The 'Couv'

The 'Couv'

Tuesday, May 22, 2018

New Tax Laws, Could Make the Evergreen State even Better

The new Federal Tax Laws offers a much larger standard deduction for all citizens. This is highly beneficial for retirees and empty-nesters that often have too few deductions to take advantage of itemizing. Now with the standard deduction nearly doubled retirees will keep more of their money and Washington's no income tax policy is that much better as the Feds eliminated a large portion of the state tax exemption. 

Washington again looks good against many of its Western State rivals. Our moderate climate on the Pacific side of the Cascades is a plus as well. Washington State also has a booming economy and that means local governments are flush with cash to keep roads, parks and other local services well funded.

Locally here in Clark County, Washington much is happening including the amazing Vancouver Waterfront project with the first five buildings rising up along the Columbia River. Thousands of housing units are coming online including senior housing both downtown and all over the area.

Vancouver and Southwest Washington are enjoying the fruits of the state and regional economic boom and a strong positive migration. This all points to good reasons to consider the area for retirement.

The local area has excellent health care facilities and a great deal of both indoor and outdoor activities to lead a healthy and active lifestyle well into the retirement years. Washington State is back as a top choice for retirees.

Tuesday, April 24, 2018

Retire to the Coast?

Originally posted 2/6/2018 on Evergreen Coastal Living, by Rod Sager

Many people that move to the Southwest Washington Coast are retired. It makes sense, really as retired people do not rely as much on the availability of high paying jobs as do those still in the working years. The coast is not exactly a hotbed of high tech nor is it filled with factory jobs. The only real stumbling block is that the coast is a fair distance away from the larger cities along the Oregon-Washington Interstate 5 corridor. The Long Beach Peninsula enjoys very reasonable housing costs and that can be a big bonus for fixed income retirees.

However there does come a time when we get older and need to visit our doctors a little more often. It is here that living on the quasi-remote coast can be an issue. There are plenty of physicians operating a practice on the Long Beach Peninsula and on the northern Oregon Coast, but hospitals and specialists may require an inland run to Longview which is 60 miles away.

This is probably the primary concern for retiring to the coast. If the medical services are adequate for your needs the rest is easy. Who doesn't want to enjoy the spectacular Pacific Ocean coastline? The weather at the coast is also more mild with wintertime temps a solid 8-10° warmer overnight and summertime highs an easy 10-15° cooler than most of the Portland Metro Area. Although the temps tend to be better moderated the rainfall is not. The coast can take a lickin' from frequent winter storms and that can mean a lot of rain and wind. Long Beach receives on average 79 inches a rain a year and that is double what Portland and Vancouver get on average. It's not that it rains more often, but more that it just rains harder.

But the coast is not that much different in terms of weather patterns and a nice long period of relatively dry conditions which arrive in July and stick around through the middle of September most years.

Yes friends, retiring to the beach isn't for everyone, but it could be just the ticket for you so check it out!

Tuesday, March 27, 2018

Washington Losing Favor Among Best Place to Retire?

I have noticed that Washington State has the appearance of falling out of 'favor' among the many magazines and blogs that write up all those best places to retire lists we are bludgeoned with on a routine basis.

So what happened? I'll tell you what happened, Seattle happened. Washington State has a population of roughly 7.5 million people. King County is one of 39 counties in Washington. It has 2.2 million residents. One county that has more than a quarter of the states residents. The metropolitan Seattle Area has over half the state's population. Housing in Seattle is now among the highest in the united state. In fact of California's 58 counties, only seven have a median home price higher than King County. The primary reason California has been nearly eliminated from those retire to list has been the combination of high housing costs and high taxes, the "deadly duo" if you will.

One might expect that Washington State has approached California overall in housing costs, yet that is simply not the case. According to Zillow's latest reports, the state wide median for Washington is $359,100 against $535,100 in California. Washington State is very high on real estate costs when compared to the nation as a whole, but falls well under California once you get out of Greater Seattle. Seattle suffers from the "deadly duo" as well with high taxes and high housing costs. But King County has a lot of heavy local taxes that are simply not applied elsewhere in the state.

Let's take sales tax for a moment. The sales tax rate in Seattle is 9.6%. Let's contrast that with the sales tax rate in White Salmon, WA in the beautiful Columbia River Gorge and it's only 7.5% That's a big difference! Wenatchee, WA recently landed on Forbes list of best retirement cities, it has a sales tax rate of 8.4% which is equal to our area here in Clark County Washington and well below the rate paid in Seattle. But unlike Seattle, Wenatchee has a very cool and reasonable median home price of just, $267,200.

When retiring to Washington State, one has to contrast where they live now against the costs in the place they choose to retire. People coming from say Iowa where the median home price is $132,600 will have sticker shock in any of Washington State's 39 counties. People coming from California and not moving to King County, will likely find the property values manageable in Washington.

