Divemedic

Tax Question II, the Search for More Money

If you get the movie reference in the title, bonus Internet points for you. Don’t use them all in one place.

So it seems like I have an answer to my tax problem from Monday. (I am posting this so I won’t lose my train of thought before I talk to the attorney on Thursday.) I would rather set a stack of $100 bills on fire than pay it to the IRS so crooked bastards in politics can use it to make themselves rich, so any way that I can avoid paying taxes that won’t see me land in Club Fed is a good idea, in my book.

The TL:DR version is that I need to sell the old house to an S corporation that my wife and I own. To do this, there are a few things that need to happen:

  • Form a Florida corporation. No sweat.
  • Within 2 months of forming, file an IRS form 2553 (pdf alert)
  • Get the old house appraised
  • Have the newly formed S corp buy the old home for the appraised value (since the sale was not an “arms length” sale, the appraisal proves it was being sold for fair market value)

This allows me to do two things: take the capitol gains deduction for the difference between the original purchase price and the appraised value that the S corp bought it for, and resets the cost basis for the property. This second part is nearly as important. The reason for that is called “Save Our Homes.” To understand Save our Homes, we have to first understand how Florida calculates property taxes.

Ad Valorem

In Florida, the county property appraiser is an elected position that estimates what your house is worth each year, called your “market value.” If your house is your primary residence, you can take a deduction called the “homestead exemption” of $50,000 from that market value. The result is called your “assessed value.” Each July, the property appraiser mails out the proposed value of each property to the property owner. If you don’t think that the value is fair, you have 30 days to appeal that valuation. Most people want it to be as low as possible, because that is the value that your taxes are based on.

The tax collector (also an elected position) charges a “millage rate” as an “ad valorem” property tax. Each “mill” is 0.1% of your home’s assessed value.

It seems complicated, but it really isn’t. For example, let’s say that your house has been deemed by the property appraiser’s office to have a fair market value of $100,000, and your county charges a property tax rate of ten mills. You would take the $100,000 market value and subtract your homestead exemption to arrive at an assessed value of $50,000. The tax of ten mills on that would make your property taxes to be $500 for the year. Clear so far? Good. It gets a bit more complicated.

Save Our Homes

Back in 1995, the voters of Florida passed an Amendment to the state Constitution that limits the annual increase in the assessed value of your homestead to the lesser of 3% or the consumer price index. Since real estate increases more than that in value each year, the longer you own your home, the better. The gap between the market value and the assessed value is called your “Save Our Homes” credit.

In most cases, you want the property appraiser to set your assessed value as low as possible. The only reason you don’t, is if you are about to move to a more expensive home. The reason is called portability. If you are moving from an old house to a new one, you can take your Save Our Homes credit with you. That can mean a significant tax savings.

So how will that help me?

As an example, let’s say that I paid $200,00 for a house, and 10 years later the tax assessor says it has a market value of $300,000. The Save Our Homes credit would be $31,000. If I buy a new house worth $400,000, that house would be assessed at $31,000 less. If the millage rate was ten, this would save me $310 a year in taxes. But what if I could get the tax assessor to admit that my house actually had a market value of $350,000? That would make my Save Our Homes credit $81,000 instead, and this would save me an additional $500 a year in property taxes at my new house.

It would seem to be a wash, since I am keeping the old house as a rental, but remember that the old house’s taxes are deductible as a business expense, and if the millage rate is higher for the new house’s location (which it is), the savings are even larger.

By Divemedic, ago

Summary Dismissal?

Gaige Grosskreutz is suing Kyle Rittenhouse for shooting him. Now I want you to watch this video clip and tell me what you think will happen. (I have it queued up to the relevant part)

I know that later, Grosskreutz claimed that he only pointed the gun at Rittenhouse because he was in fear for his life, but he didn’t testify to that at all until that point. He never once mentioned self defense.

By Divemedic, ago

Voting With Feet

Hawaii and California are the two states with the lowest percentage of whites at 20 and 36 percent, respectively.

Hawaii started that way, with native Hawaiians being the majority. California is becoming increasingly less white as taxpayers flee the high taxes, crime, and general loonieness of the Golden State.

Mark Wahlberg lowered the asking price of his home by $32 million in order to cut ties with the place before the wealth taxes that would tax unrealized capital gains went into effect.

Please, California refugees, when you get to your new home state, don’t continue to vote for the same policies that made you flee California.

By Divemedic, ago

Tax Problem

My wife bought our current home 5 years before we met. It’s still deeded in her name only. When we move, we want to convert it into a rental.

The problem is this: That house has appreciated by $200k since she bought it, and unless we sell within 3 years of moving out, we will have to pay capital gains taxes on that $200k.

My position on this, is that we should sell it and use the proceeds to buy a different rental so we can reset the tax basis. My wife is vehemently opposed to this and wants to keep it. She remains convinced that there must be a way to avoid the capital gains taxes.

I have an appointment with a tax attorney this week, but my own research says that we either sell within 3 years of moving, or we will owe the taxes when we eventually sell, even if that sale is 15 years from now.

By Divemedic, ago

Glad

One of the reasons why I am glad to be moving is that the area is changing. It used to be a solid middle class area with no homeless on the corner, no real crime (aside from the one burglar that was behind several break-ins and got caught).

