After paying off their mortgage debt, middle-income and even higher middle-income households that had children who were now young adults discovered that they needed to take out a second mortgage loan or refinancing their mortgage. Their adult children were able to purchase their own home with the down payment money that was provided by the cash that was taken out of the equity in their property. In this manner, a portion of the parents’ estate was transferred to the children while the parents were still alive and able to enjoy it themselves. https://penaltykickonline.com

For the last half of the 20th century and up until the end of the first decade of the 21st century, the nation’s public policies nurtured an increase in the ownership of a residential property. The combination of amortization of mortgage debt and the almost ongoing increase in land value provided for tens of millions of households a level of net worth they could not accumulate by investing savings in financial assets. The same market forces that caused ever-rising land prices meant that millions of other households (particularly those with low incomes and many young adults) had greater and greater difficulty accumulating savings and the cash to cover closing costs required to purchase the higher and higher priced residential properties.

Middle and even higher middle income households whose children were now young adults found it necessary to take out a second mortgage loan or refinance after paying off their mortgage debt. The cash taken out of their property equity provided the down payment monies for their adult children purchasing their own home. In this way, the estate of the parents was partially passed on to their children while they were still living.

One of the circumstances causing senior adults to take out a reverse mortgage loan is when they are property rich but income poor. A major living cost for seniors who own a residential property can be property taxes, the annual school tax often being the highest of the property taxes imposed by the town, city, borough, county, township and school district. Some communities have adopted one form of “circuit breaker” or another to cap or rebate a portion of property taxes back to seniors, generally, or to senior-headed households who are income eligible.

The systemic remedy for all of the above issues is simple. Exempt all property improvements up to some value from the tax base. Impose an annual tax on whatever land is owned equal to the potential annual rental value thereof. This will bring down land prices, which will bring down asessed values. And, the burden of the property tax will shift to those who own the most valuable locations in the community. Owners of vacant or under-improved locations will then have a real financial incentive to being the land they hold to its highest, best use — or sell to someone who will.