Source: The Griot
Case and point: when you buy growth stocks like Apple and hold them, as they appreciate over the years you don’t pay a dime in taxes until you sell. Same rule applies to cash value life insurance policies — no taxes, as rich people continue to stash millions of dollars in them. The same rule should apply for residential property.
Could it be that assets such as stocks, bonds and insurance get special tax treatment because African-Americans aren’t known for using and taking advantage of these wealth building investment vehicles?
Did you know that when figuring your net worth, your personal residence isn’t used in the computation? It’s your home, not an investment. It doesn’t matter if it’s paid off or not, it’s not an investment and you will never stop paying for it.
Recently, a 101-year-old, African-American woman lost her home because she failed to pay her property taxes. Sad, but it still happened. It should serve as a wake-up call to the rest of us that age doesn’t matter when you’re talking business and money.
So how can we avoid this happening to the rest of us in the future?
First, pay your taxes. If you find yourself behind for several years, and you can’t afford to pay all the years at once, pay the oldest tax bill first. This will buy you some time for at least another year. Paying the oldest bill first will keep the property taxing authority from foreclosing on you property now.
The rule is, if you’re behind one or two years paying your property taxes, they won’t foreclose. But if you manage to fall behind after the third year, you’re living on borrowed time. Investors are circling your property like vultures waiting to scoop it up after that third year.
You see, when you fail to pay your property taxes, investors pay them for you. Yes, that’s right. A complete stranger pays your tax bill. It’s called purchasing a tax certificate. Now don’t get me wrong, this investor could be an individual or a corporation. In the case of the 101-year-old woman it was a governmental agency.
The investor is in it for a profit — nothing personal. Paying other people’s property taxes (purchasing tax certificates) is a very profitable business. Tax certificates can pay anywhere from 5 percent to as much as 18 percent on the dollar.
If you think it’s shocking to hear that a 101-year-old woman lost her home due to delinquent taxes, be advised, it can happen to anyone. People lose homes not just due to property taxes, but African-Americans also lose millions of dollars worth of property each year because they simply failed to have a will or a trust drawn up before they died.
In the end, it’s all about the money. We need to be educated to do better about protecting the assets we have worked so hard for.
