Multi-Millionaire Says “Enough”

By S.D. Plissken | September 29, 2018

A commenter sent me a newspaper article from the Laconia Daily Sun of September 28. It takes place in Alton, but makes several points that are pertinent here as well.

It concerns a multi-millionaire who is trying to sell his 19-acre waterfront estate. He put the property on the market for $49 million dollars four years ago (2014). He halved the price two years ago (2016) to $25 million. It is currently assessed for tax purposes at $23,109,500. (As if you can actually rate it to the nearest $500, when dealing with these numbers). It is currently offered at $17.8 million.

Note that the estate is not “moving.” In economic terms, the market did not “clear” at the $49 million, $25 million, $23 million, nor yet at the $17.8 million prices. Multi-millionaires and tax assessors can have their fantasies but the market determines the price and they do not. Of course, sufficient sales data must be somewhat difficult to obtain for 19-acre multi-million dollar waterfront estates.

Bahre paid $309,280.17 in property taxes! I know, this guy is a selectman’s dream. This summer, Alton reduced his valuation by $936,400 and refunded $12,092 in taxes from the 2017 year.

Bahre is suing the Town of Alton, because their valuation is still $5,355,811 higher than the asking price at which the property does not “clear.”

The article notes parenthetically that

At $14.98, Alton has one of the lowest tax rates among communities with extensive waterfront on Lake Winnipesaukee. Moultonborough’s rate is considerably lower, at $8.22 per $1,000 of assessed value. But Wolfeboro, Meredith, Gilford, and Laconia are higher, with tax rates of $14.98, $15.23, $17.26 and $21.03 respectively.

Now, from my relative hovel in Milton, any one of those “higher” rates seems vastly better than our $25.89. We began below the high end of this “higher” rate list eleven years ago, and rose, and rose, and rose, peaking at $28.60 in 2015 and $28.40 in 2016. Then BOS Chairman Rawson was asked last year what rate would finally be “too high.” He said $30, $30 per thousand would be too high. (“Miss me yet?”)

Only the phantasmagorical flash valuation of last year allowed the Milton selectmen to “cut” us to $25.89. Well, yes, there was not much pain in it for them. Fantastically high valuations combined with a slight cut in rate produced a fantastically higher bottom line still. (And they did not even get it right).

This Alton multi-millionaire guy can probably afford to sue the Town of Alton into the ground, so this will be interesting to watch. And the premise of his suit is itself interesting. The Town’s high tax rate – yes, he means the $14.98 – is scaring off potential buyers. He cannot realize the full value of his property because of high taxes.

Fascinating as all of that is, the real nugget was buried near the bottom of the article:

The suit filed by attorney Margaret Nelson on behalf of the Bahres, argues, “Even affluent potential purchasers are concerned about the very high tax burden, especially in light of recent changes in the federal tax law regarding the deductibility of property tax expenses.”

Beginning with this federal Income Tax year, taxpayers will only be able to deduct $10,000 in state and local taxes from their income tax.

Yes, you read it right. If a business bears a tax burden that is greater than the deductible $10,000, the portion above that amount is no longer deductible from Federal taxes. Remember, they pay a local NH State Business Tax too.

The Feds just stopped subsidizing places with high local taxes. For a valuable property, having it in Milton, or California, Connecticut, Massachusetts, New York, etc. – all high tax places – just became even more expensive than last year.

What effect might that have on businesses? Would taxes even higher-than-high tend to make Milton more attractive to them or less?

You figure it out.

References:

Laconia Daily Sun. (2018, September 27). Bahre sues Alton, alleging taxes on lakefront estate scaring away buyers. Retrieved from www.laconiadailysun.com/news/local/bahre-sues-alton-alleging-taxes-on-lakefront-estate-scaring-away/article_7132b470-c0eb-11e8-ac87-472a3856d0fc.html

 

Author: S.D. Plissken

I thought he'd be taller.

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