Socialists to the elderly: It's our nest-egg, not yours!

[Cunt]

I like it because I think a lot of real-estate shenanigans are had around 'value' (like the ag land being sold for one value, but being worth another)

[Gawdzilla Sama]

You’ve got to be kidding me. I’ve been further even more decided to use even go need to do look more as anyone can. Can you really be far even as decided half as much to use go wish for that? My guess is that when one really been far even as decided once to use even go want, it is then that he has really been far even as decided to use even go want to do look more like. It’s just common sense.

One step closer and I shoot the dog.

[Seth]

I like it because I think a lot of real-estate shenanigans are had around 'value' (like the ag land being sold for one value, but being worth another)

That's not really an issue so long as the land is in ag production. You don't want ag land valued (for tax purposes) like residential land because that only forces ag owners to convert the land to residential. And when ag owners sell for development, they pay sales tax based on the sale price, not on the assessed value, so any increase in value is accounted for there.

In my case, my family bought the land for $50,000, and it was appraised at $2 million for estate tax purposes, and we paid estate tax based on that valuation. We received a "step up" in basis when my mother died, so our basis was $2 million, and when we sold it, we owed capital gains tax at 15% based on the difference between our basis and the actual selling price. So, in every case, taxes were paid on the increase in value, and had we not lost half the value of the property in the real-estate crash, we would have paid much more.

And, had there been no estate tax (as there shouldn't have been) we would have had a $50,000 basis and paid tax on the full capital gain when we eventually sold, so once again the entire increase in value would have been taxed eventually.

Unfortunately, it was the estate tax that, in the end, forced us to sell the property. We did not have sufficient cash reserves to pay the estate tax and keep the ranch running for very long because the ranch was valued by the IRS as potential rural residential estate lots, rather than as a working ranch, which took the IRS-appraised per-acre value from around $4000 to more than $25,000. This is based on a wrongful method the IRS uses to assign value to estate assets, which is as if it WAS being used at it's "highest and best" use, which in this case was for luxury residential estate lots, even though we had spent our entire lives preventing it from being subdivided and developed.

The problem with the IRS valuation method is that it uses a standard land-appraisal paradigm that's designed to find the fair market value of land as a part of a voluntary transaction between a willing seller and a willing buyer. In such transactions, the value of the land is based on the "highest and best" use, which is the most profitable use that the particular parcel can be put to under the existing land use laws. This accurately reflects both what the buyer is buying, and what the seller is selling. Buyers want the lowest possible valuation, and sellers want the highest, and the "fair market value" is a balance between the two competing interests, and because the transaction is voluntary, if either party is not satisfied, they can walk away from the deal.

But with the IRS and the estate tax, it's an involuntary transaction to begin with, and more importantly, both the value expectations and the power structure are completely reversed. With an estate valuation, the owner is an unwilling "seller" in that he does not wish to pay the tax but is being forced to do so and cannot walk away from the deal, and the IRS is an all-powerful "buyer" who gets to dictate the rules of the game and has jackbooted thugs with machine guns backing up its decisions. This imbalance of power, when combined with the upside-down valuation paradigm, works a significant injustice on the heirs of an estate.

As I said above, a "fair market valuation" based on the "highest and best use" is a compromise between what the buyer and seller want that they can accept or reject. It represents added value to the seller, in that (as in my case) while the land IS in agricultural use, the new buyer will not be compelled to KEEP it in agricultural use, and therefore can realize an additional profit by turning it to residential use. For the buyer, the paradigm keeps the seller from asking an arbitrarily-high price based on sentiment or some other subjective criteria, because the buyer will refuse to buy if the price is too high and doesn't represent what the buyer can profit from the land. Therefore the interest of the seller is to maximize value, and the interest of the buyer is to minimize value, and neither is compelled to deal.

But in the estate paradigm, this is upside down, and the seller (who is unwilling) has an interest in minimizing the valuation, while the buyer (the all-powerful IRS) has an interest in maximizing the valuation in order to maximize the tax collected. And believe me, they do, without mercy.

It should be obvious that the imbalance of power the IRS has, added to its interest in valuing the property more highly, leading to a higher collection of taxes, and the compulsory nature of the transaction makes the standard "highest and best use" paradigm inappropriate because neither the IRS nor the owner have any interest in actually realizing that value, nor is the property worth that much as it is being used when the owner dies.

And the tax law is quite specific: property valued for estate purposes is taxed at its "value" as of the day the decedent died. Logically, this would mean that the value is based on how the property is actually being used at the time of death, not some speculative potential "highest and best use" valuation that is not, and may never be realized by the heirs.

Certainly in my case, my intent had always been, for my whole life, to keep the ranch as a ranch and live there with my family and pass it down as a ranch to my heirs. But because the land was valued for estate tax purposes as potential luxury rural estate development rather than as the minimally-productive agricultural property it was actually being used for, our tax bill was enormous, and it beggared us. I went deeply into debt (more than $700,000) to pay the tax bill and try to save the ranch, but ultimately couldn't make it work, so I was forced to put it on the market and eventually sell it, for far, far less than it was worth six months earlier. I had a signed contract to sell in September, right before the crash, but the closing wasn't for six months, and by April, when we were supposed to close, the buyer had walked away from the contract using a loophole due to the crash in property values. We eventually sold it for half of what we had previously contracted for, of which my share paid off my debts, leaving me with enough to retire on, barely, but far less than was justly due to me, all thanks to the IRS and the estate tax.