Washington State has two distinct sides, the wet side and the dry side. On the dry side rainfall totals are in the arid range with cities like Goldendale, Yakima, the Tri-Cities area and Wenatchee seeing well under 20 inches of precipitation annually. These areas tend to be much more sunny and have warm bordering on hot summers and cold winters with significantly more snow than Western Washington cities. The wet side has very mild temperatures year round. Wenatchee is on the dry side so that may have played a role in Forbes ranking.

Locally here in Clark County Washington, the median home price sits just under the statewide average at $334,300. We have close proximity to Portland, OR that borders Clark County and Vancouver, WA. This is a solid choice for retirees as the housing costs are still manageable, services are excellent including health care, shopping, proximity to Oregon's no sales tax and devoid of any state income tax. Rainfall is moderate with Vancouver seeing on average 40 inches a year of rain. We do have extended cloudy periods as does most of the "wet side" of Washington. But we enjoy warm and dry summers that are to die for and lush greenery year round. The mountains are spectacular, the Columbia Gorge is right next door and the famous Oregon Coast is as accessible to us as it is to Portland.

Yes friends, Washington may not be the "best place to retire" list darlings like we were a couple years back, but that is more about metrics and magazine sales as it is about actual retirement living. Southwest Washington remains a great place to retire. 

Tuesday, February 27, 2018

Cottages the new trend?

A cottage often conjures up visions of a tiny little house from the pre-war era on a tree lined street in a quaint town or even in a big city. In fact many retirees consider buying and older cottage type house as they are often located close to services and the smaller space is easier to maintain. Lower prices don't hurt either. But what if someone wants the cottage experience but not the downside to an 80 year old house. Often those older homes are functionally obsolete. Well it seems the market may be rising to the demand.

Recently a local builder here in Clark County, Washington starting a subdivision of "cottages." Quail Homes has a small community of "cottages" on small lots in Vancouver, WA. Now this is not their first go at this type of development, in fact they had a very successful similar development back in the 1990s. But these are aimed at the empty nest market. Active adult living. Although 'Quail Cottages' is not a senior living over 55 community, the homes are designed as low maintenance, small yard with a small but well designed living space.

The reason I find this as a refreshing approach is the demand for such housing is enormous. Most builders are trying to pack in as much square footage as they can and that is fine and well, but it leaves retirees on the downsize wagon in the cold, looking at 20 year-old resale properties. Let's face it for builders the 3000 square foot two story is much more profitable.

Now first off, these "cottages" are not as small as one might 'conjure' in that 'vision' I mentioned earlier. These homes are in fact roughly 1400-1500 square feet. These are homes that are a little more narrow so they fit on a 50 foot wide lot. You know like the lots of yesteryear. The yards are not as large as a home designed to support a family of four on a 60-80 foot wide lot. There is however a nice yard that one can have an pleasant outdoor experience with out a one hour weekly lawn mowing experience.

The advantage to this design for retirees is that a 20-30 year-old resale home will have more maintenance issues than a brand new home. For people looking to find their last house, a new home makes sense. There is no need to worry about the roof, furnace and other expensive replacement items as the home is new and those items are generally expected to deliver decades of use.

I don't want this blog post to sound like an ad for Quail Cottages, but this is a bit of a unique development and one that is much needed in our area. Their are several senior community builders like Trilogy homes that build sprawling adult living communities with a golf and country club atmosphere. That's all fine and well, but those homes are often expensive and routinely have a steep HOA fee.

Projects like the Quail Cottages in Vancouver offer much of the advantages of those more plush developments but with a price tag that is much more affordable. The cottages in this article are selling at start values in the upper $300's and the homes are very nicely equipped and trimmed with high grade finishes. I also am researching a project from Manor Homes that appears to be similar to the "cottages" so I'll update that in a later post sometime.

I am looking forward to seeing more new projects that cater to this increasingly large empty nest / retiree crowd here in no-income tax Washington State.

Tuesday, January 23, 2018

2018 off to a good start

I wrote this on my real estate blog and it applies to retirees as well.

