I were/could. Maybe I'll check into that again tomorrow and see if anything has changed from years ago.

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A couple of things doesn't sound right, compared to my county and my appraisal district. By law the tax has to be assessed according to the county's appraisal, based on current market value. True, that your purchase price will have a big influence on that, but they also have to take in to account surrounding property values.

Also have ?? about not being able to go ag immediately. I bought 17 acres in 2008 or 2009, and went down and filed for ag on it immediately. At first, was told it didn't meet the 20 acre minimum this county had set, but explained to the appraisal district manager himself there was nothing but a barbed wire fence separating it from 41 acres that was mine and already on ag--the 17 acres had been on ag as well, as part of another 41 acre tract, and my cows were already running on that 17 acres under a lease agreement I had on file with the AD. He agreed that it was indeed producing an ag product and the 17 acres qualified to continue on ag. You may have to go higher up the chain of command at the appraisal district--IF, you want the exemption. You do know, that hay production alone qualifies for ag exemption?? Just sell the forage off it if you can find someone to cut & bale it.

Kusanar:
There are 'some' advantages to having a loan/mortgage. You will pay more for the property over the course of the loan, but you're using someone else's $$ up front. There are also some tax advantages, if one's total income is enough they can make use of the tax law. I deal only in cash myself, but have sometimes wished I had not when I actually pencil it out. Keep in mind too, that property sale profits are capital gain--just because it looks like revenue from land sold exceeds what the new property costs, a big chunk of that sale profit is going to get gobbled up by Uncle Sam and CG has to be paid the same tax year in which the property was sold--there are exceptions to that tho.

I don't think there should be any capital gains tax since LS is selling his primary residence.

Bruce said:

I don't think there should be any capital gains tax since LS is selling his primary residence.

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Ah yes, you are correct. Been so long since I sold a residence I had forgotten that.

greybeard said:

Kusanar:
There are 'some' advantages to having a loan/mortgage. You will pay more for the property over the course of the loan, but you're using someone else's $$ up front. There are also some tax advantages, if one's total income is enough they can make use of the tax law. I deal only in cash myself, but have sometimes wished I had not when I actually pencil it out. Keep in mind too, that property sale profits are capital gain--just because it looks like revenue from land sold exceeds what the new property costs, a big chunk of that sale profit is going to get gobbled up by Uncle Sam and CG has to be paid the same tax year in which the property was sold--there are exceptions to that tho.

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Ahh, ok, I would have paid cash for my place if I had had it... but, realistically, how many 25-26 year olds have roughly 50K laying around? I put 10 grand down on it, and have a 15 year loan for the rest, paying almost twice the bill each month to shorten it further. I'm hoping to get it paid off sometime between 5-10 years rather than 15. I don't know how people can do a 30 year loan... I don't want to be in my 50-60's before I actually own it...

Yes, the issue is; I financed 162K when I bought this place, I wasn't able to pay it all off in the almost 3 years I've lived here (Gee, wonder why not?) Most folks (I) don't have an extra 50K each year they can throw at their mortgage... Anyway, I DID pay extra principal every month the first 2 years (before quitting my job and retiring), but still owe ~ 147K that needs to be paid from the proceeds. Now there are places down there for less than 100K, in which case (if this place appraises out) I could pay cash. However, most of them don't meet my needs/desires, & I don't have the time presently to find one that does. I'm sure given long enough, I might be able to, but there's no/never a guarantee.

Most people, me included, would LOVE to own their place in 5-10 years, or sooner if they could, however, for most it's simply out of reach. Especially for someone like me who is older, retired, and on a fixed income. I need the lowest possible monthly payment I can get, and then I can apply extra principal as I'm able. Another thing to consider is how long you intend to live there. Most folks move every 3-5 years. And most folks don't have the funds to pay cash for their home. The tax benefits of financing for those who are working/unable to pay cash, are helpful/advantageous(? not really!) to most.

Even now, it still makes more sense (if you CAN) to pay the income taxes on the money you're paying the banker in interest (schedule "A" mortgage interest write off) than to pay that full amount to the banker. If you write off $12,000 in mortgage interest (paid to a banker) and are in a 22% tax bracket, writing that off saves you $2,640.00 in federal taxes and a small amount in additional state taxes (based on federal taxable income). But it COST you the $12K you paid to the banker to get those "savings". Would you rather pay uncle same the 2640, or pay the banker 12K? But again, if you don't have the dough to pay cash, and most don't, the write off still helps tax wise. In my case, since I'm retired and have limited income, the mortgage interest I pay will not be sufficient to move me into a schedule "A" filing category, so I'll see no tax savings at all. For me it makes the most sense to pay that loan off as fast as I can.

I was told or as I understand, they do the county appraisals once per year. I'm guessing like most counties, if a property sells (2016), the appraised value will initially be placed at that (for 2017) until the next county appraisal happens (2017 for 2018), at which time it will adjust one way or the other. In the mean time, the property tax will stay where it's set (from 2015) for the remainder of this year (2016 due in 2017) so I won't have to worry about the huge increase till they start the process again next year (2017 for 2018). I wasn't aware that there was a minimum acreage required for ag... Makes sense. I'm glad it's under AG right now as that should (I hope) make it easier/feasible to keep it under ag going forward. Of course the value will still increase. I will of course head down to the county ASAP after I own the place to make sure nothing slips through the cracks. I also have to apply for that ag exemption card to eliminate sales taxes on "farm" purchases. If/when I buy the barn and the tractor and fencing, etc, I don't need an additional 9% tacked on top for taxes.

As far as I know/recall there are no fed taxes on sale of a personal residence as long as the proceeds are applied to the purchase of another personal residence of equal or greater value. That's the kicker... Since I am replacing my residence with one of lesser value, the difference will be taxable unless I use the one time exclusion to not pay that tax (Thanks uncle sam ). So in actuality, there are "capitol gains" taxes on the sale of a personal residence in some cases. Since I expect this to be my final "resting" place HA! I'll use the exclusion on this sale and when I'm gone, the profits if any from this property will be part of my estate which will be less than the federal/state "cut off" or "trigger" before taxation starts, so the profits will pass on to my kids tax free. At least that's the plan... It's my "best laid" plan! After the zombie apocalypse happens it won't matter anyway But this place being centered and set back does lend me nice shooting lanes Just wish it were a bit wider.

@Kusanar you are exceptional for having bought a place at your young age. Good for you! And paying double on the note is even better. I bought my second home at 31, paying down on it with what I cleared on the first home. When we bought the place we have now, we financed it, as we hadn't put our other house on the market. When we sold it, we paid off this loan. Such juggling when it comes to buying a home! It does feel good to know there is no more house note, but there is still insurance and taxes!

Latestarter, we got an AG exemption on our little 8 acres. We also got a senior citizen discount along with the homestead and our taxes are frozen. Even if my husband passes away, my taxes won't go up. You will qualify for AG, homestead and disabled veteran. As soon as you turn 65, you get a senior citizen discount on top of that and your taxes will be frozen at that point.

It seems most states make it fairly easy to get the exemption. Tennessee has a narrow window for approval and you only have to show gross earnings of $1500 a year at the end of 3 years.

Wow this is so very confusing. I am so glad I didn't have to deal with the majority if this. My parents gave us land that had electric and septic on it, and we got a loan (10 year) for a mobile home, pad, etc. In 6 years (if we don't pay extra, which we usually do) we will be done paying and start saving to build something bigger.

Kudos to you for pursuing your dream despite all this. I really hope it gets easier for you!