SMART MONEY: Curbs and sidewalks are the price of expansion
DEAR BRUCE: I own a property and lease half the space. The current tenant wants to expand to the lot next door. However, the township says we need to install curbs and sidewalks. This is ridiculous because it is on a main highway. However, I want to keep everyone happy and have offered to help with the high cost of installing what is needed.
Is there any way I can avoid all this cost? Is there any way to fight the township on this matter? — T.W., via email
DEAR T.W.: To answer your second question first, “Is there any way to fight the township on this matter?”: Possibly, but generally speaking, it is a waste of time.
What has happened is that subsequent to your current arrangement, an ordinance has been passed that says any extension of use will require that you install curbs and sidewalks. You may think this is ridiculous because it’s on a main highway, but that’s not material, and keeping everyone happy is not material either.
Is there any way to avoid this cost? I doubt it very seriously, except by passing it on to the current tenant who wants to expand his use, which is perfectly appropriate. If he wants the use, he will have to pay.
o o o
DEAR BRUCE: In 1990, my parents created a trust and placed the family home in it. When my mother passed away in 2010, the trust was dissolved and the family home was placed in the name of my sister and me with a right of survivorship.
The value of the home in 1990 was approximately $150,000, and when my mother passed, it was approximately $215,000. Neither my sister nor I live in the house or plan to live in it since our elderly father lives there and we live out of state. At some point in the future, we plan to sell the house.
The question is whether we owe tax on the sale of the house and, if we do, what is the basis? Is it when the trust was established or when the trust was dissolved? — R.S., via email
DEAR R.S.: In 1990, when your parents created the trust, the house had an established value. You said when your mother passed away 20 years later the value of the house was approximately $215,000, which is a difference of $65,000 from 1990. At that point, the taxes should have been paid on the $65,000.
If that wasn’t the case, that obligation is still buried into the value passed on to you and your sister. In the event that one of you passes before the house is sold, the remaining heir will be responsible for taxes on the entire $65,000 that is already accrued, plus any difference in appreciation.