In 1980, Congress enacted the Foreign Investment in Real Property Tax Act (FIRPTA), 26 USCS 1445. The law provides that if a seller of real property is a "foreign person," the buyer must withhold a tax equal to 10% of the gross purchase price, unless an exemption applies under the law.

A "foreign person" is a non-resident alien individual, a foreign corporation not treated as a domestic corporation, or a foreign partnership, trust or estate. A resident alien is not considered a foreign person under the law.

Exemptions to FIRPTA

There are a number of exemptions to FIRPTA. A transaction is exempt if:

• the seller of real property furnishes a non-foreign affidavit stating under penalty of perjury that the seller is not a foreign person
• the transaction involves the transfer of a property acquired for use as the buyer's residence and the amount realized is not greater than $ 300,000
• the seller obtains a "qualifying statement" from the Internal Revenue Service stating that no withholding will be required

Obtaining Legal Counsel

In connection with any real estate sale involving a foreign investor the buyer and the seller should consider making a specific agreement with regard to FIRPTA compliance. The expertise of a real estate attorney may be helpful to avoid complications that may otherwise arise at the last minute and delay the closing. As always, when dealing with the Internal Revenue Service, it is important to proceed with an abundance of caution, as "an ounce of prevention is worth a pound of cure."

Switching so many hats at home and work to get it all done puts Catholic biz moms at risk of overlooking important, non-urgent tasks.

Managing your intellectual property (IP) easily tops the list of ignored activities.

Understanding intellectual property basics now could save you a lot of money and heartbreak in the future.

So what is IP? Guy McClung, patent and copyright lawyer, defines intellectual property as "non-real, non-dirt, non-physical intangible personal property resulting from mental processes".

Atty McClung distinguishes the four types of intellectual property:

• Trademarks – a symbol or logo that identifies your company (trade names, trade dress)
• Trade Secrets – anything of value to your company that you wouldn't give to somebody for free. These include the people you include to buy supplies, customer list-anything of value like a device or process, a compilation of information
• Copyrights – apply to works of authorship (paintings, artworks, reports, brochures, books-anything produced that can be copied)
• Patents – deal with inventions (things, process, methods)

Still not jumping off the couch to jump to action?

Here's why you need to have an intellectual property plan:

1. Short-term Gain for Long Term Pain – Neglecting your IP needs now could mean that years down the road as your business and brand blossoms, you could be required to change the name or logo of your business should you in violation of the intellectual property of another. This may have a disastrous effect on your following and your bottom line.
2. Giving It Away for Free – Ignorance and inaction about Copyright Laws could land you with screwed book deals where you could lose the rights to your published signature systems. You could also have your content stolen without credit or compensation simply because you failed to include a copyright symbol at the bottom of every document, website, and social media site.
3. Giving Away the Farm – Not recognizing what trade secrets you have and how to keep them protected could easily leave you with former employers without signed disclosure statements walking away with client lists, processes, procedures, and contact lists that took you years to accumulate. Even carelessness with computer security protection could compromise your intellectual property in the hands of the wrong person.

Don't get that itchy- "Oh no I'm doing a ton of stuff wrong feeling and I already have so much to do!"

An Intellectual Property Plan does not have to be stressful.

Wood signs are one of the most growing trends among property owners to welcome guests in the most creative and unique way. These signs create a lasting impression on the guests, making it easier for them to spot your address. You can mount them on the wall, door or near your house with a stand. You can even customize the wooden signs by entering your name, house number, flat number on it, making people locate your address easily.

Benefits of Using Wood Signs Outside your Property

• Adds Natural Appeal

As wood is an organic material, it adds natural appeal to any space. Placing this type of sign outside your property is not only welcoming but also an affordable way to leave an everlasting impression on your guests or potential customers. All in all, these are great for both residential and commercial properties like a local coffee shop or a resort. These can adapt well to any location.

• Distinctive Visibility

The customised and a handcrafted appeal of the wood signs, especially the rustic signs are hard to overlook. Just like an exquisite logo or a piece of art stands out, a unique wood design adds aesthetic appeal to any location and grabs the attention of the visitors. A custom wood sign outside your business property or house will shine amongst other properties and will demonstrate that you’ve taken care of every detail that goes into it.

• Versatility

While it may seem that these are only great for restaurants or country stores, but they can be installed wherever required. For instance, you can place them anywhere – outside your corporation, restaurant, cabin, and even your house. Wood signs are mostly used for identification purposes so that your guests or visitors face no problem in finding your property.