So, anyone who tells you that the estate tax doesn't destroy the family farm or small business doesn't have a fucking clue what they are talking about, and they are either abysmally ignorant and stupid, or they are liars, or both.

The estate tax (or properly Death Tax) is an egregious evil that routinely destroys family farms and small businesses across America because of the upside-down valuation paradigm that leaves ag owners "land poor" and unable to pay the taxes assessed on their corn fields at a residential rate, which forces them to sell to developers. I've seen it happen to my friends and neighbors more than five time in my personal experience.

The IRS is pitiless and cruel and wipes out the hopes and dreams of families nationwide just trying to preserve their heritage and lifestyle and keep agricultural lands in production. There is no excuse for an estate tax. It's a Progressive evil instituted to fund the warmongering pretensions of Woodrow Wilson, who promised to keep us out of WWI, and then promptly turned around and sent our men off to a war that we had absolutely no interest in. It was supposed to be repealed after the WWI debt was paid off, but the Democrats and Progressives have kept it from being repealed because they like stealing the fruits of other people's labor to redistribute to the dependent class so they can garner votes.

I tell you this, the IRS will get NOTHING from me when I die, because I've arranged things so everything I own, and all my cash, will have disappeared long before those evil fucks come digging in my grave looking for taxes.

[Cunt]

and I thought you were rich....

Same thing happens here, but there is a 'dodge'. My elderly relative and her younger also-relative both own property together, so that when one dies, the other doesn't 'inherit', but just keeps on being an owner.

That's the thumbnail sketch. You would have to talk to a lawyer named Pink to find out the particulars...

[Seth]

and I thought you were rich....

Same thing happens here, but there is a 'dodge'. My elderly relative and her younger also-relative both own property together, so that when one dies, the other doesn't 'inherit', but just keeps on being an owner.

That's the thumbnail sketch. You would have to talk to a lawyer named Pink to find out the particulars...

Unless they are married, the younger relative will owe estate taxes based on the percentage ownership of the older relative.

In our case, for reasons I don't want to get into, when my mother died she owned 80 percent of the ranch, so we had to pay taxes on her share. Had she done what she was supposed to so over time, which was to transfer shares out of her estate, we would have owed much less.

But this is common where elderly parents don't trust putting their property in their kid's names on the not unreasonable fear that the kids will ship them off to a home when they get old and decrepit and/or sell the house out from under them.

There was a case just the other day of a 101 year old woman who was evicted from her home of 60 years by the Sheriff after a foreclosure because her adult son diverted the mortagage payments he was supposed to be making to his own use. After a LOT of public outcry, the bank relented and she got her house back, but that's highly unusual.

[MrJonno]

Ah, well, thanks for clarifying. But, why shouldn't local residents have a say. They don't have a "veto" anywhere in the law so far as I know, but they do have a right to petition their government for redress of grievances and try to convince those making the decision that the project should not proceed. What's wrong with that? It's democracy in action.

Its not so much they have a veto but can type the process down for years, in the end of the day a government has to decide is it acting in the best interests of the country as a whole or a small village which understandable doesnt want any new houses being bought there.

No one wants a high speed railway being built through their house (a current project being looked at at the moment) so what exactly is the point in having a public enquiry and asking these people want they think. Of course they are going to object.

Why bother asking a village if they want a 1000 new houses build on land they don't own (if they don't want anyone building there they should buy it). The point is local democracy is not a good thing when a government is meant to act for all the people and we are one country not a lot of different fiefdoms

[Tero]

Seth you cant fight city hall.

My dad was unable to develop land because he forgot to pay off crooked officials.

[Seth]

Ah, well, thanks for clarifying. But, why shouldn't local residents have a say. They don't have a "veto" anywhere in the law so far as I know, but they do have a right to petition their government for redress of grievances and try to convince those making the decision that the project should not proceed. What's wrong with that? It's democracy in action.

Its not so much they have a veto but can type the process down for years, in the end of the day a government has to decide is it acting in the best interests of the country as a whole or a small village which understandable doesnt want any new houses being bought there.

Then what the fuck are you complaining about? First you said they had a "veto" now you admit you were lying. What you're complaining about is called "due process of law." There's a system, and a procedure, and it involves getting input from those who will be affected by the government's action and giving their concerns careful consideration before finally making a decision.

No one wants a high speed railway being built through their house (a current project being looked at at the moment) so what exactly is the point in having a public enquiry and asking these people want they think. Of course they are going to object.

Because it's their right to participate in such decision making, and to give their concerns, which may be valid and legitimate, so that the planners and decision makers can take them into account and, if necessary or desirable, change the plans to make the project less impactful or better.

Why bother asking a village if they want a 1000 new houses build on land they don't own (if they don't want anyone building there they should buy it). The point is local democracy is not a good thing when a government is meant to act for all the people and we are one country not a lot of different fiefdoms

While I agree with you in part, in that local residents should not have veto power of such projects, there are legitimate public concerns with development that the local residents have a right to express, such as whether the developer will be required to adequately improve the public infrastructure, like roadways, electrical, water and sewer systems to serve the new demand for services, thereby avoiding the passing-off of those costs onto current residents. There are legitimate "exported harms" that need to be aired and considered and the residents have a right to comment on how their elected representatives are handling the planning process, precisely to prevent corruption and cronyism from benefiting a developer at the expense of current residents.

It's a process designed and intended to give people input into how their government operates, which is their right.

[Seth]

Seth you cant fight city hall.

My dad was unable to develop land because he forgot to pay off crooked officials.

That's a real problem in some places, but shining the light of public review on the process helps to reduce such corruption.