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.

Retire to Washington

Washington State is not the first state you think of when pondering the exodus of retirees to "fairer" locales. You might think of the warmer sun belt states like Arizona and Florida. But Washington offers a unique combination of favorable taxes for seniors, a variety of climates from dry to wet and mild to wild. Washington offers its qualifying seniors a significant reduction in property taxes. There is no state income tax. Southwest Washington really hits the spot, because for those who like to shop and spend money the very nearby Oregon has no sales tax. A trip to the Oregon coast is easy and inexpensive.

Many retirees in the area keep two inexpensive (or expensive depending on their finances) homes. One in Washington State and another in California or Arizona. They fly south for the winter in November and return to our more tolerable climate in the late spring. usually it is better to claim Washington as the "home" state since we have favorable tax conditions for seniors. Although Washington is not the TOP rated state for tax friendly status, it would be when considering the live in Washington, play in Oregon angle offered by Southwest Washington.

Vancouver offers the glorious beauty of the west side of the Cascades with a moderate amount of rain and very modest snow. East of the Cascades delivers much more sunshine but also has more drastic swings in temperature and much more snow in the winter. Southwest Washington also offers close proximity to the aforementioned Oregon Coast and the metropolitan Portland area.

Speaking of the coast, Southwest Washington has the lock on reasonably priced beach property. The Oregon coast is world famous, largely because the state of Oregon spends millions of dollars promoting it. The southern Washington coast is equally spectacular but offers amazing values in property and taxation. This is especially true when compared to Oregon which is very tax unfriendly according to several prominent sources such as Money Magazine and Kiplinger.

Sourced from Kiplinger.com

Our southern neighbor, Oregon is rated as "least tax-friendly" for seniors while we enjoy the "tax friendly" status. Our base property taxes are much lower than Oregon and many seniors qualify for one of four property tax reduction programs. Sales tax is a much less intrusive tax than income tax for middle and upper income seniors. Arizona rated higher than Washington for tax friendly status but actually depending on income and spending habits we might be better than them as well. 

Now that all this taxation benefits are out of the way, we can consider other factors. The well known fact that Washington state is absolutely gorgeous is a strong draw. We have four distinct seasons here in Clark County but none are severe. That is tough to find anywhere on Earth. It seems like the proverbial slam dunk for a retirees to move here. And many of them are moving here. So there you have it, Washington State is the best northern state to retire to. Start packing.