Wooden signs are timeless! They are the perfect combination of natural beauty and durability which makes them the right choice for quality signage. You can make use of timber signs to give a more authentic and warm feel to your property. You can get many websites that offer you customized woods signs for your property. You can choose your desired style and personalize them according to your needs.

No matter how much technology advances we witness and how modern the world becomes, wood signs will always remain eternal. These will not only look good but are also durable. So if you haven’t installed wood signs to your property, get it now!

What does it really mean to invest in yourself? I mean yeah stocks, bonds, mutual funds, etc. But what is your plan once you reach the point you're dreaming of? Of course everyone should constantly be saving for retirement, but isn't there another goal besides that? Starting a low cost business may sound very complicated, but it's actually much much more simple than you think. Have you ever thought about owning property? I am not talking about launching the next big real estate venture, but would it be that difficult to own some small properties? Lets think about it for a second. If you were to buy a house for $ 200,000 and rent it out for $ 2,000 a month, that would only take a little over eight years to break even, and then you would be making an additional $ 24,000 a year after that.

OK well even if you have the money to make that investment, you may be thinking to yourself … "How much work is it going to be?". To be honest, one family is not to much to take care of as a landlord. You may have to stop by once a month or so for routine maintenance, and if you are someone who is somewhat handy, then this should be no problem for you! Otherwise you could easily hire a part time worker to help with handy work. This may dip into your profits a little bit but will present itself as an opportunity to make side cash with basically no work involved at all.

As a professional investor, I would highly recommend investing in real estate to my listeners. It is a very easy way to generate profits in the long term, and if you continue to invest into this market you will be earning very large revenues down the road. This is a very simple yet costly investment, but it is also a very valuable investment nonetheless! It's an easy way to make extra income, and you might surprise yourself with how much revenue comes your way! If you don't have enough saved up to get through the startup costs of your venture then you may want to find investors. But finding investors with small companies like this can be very easy! The best time to start saving is right now! Owning property can be very lucrative and it should definitely be an investment considered by anyone.

These days, most companies will have some sort of intangible (meaning that it can be seen but not touched) asset that they have claimed ownership of, such as a trademark, patent or copyright. As with any other asset that you own, they need to be properly managed and cared for to ensure that your rights have not been encroached upon. To help you do this, you require the assistance of an intellectual property lawyer.

Protection

This is the number one reason why many companies look at getting legal representation. As intellectual property is not a physical object that you can touch and feel, it is very easy for thieves to copy it and claim it as their own. A lawyer will be able to keep an eye on your property, making sure it isn't being used without your authorization.

Profit

Many companies are unaware that they can actually make money off their intellectual property. In manufacturing, for example, it can actually be cheaper to license the patent from another company than it can be to try and reproduce your own processes. If you were to sell or lease out your assets in this way, you can make a nice profit.

Upkeep

Did you know that you will only have exclusive rights to your property for a certain amount of time? To ensure that your rights remain intact, you will need to pay fees and re-file paperwork every few years. An intellectual property lawyer will be able to keep track of these time limits and ensure that they are filed in a timely manner.

Acquisition

It is also possible to acquire patents and other properties when they expire for the exclusive use of your company and those you choose to lease it to. Your lawyer will be the best person to help you achieve this, as they will be able to tell when property is about to expire and prepare you to acquire it as soon as it becomes available.

As you can see, managing your assets is not the simple task it may appear to the untrained eye. To ensure that your property is properly looked after and that there is no chance it is being used illegally by someone else, you should employ the services of a reputable intellectual property lawyer. There are actually a number of ways that they can assist you, both now and in the future.

The question whether purchasing US property helps to obtain US residency is somewhat confusing, for paradoxically both a yes and no answer can apply.

With many British people seeking such a “sought after” status here is what I have found from my experience involving British buyers.

The E investor visa application is the most popular residency route with immigrants for a suitable new or established US business venture provides a relatively easy path.

However careful research and planning will be necessary to avoid a costly and disappointing outcome.

With many British buying vacation homes in Florida for rental and investment reasons, many ask if their property purchase can help them to obtain US residency status.

Anyone expecting a visa based on the purchase of a single US home will be severely disappointed, for it will never be able to justify a business investment reason.

However a carefully presented visa application that involves the purchase of 3 or more homes together with submission of a comprehensive detailed business plan could succeed.

