Friday, July 21, 2017

Buying in High Tax Neighborhoods, Is it for you?

That's a grabber headline, right? What exactly do I mean by "high tax neighborhood"? Well, in this context it is neighborhoods that have strong property tax assessments most likely supporting school bonds. Here in Clark County we have excellent schools throughout the region. There are however a few districts that have had great success passing multiple property tax bonds to fund projects that enhance the district's facilities. Many families with children at school age often seek these areas out to take advantage of what they view as an opportunity for a superior public education.

I will not debate the issue of education variances across districts, but rather will keep this real estate central. For people who do not have school age children this "advantage" is not realized but the higher taxes are.

Young people who have school age children or feel they may have children in the near future may choose such an area to prepare for the inevitable need for public schools.

One 'school' of thought, punned the heck at of that didn't I? Anyhow, is that these well funded school districts will increase property values over time. This does tend to hold true. But a fresh empty nester holding on to a property in one of these areas may be wise to consider a move. Why, you ponder? Because demographics change over time. School bonds are like other government funded projects in that they ebb and tide with local public sentiment. An empty nester has already reaped the rewards of the higher taxes and now has no children left in the school district. There is no guarantee that twenty years down the road the area will still be the area of choice for schools and families concerned with education. Thus all the extra taxes paid may not convert to increased value later. They do however provide extra value NOW for a prospective buyer.

A person sitting on a house in this type of area with no prospect of having use of the local public schools can capitalize on the demand from others who are seeking these areas out. Perhaps a downsize into another area with less intrusive property taxes could help ease expenses later on when retirement income is in play.

Listing a house when the market demand for it is very high is usually a good thing. This holds especially true if an opportunity to buy the replacement house is in an area that is not in as heavy a demand and could provide a better financial position later on.

This represents just a few ideas on whether to sell or hold is the best option. Always look over your options thoroughly and consider all angles. Check with your tax professional as well. Real estate is often a major portion of ones financial portfolio and should be managed wisely. This is particularly true for those who find themselves in a life transition or approaching retirement.

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