That neighborhood is changing. It began in 2019 when the beggars started showing up on the street corners. I went to the grocery store (Publix) that is about a quarter mile from the house this weekend, and this is what I saw:

Screenshot from my dashcam

Now you might think that the problem I have is that she is black, and you would mostly be wrong. The problem that I have is that she was covered in dirt, braless, wearing slides, and looked like shit with her lack of caring about her appearance. It’s a sure sign that the area is on a downward economic trend.

To make things worse, there is a low income housing development going in about a quarter mile away: it will be a mix of 200 apartments and 150 homes. All what they call “affordable” housing. yay.

By Divemedic, ago

Poof, debt free

It’s the law in Nevada that a casino has to have enough money to pay off every bet in that casino. That is, if every single chip and bet were to be called in at once, they have to have enough cash on hand to pay it off. For the slot machines, the casino has to have $1,000 per .01-.50 machine, plus $1,800 per $1 slot, and $5,000 each for slots of higher denomination. The idea here is that the casino needs to be able to pay the obligations it incurs by losing its bets.

Banks have laws that require them to have a certain amount of funds in reserve. All banks with more than $124.2 million on deposit must maintain a cash reserve of 10% of deposits. Banks with more than $16.3 million but less than $124.2 million must reserve 3% of all deposits.

So when I see a story telling me how a Florida insurance company, faced with having to pay out hurricane claims, is going to use insolvency as an excuse to get out of paying, it boils my blood. These companies are in turn owned by other companies, and the use that structure to move money from one place to the other to avoid having to pay out claims. They collect billions in premiums for decades and send that money off to their parent companies, then when they have to pay out a large number of claims, they claim to be cash poor.

Perhaps the state needs to make sure that there are more cash reserves required to do business as a Florida insurer. United Property and Casualty had about 135,000 policies in Florida. That means they are collecting at least $150 million a year in premiums in Florida alone. It claims to have losses of more than $35 million each year since 2017. The thing is, it is owned by a larger company, United Insurance Holdings Corporation. That company was making $10 million a year in profits until 2018.

By Divemedic, ago

This Makes Me Happy

A Federal Judge in Illinois ruled that outlawing particularly dangerous weapons, high capacity magazines, and dangerous weapons accords with US history and tradition, meaning that the state of Illinois lawfully exercised their authority to control their possession, transfer, sale and manufacture by enacting a ban on commercial sales, which comports with the Second Amendment.

I love this decision because it doesn’t set court precedent, but is almost guaranteed to be overturned on appeal, which WILL have precedential meaning.

By Divemedic, ago

If you see something, keep it to yourself

A man was brought to our hospital while unresponsive. He was a possible drug overdose case. When one of the technicians was stripping his clothes off, he found a baggie containing almost 100 grams of what looked like crystal meth in the patient’s pocket. The technician turned it over to the charge nurse, who immediately called the local gendarmes.

By the time a cop arrived, the patient was awake and denied that the drugs were his. The police took photos, fingerprints, and ID from the technician and the charge nurse. According to the cops, since the the nurse and technician admitted to having possession and control of the drugs, they just admitted to felony possession of methamphetamines with intent to distribute.

Since the two voluntarily called the cops, they said that no arrest would be made on the spot, but claimed that they will be turning the information and evidence over to the State’s attorney for possible prosecution.

There is an important lesson there: Don’t fucking talk to the cops, no matter what. They aren’t your friends. They aren’t there to help you. They are there to make a case to arrest someone, and they will get the arrest that requires them to do the least amount of work they can. They get to pad their stats and look good for getting a felony collar without having to do any police work at all.

The tech told me that if there is a next time, he is flushing that shit down the toilet.

Congratulations, cops. You just pissed off an entire ED full of the doctors and nurses you depend on every day, turning them from coworkers of a sort into a department full of people that no longer like or trust cops. Even if the charges don’t stick, people remember stuff like that. Nice move, idiots.

By Divemedic, ago

We’re Now Funding Ukraine Pensions & Welfare

From Whitehouse.gov comes this quote:

You know, and it’s going to deliver much-needed humanitarian assistance as well as food, water, medicines, shelter, and other aid to Ukrainians displaced by Russia’s war, and provide aid to those seeking refuge in other countries from Ukraine.

It’s also going to help schools and hospitals open. It’s going to allow pensions and social support to be paid to the Ukrainian people so they have something — something in their pocket. It’s also going to provide critical resources to address food shortages around the globe.

Did you catch that? We are sending another billion dollars to Ukraine, so Ukraine can pay their people pensions. Ten percent for the big guy, eh? How is creating and borrowing billions of dollars so the people of Ukraine can live the retired life contribute to US national interests?

Meanwhile, in East Palestine, OH:

By Divemedic, ago

That’s a Bold Plan, Cotton. Let’s see how it works out for them.

The leftists in the Blue cities want to starve the red states out economically until we submit to their socialism and gun control. The Civil War that follows is going to be epic. Larry Correia cuts to the quick in his usual outspoken style.

Olbermann is one stupid son of a bitch.

By Divemedic, ago