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GREETINGS FROM VERNA ACKER
I WISH EVERYONE A HAPPY AND PROSPEROUS NEW YEAR.
THE YEAR HOLDS MANY PROMISES FOR ALL OF US.
MAY WE MEET THE CHANGES WITH WISDOM AND FAITH.
TABLE OF CONTENTS
Have you ever heard of “The Burlington Liar's Club?”
The club was founded in 1929 by Burlington newspaperman,
Otic C. Hulett. Every year “lies” are submitted from all over
the world. The story of a trying trip to Florida netted Gordon
Zwicky of Oshkosh the title of Champion Liar of 2000 by the
Liars Club.
“Gordon and his wife have never been more than 25 miles
from Oshkosh during their 50 years of marriage. They won
some lottery money and decided they could go to Florida.
Their neighbor, who had traveled extensively, advised them
to pay attention to the road signs and they would get along
just fine. Thirty miles from home they saw a sign stating
'clean restrooms ahead.' Two months later they arrived in
Florida. They had cleaned 450 restrooms, used 267 rolls of
paper towels, three cases of bowl cleaner and 86 bottles of
Windex. They were so tired, they left for home immediately.”
Some other “lies” received honorable mention:
“A man from Dubuque, IA, who called himself Flash Gordon,
told about the dryness of his back yard. He said the robins were
hiring woodpeckers to drill holes so they could get worms out
of the ground.”
Mark Lukoff of Bayside, WI said “the water residents were
receiving from their wells had so much iron that everyone in
town pointed north during electrical storms.”
Kenneth Flunker of Neenah reported that “a robin built a nest
with a hole in the bottom because she liked to lay eggs, but
didn't like kids.”
These excerpts were taken from an article in the January 1,
2001 edition of The Racine Journal Times
THE WISCONSIN LAND USE PENALTY
Some recent changes to Wisconsin's system of assessing
farmland have caused considerable controversy throughout
the state and will likely impact real estate transactions
relating to farmland. The following information will provide
a brief overview of use-value assessments, how the assessments
are made, and some recent changes to the use-value assessment
program.
What is a use-value assessment? The use-value assessment of
farmland is essentially a tax break for owners of agricultural
land. Rather than assessing the farmland based on its fair
market value like most other land, the use-value assessment
assesses farmland based on its agricultural productive value.
The program was intended to allow farmers to continue
farming their land without incurring significant tax burdens
due to increased value of their land.
Determining Use-Value. Unlike the assessment system used
for most properties, use values have no relation to market sales
of comparable farmland. Instead, the values are determined
solely by a formula based on the value of farmland for growing
corn, the most commonly grown crop in Wisconsin. The use-
value formula uses several factors including: corn yield and
prices, cost of producing corn, interest rates, and local property
tax rates.
Under the rule, all farmland is categorized by the local
assessor into one of five classes: class 1, class 2, class 3,
pasture, and specialty land. The Wisconsin Department
of Revenue has calculated the use values for each class of
farmland in each municipality and provided those values to
local assessors.
Phase-In Requirement. In 1995, the Wisconsin legislature
passed the use-value assessment that went into effect in 1996.
Because communities would need time to implement this new
assessment system, the legislation called for a ten-year phase-
in of use valuation. The phase-in represented a compromise
between urban and rural interests which, on the one hand,
allowed farmland to be assessed based on its lower use, as
opposed to market value, but which, on the other hand,
attempted to cushion the impact of this change on non-farm
property owners and jurisdictions through a gradual phase-in.
To provide a base level of value to begin this ten-year
phase-in, the assessed value of farmland was frozen at
their 1995 levels.
Despite the phase-in requirement, WDOR has decided to
eliminate the use-value phase-in in the year 2000. This change
has resulted in considerable criticism from municipal groups
and legislators due to the greater tax burden that will be placed
on non-agricultural land to make up for lost revenue. In addition
to the dispute over tax policy, WDOR's decision has also raised
legal questions as to whether WDOR has the authority to ignore
the statute's express language and terminate the phase-in requirement.