Originally published in Real estate News, by Rod Sager

OK I'll admit that title is anecdotal. But I am seeing a nice flow of listings and buyers poking around, finding homes, and making offers. Many analysts feel that 2018 will slow the crazy pace in the real estate market to a more healthy and normal 4-5% price appreciation over the course of the year. This is fine by me. I think the fact that the "threat" of higher rates is now the reality of higher rates, people that we dangling their feet over the fence are starting to jump in. I have made the point time and again that rates are far more important the price. Most people will pay far more in interest than any price deal they might negotiate. The federal tax revisions that take effect this tax year (2018) many middle income earners will no longer need to itemize and as such the mortgage deduction will no longer benefit them. A married couple paying less than $20,000 a year in mortgage interest may not have enough itemized deductions to exceed the new and improved standard deduction of $24,000 for a family. As I always state my standard disclosure anytime taxation is discussed: always consult a professional tax prepared or CPA when making decisions based on taxation. That out of the way, the new tax law increased the standard deduction for a married couple from $12,000 to a whopping $24,000. W2 wage earners are those who have a job and the boss cuts a paycheck, withholding money for taxes. W2 wage earners will receive a standard deduction of $24,000 for a married couples and $12,000 for single filers. This is nearly double from previous years! In general this is a good thing. But in order for it to matter you must have more than $24,000 in deductions for a couple or $12,000 for single. That may be a problem for some. Lets look at a hypothetical taxpayer for a moment, we shall call her Sally. Sally made $40,000 in 2017 and has a mortgage of $200,000 on her home. She paid $8,700 in interest last year. The standard deduction for 2017 was $6,350. Her mortgage interest exceeds that so filing the "long form" IRS 1040 with a schedule A for itemized deductions makes sense. Why take the standard $6,350 when you have $8,700 in mortgage interest alone. Now Sally can also write off other job related and business expenses. Here is where talking to the tax pro is CRITICAL. Sally needs to make sure that she doesn't take deductions that are not supported by the IRS. OK Sally is smart and she has a trusted tax pro handling her filing each year and he helped her find an additional $2,200 in legit tax deductions. No Sally can't write off those coffee break lattes ;) Now two 'problems' will arise for Sally this year. First the amount of interest paid on a mortgages drops each year as the balance is reduced. Let's say Sally will pay $8,500 in interest in 2018. She will likely have a similar amount of other deductions. So at the end of the year she has $10,700 in deductions which is now less than the new standard deduction of $12,000. The good news is, Sally will get a larger deduction and save the extra expenses of having to file the schedule A. Her tax guy is not happy, but Sally is. But now for many the extra bonus value of home ownership that was an effective tax break, has been eliminated for those with smaller mortgages. This could have a net effect of slowing down some of the pressure on entry level homes and first time home buyers. Of course the idea of home ownership should not revolve around tax deductions, but rather the idea of owning real property, gaining equity by reducing the balance on the loan and enjoying appreciation in price over time. These are really the hallmarks of home ownership. It's all about the equity asset and the lack of a landlord that can kick you out or raise your rent. Over all the new tax system will be a bonus, but it could lead to some minor softening mostly near the bottom of the market. Frankly the bottom needs a little price relief anyway. 2018 is looking good.

Tuesday, November 28, 2017

Year End Tax Evaluation Time

I do hope you all had a fantastic Thanksgiving. December is upon us and the last chance to make adjustments for the tax year is now. The twelfth month is one that tend to fly by by at light speed. Unless of course your under the age of twelve in which case December is the LONGEST month of the year ;)

Yes even when one makes it to the golden days of retirement... does that exist anymore? Well anyhow, taxes are still important and one should meet with their trusted tax professional at the end of each year to take a peek at their situation. There are many things one can do in December to help strengthen the tax position. Most things however cannot be done after the New year. So take the time to chat with your accountant and make sure you are not giving the flag waving uncle more than your fair share.

For the retired it is often the case that tax deductions are few and far between. The nest is probably empty, the huge pretax deductions are not there, and the legit business expenses are all but vanquished. To make matters worse, the tax laws are tweaked every year, so a meeting with a professional can help you save money. Every dollar you keep is a dollar the feds can't make poor decisions with.

1040 long baby, that's the ticket to savings, but without a little help form the CPA mind vault, you could be spinning your proverbial wheels. Although a good burnout is fun, it is a bit wasteful. Waste the rubber don't waste your retirement funds on the behemoth we call the Federal Government.

That's all I got this time round, Retire to Washington State and enjoy the Holidays.

Tuesday, October 24, 2017

New Tax Talk Favors Washington State.

Retirees may have yet another reason to hang out in the Evergreen State if the President gets his tax package through the Congress. Talk is that state and local income taxes may be removed as a deductible expense on the new federal tax law. This has Californians, Oregonians and New Yorkers in a fit as those states have notoriously high income taxes.

Here in the great State of Washington, we have no income tax and that means retirees can breathe a sigh of relief. Income tax for retired people is a serious drain on what is typically limited resources. Down south of the border, in the Beaver State, they get hit hard with most middle income retirees seeing state taxes in the 9% bracket.

Whether the new law eliminating the local tax deduction actually gets passed into law is yet to be seen and there are some who feel that provision will die in the negotiation process as the bill circulates the house of representatives. But live or die, Washingtonians need not worry.

Take a peek at some of the tax related articles I have posted over the last few years and get ready to retire to Washington State.



Don't fret the taxes, come to Washington State keep more of your income and enjoy the gorgeous Evergreen State!