Now that it is December — unlike during late September, October, and early November — all of the holiday decorations don’t seem out of place, and, in fact, they are uplifting, given all that’s going on in the world.
In past columns at this time of the year, we have talked about having a holiday budget — not just for gifts, but for entertainment, travel, and everything else — and sticking to it. We have also talked about avoiding credit card debt, or having a plan to pay it off as quickly as possible after the holidays, and starting now to save for next year’s holidays. So we don’t have to repeat that — right?
There is no question that the holidays can be stressful — financially, emotionally and logistically. As a result, I am always alert to anything that can reduce the financial stress, so a recent Harris Poll survey result definitely got my attention. When asked if they would give up the holiday gift-giving tradition this year if their friends and family agreed to it, 69 percent of Americans said they would. I don’t have the actual survey results, but I would like to believe that it is not about gifts for children, or gifts for a friend or family member that is truly in need. However, it does illustrate what we all know, which is that the stress of the holiday gift giving tradition is catching up with people.
What would people do with the saved money? Forty-three percent of those who spend money on anything related to the holidays said they feel pressured to spend more than they can afford. If they didn't have to buy gifts, 25 percent would use the money on activities with friends and family, 37 percent would pay down debt and 47 percent would save or invest.
Talk about timing. Our family decided this year that we would not buy gifts for extended family, except for the young children in the family, and that was before anyone but me knew about the survey.
On an unrelated, but important subject, as I write this column, the U.S. Senate and House have passed competing tax reform bills. Just like with the Equifax breach, I think that, as individual taxpayers, we need to let the conference committee meet, and the dust settle, before we overreact. For individual taxpayers, we don’t know things like the fate of the Alternative Minimum Tax, the deductibility of mortgage interest, or what the final tax rates will be. On the other hand, it is starting to look more and more certain that state and local taxes will no longer be deductible, or that the real estate tax deduction may be capped. The non-deductibility of those taxes will certainly affect a good number of New York state residents, unless things like reduced rates and the elimination, in whole or in part, of the Alternative Minimum Tax significantly compensate for it.
There are so many other open issues, including a cap on the deductibility of student loan debt interest, that it just seems prudent to voice your concerns to your representatives, but then to step back, breathe, and enjoy the holidays. It is beyond your individual control.
On a different, but related subject, given that it looks like real estate taxes will no longer be fully deductible for primary residences, I received my new real estate tax assessment this week. My town, like many others, has completed its most recent 100 percent of market value reassessment. Of course my assessment went up, which has higher stakes than in the past, since, without the real estate tax deduction, the government won’t be subsidizing part of the increase, if my taxes do go up as a result of the increased assessment. That is a critical point, since the key is not what your assessment is, but what the tax rate is per thousand, after any exemptions. It is possible after a major reassessment, even if your assessment has increased, that your taxes won’t, because the rate per thousand could drop when all of the property in the town is reassessed at true market value. In addition, the increase could be minimal, so that challenging the assessment would not be cost-effective.
Bottom line, if you think that your property is over-assessed, start by looking for comparable market values online, then consult with a reputable real estate broker to obtain an expert opinion on value, and whether a challenge could be reasonably expected to be successful and cost-effective. Then go from there.
Next time, we will look at more insights from the book “Dollars and Sense.”
John Ninfo is a retired bankruptcy judge and the founder of the National CARE Financial Literacy Program. Find his previous weekly columns at http://www.mpnnow.com/search?text=Ninfo or at http://www.monroecopost.com/search?text=Ninfo