Tax Penalty. In an effort to make this program less
burdensome for farmers, the 1999-2001 biennial budget
included changes to the penalty provisions in the use-value
program. To make the agricultural business more
financially feasible for farmers so they are not required
to sell their land, the use-value system assesses most
agricultural land at a lower value than if the property
would be valued using standard assessment practices.
However, in exchange for receiving the benefit of lower
taxes, owners of agricultural land are assessed a penalty
if they no longer use their land for agricultural purposes.
Prior to the recent budget changes, any person who owned
land that was valued under the use-value system would be
assessed a penalty upon selling the land if the person
(a) owned the land for less than five years, and (b) benefited
from a lower value under the use-value system (i.e., received
a tax break). In other words, if the person owned the land
for more than five years or did not receive a benefit under
the use-value system, the person would not be subject to a
penalty upon selling the land. The penalty was equal to
five percent of the difference between the sale price of the
agricultural land and the assessed value (under the use-value
system) during the last year the person owned the land
((sales price - assessed value) x 5%).
For example, Farmer Brown sells Parcel A, which is valued
under the use-value system at $20,000, to Developer for
$100,000. If Farmer Brown owned the property less than
five years, Farmer Brown would have to pay a penalty
equal to $4,000 (($100,000 - $20,000) x 5%).
While the penalty remains in effect, the recent budget bill
modified how the penalty will be calculated. Instead of
assessing a penalty upon the person who sells the land, the
new system assesses a penalty upon the person who changes
the use of the land to a non-agricultural use. In addition, the
penalty formula now imposes a penalty equal to the difference
between the property taxes that would have been levied on the
land if the land had been assessed at full-market value and the
property taxes levied on the land for the last two years that the
land had been valued under the use-value system ((fair market
value - assessed value under the use-value system) x mil rate x 2).
Using the same example as above, Farmer Brown, under the new
formula, would not be assessed a penalty upon selling his land.
However, if Developer wanted to change the use of the property,
Developer would be charged a penalty equal to approximately
$4,800 (($100,000 - $20,000) x 3% (assumed mil rate) x 2).
Obviously, the advantages to this new formula are that the seller
is not assessed a penalty, and a penalty is not assessed upon every
sale of agricultural land owned less than five years. However, the
disadvantages are that the buyer is subject to the penalty if he/she
changes the use of the property, and that if the mil rate in a
community is greater than 2.5 percent, the penalty is higher.
In an effort to reduce the tax penalty imposed on persons
who change the use of agricultural land, the Wisconsin
REALTORS® Association, along with other interest groups,
will be seeking changes to the penalty formula.
Disclosure Requirements. The revisions to the use-value
system also include a new disclosure requirement for sellers
of agricultural land that is assessed under the use-value system.
As discussed above, a penalty is no longer assessed to the
seller of agricultural land. Instead, the penalty is assessed to
any person who changes the use of land assessed under the
use-value system to a non-agricultural use. Because this
information would obviously be important to prospective
buyers, the legislature believed it was necessary to include
such a disclosure requirement. The old rule did not include a
disclosure requirement since the seller, not the person who
changed the use, was assessed the penalty.
As matter of practice, REALTORS should inform sellers of
agriculture land to include this disclosure within the real estate
condition report if the land is assessed under the use-value
system. To make sellers more aware of this new disclosure
requirement, this change will likely be included in the updated
version of the real estate condition report which is expected to
be completed and available for use sometime this spring.
GREETINGS FROM VERNA ACKER
TABLE OF CONTENTS
TO THE SELLERS: TEN RULES FOR A SUCCESSFUL SHOWING
2. Turn on EVERY light in the house! Before a showing,
turn on every light in the house including closets and baths.
Your home will be perceived as bright and cheerful, and avoids
the appearance of dark, dreary rooms.
