As the filing deadline for 2007 looms, small business owners still have time to save on taxes.
Unfortunately retiring on easy street is more complicated than you think. Here's a road map.
Last week my family visited Boston for a little spring break R&R (is it really spring break when the temp barely breaks 50? better than snow, I suppose).
I'd never been to the city before, and we had a nice time visiting friends and seeing the sights along the Freedom Trail. Surprisingly, a couple of estate planning issues impacted the makeup of the city. The following quotes are from the nice walking guide entitled The Complete Guide to Boston's Freedom Trail, by Charles Bahne:
1. "The [Massachusetts] State House stands on land once owned by John Hancock.... Hancock was the first person to sign the Declaration of Independence.... Hancock's elegant mansion stood on what is now the west lawn of the State House. Hancock wished to give his home to the state, for use as a governor's mansion, but he died before he could sign his will. Year later, his heirs offered to sell the old house to the state, but the price was considered too high. Much to the dismay of all Bostonians, the Hancock mansion was demolished in 1863." (page 8) Ah, the irony of one of the world's most famous "signers" failing to sign his Will.
2. Faneuil Hall is "Boston's town meeting-hall [] where the colonists first dared to speak publicly against British rule.... The building was a gift to the town from Peter Faneuil, 'the topmost merchant in all the town'.... Peter Faneuil inherited his fortune from his uncle Andrew, a prosperous merchant whose ships called at ports around the Atlantic. But Andrew's bequest was subject to one unusual provision: like his uncle, Peter had to remain a bachelor. If he ever married, he would forfeit the money!" (pages 30-31) Peter Faneuil was known around Boston as "the jolly bachelor," which is also a name he gave one of his ships. These days, a "no marriage" provision would possibly be declared void as against public policy.
Real estate transfer taxes vary greatly in the Chicagoland area. Here is a list (in PDF form). Note, however, that this list doesn't include any changes since July of 2007. For instance, it's missing the recent change (effective 4/1/08) to Chicago's transfer taxes. Traditionally, Chicago's tax was unique in that it was assessed only against buyers -- most transfer taxes are paid by sellers. Chicago now has a transfer tax for buyers AND sellers, at the following rates:
For buyers: $7.50 per $1,000.00 of purchase price
For sellers: $3.00 per $1,000.00 of purchase price (this is in addition to the combined county and state transfer tax of $1.50 per $1,000.00 of purchase price)
According to this article, Chicago now has the highest transfer taxes in the nation!
I used to recommend (somewhat facetiously) moving from Chicago to Oak Park, as Chicago only taxed buyers and Oak Park only taxed sellers. The result would be a pretty huge savings on the opposite move (from Oak Park to Chicago -- Oak Park taxes sellers at a rate of $8 per $1,000.00):
Transfer Taxes (prior to 4/1/08)
assuming sale of $400,000 home and purchase of $500,000 home
Sale in Chicago, Purchase in Oak Park: $600.00 (just county and state transfer tax on sale)
Sale in Oak Park, Purchase in Chicago: $7,550.00 ($3,800 for sale plus $3,750 for purchase)
That's a difference of almost $7,000! Of course, the difference is now smaller -- the tax hit for a "sale in Chicago, purchase in Oak Park" scenario as of 4/1/08 is $1,800.00.
Note that you can still find "bargains" from a transfer tax perspective, as municipalities like La Grange and Hinsdale have no transfer taxes whatsoever. You can use the above list and a little research to check on the municipality to which you are planning a move.