3. Open all drapes, curtains, and blinds! Help buyers see your
home in the very best “light.” Be sure windows have been
cleaned, then let in all the light you can by opening all drapes
and curtains.
4. Turn off the television! The agent will have trouble holding
the attention of prospects when Oprah or Jeopardy is competing
for their attention. Turn the TV off before you leave home.
5. Turn on the Stereo! Tune in your best stereo to a soft,
“easy listening” station, then turn the volume down low.
Most buyers like to imagine themselves living in a peaceful,
serene atmosphere.
6. Set your Table! Set your dining room table as if you had
special quests arriving. Use your wine goblets and pretty
napkins with your good china. If your home is more informal
and only has a dinette area, set the table with a more casual design.
One of my sellers had a snack bar against the kitchen wall. She
set it with paper plates in wicker holders and put the peanut butter
and jelly jar out, as if it was waiting for the children to arrive for
lunch. Several buyers commented on the “cute idea.” What that
cute idea did was draw attention to the snack counter!
7. Keep all pets outdoors! Pets are of no interest whatsoever
to buyers who may be considering your home. The
distraction and inconvenience caused by a pet should
be eliminated. Keep pets outdoors. Remove all sign of
pets in the home, too. Be sure that kitty litter boxes and
food and water dishes are out of sight.
8. Check the thermostat! During the hot summer, lower the
thermostat. Buyers will notice the cool efficiency of your
air conditioning. On wintry days, raise it, making your home
feel toasty warm. We are only talking a couple of degrees.
Just enough to make it feel extra comfortable.
9. Build a blazing fire! Build a crackling fire in the fireplace on
wintry days, before you leave the house. What family wouldn't
enjoy cozy evenings roasting popcorn in front of the fire? Be sure
that you have a good shield or glass doors if you do this, however.
10. Bake Bread! Give your home the aroma of Grandma's country
kitchen by baking fresh bread before a showing. Or, try warming
cinnamon rolls in the oven or perking a fresh pot of coffee. A
fresh apple pie on the cupboard serves the same purpose.
Buyers WILL respond with their emotions and their pocketbooks
if you will pay attention to the items mentioned here. The buyer
will appreciate the effort that you made to prepare for their arrival.
A rapport between buyer and seller can be started at the first showing.
Your rewards will be in great proportion to your efforts.
Visit the rest of my web site for more ideas on the presentation
of your home.
MORE ON THE LAND USE PENALTY LAW
Thanks to Kathy Romanek, our area assessor, for the explanation.
For further information go to the State of Wisconsin,
Department of Revenue web site:
www.dor.state.wi.us
GREETINGS FROM VERNA ACKER
TABLE OF CONTENTS
New IRS Regulations Regarding REVERSE EXCHANGES
This article is taken from the 1031 Exchange Newsletter,
Jan 05, 2001. “New IRS regulations have surfaced regarding
reverse exchanges (buying the replacement property then
selling the relinquished property). These changes will make
it less risky to do this type of transaction. They have also
made this type of deal less flexible that in the past. There is
less time to complete a reverse exchange now )180 days when
it used to be a year or more previously). The qualified intermediary
needs to hold title to the property (on the buy or sell side) and
depreciate the property. This increases reporting requirements;
therefore, the cost is higher.”
“For most people it is best to avoid doing a reverse exchange
whenever possible. The following are some ways to negotiate
a deal to be a regular exchange:
Here are some other newsletters:
Calculate your tax liability before you sell!
Click here to sign up a friend:
GREETINGS FROM VERNA ACKER
TABLE OF CONTENTS
RACINE COUNTY HAS SEVERAL INLAND LAKES:
BROWNS LAKE.
DELMONTE LAKE.
ECHO LAKE.
HONEY LAKE.
KEE NONG GO-MONG.
LONG LAKE.
LAKE TAHOE.
ROCKLAND LAKE.
LAKE TICHIGAN.
WAUBEESEE LAKE.
WIND LAKE.
This information is taken from an article in the Racine Journal times,
5/11/99. |
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