If a visa application is poorly presented or it shows the property as being a “passive investment” it would normally be declined. Anyone considering an application is best advised to use an experienced professional with a proven track record in the preparation of such a business plan.

The purchase of property alone will always be viewed as a passive investment, however should the application clearly demonstrates an “active property business” an E2 visa may well be issued.

It is also imperative to prove a “substantial financial investment” as being made prior to the application being submitted and although no actual sum is detailed anywhere in reality it should not be less than $100,000.

Property loans are allowed although when the case sufficient projected business profit margin will be necessary for as the expense and risk increases so too does the scrutiny from the issuing immigration authority.

Of equal importance is the need to clearly show that the business will be viable and that it will be able to support the owner’s future living expenses etc

The supporting business plan should clearly demonstrate a defendable reason why it will generate future employment, plus as a guide projected generated profits of at least $50,000 per annum generally would be expected.

Clarifying property, as an important role in the business plan is essential as would be the case with such proposals as a guest- house, hotel or property rental firm.

Vacation rental homes can be treated similarly to a hotel acquisition for the property purchased has a similar function, however homes should never be bought for any personal use!

Property assets purchased specifically for a rental business do of course require regular maintenance and rental bookings require necessary appropriate personnel for the business needs, no wonder property management is a popular form of investment proposal.

In Central Florida, especially in the Disney catchments a constant demand for “good quality well run” property management firms still exists despite a number of holiday rental firms already operating in the area.

The constant growing demand for good quality management results from many new firms increasing their portfolio of homes, which seemingly reduces some firms’ business operating standards.

This problem was the underpinning reason for my firm’s decision NOT to enter into property management, despite the obvious financial temptation.

Back in 1985 there were very few holiday property management operations near Disney for by and large hotels were the main form of rental accommodation.

Over the next few years we arranged thousands of property sales to British buyers all of whom bought for personal holiday use and potential rental income during their absence.

In view of the importance our buyers applied to property management, we decided that we should do everything to provide the best possible service.

As such it would be best for us to remain totally independent and unlike many of our real estate competitors we resisted the financial temptation.

As a result we continue to track and monitor the performance of some 700 property management firms in Central Florida and the valuable information we gain often helps our client buyers.

There is thought to be over 50,000 British owned homes in Florida and of course many more are owned by other non -residents.

The constant demand for quality small to medium sized property- management firms is naturally creating attractive investment opportunities for budding entrepreneurs in search for a new way of life.

Those keen to try and keep their investment risk to a minimum and are nervous of investing cash into a new business venture may be hard pressed to find a better alternative than a property based management business.

Orlando Investment Properties purchased in the “Sunshine State of Florida should keep rising in value for property prices here are still much lower than many comparable states such as California, where prices are almost 3 times higher!

Those interested in obtaining more information regarding a resident E2 visa application or Orlando Investment Property should contact Graham at Florida Countryside 08456 444 747

You can also obtain a free DVD “The definitive guide to buying in Florida”

Property tax is probably the fairest tax collected by municipalities. However, it is also probably the un-fairest tax collected by municipalities.

The state where an individual lives determines how much they pay, which may be higher or lower. An individual's economic status can also be a factor in how this type of tax impacts their pocketbook.

In fact when it comes to the decision on taxes and renting versus owning, this may be the only time renting is the best option. States collect property taxes on:

• Land
• Improvements to land such as additions to property
• Man made objects that are not stationary structures

It is usually assessed by individual county tax collectors in each state. Land and property are mailed tax payment notices that are the result of appraisals of the property's value. Notices of assessments can be disputed by contacting the tax collector in the land owner's county, and the tax bill is typically paid from a homeowner's escrow amount on their mortgage.

As mentioned, property taxes can disproportionately affect some homeowners. Increases in a state's tax rate can often double or even triple a homeowner's tax liability and often leave them with no option but to sale their residence or land.

Critics of this form of taxation have also decried the fact that it does address the situations of some individuals. Although it is ordinarily paid as part of an escrow account, increased property tax means they would have to pay more into escrow.

Senior citizens on a fixed income have been identified as a group sometimes hit hard by taxes on their property. Such individuals may have high taxes due to an increase in the value of their property, yet find them selves unable to pay because of a reduced income during retirement. This mandatory tax, in some cases, does not take into account factors that may impact someone's ability to pay, such as personal tragedy or acts of nature.

Property tax has also been criticized because of the difference individuals must pay between states. Alabama has the lowest rate at 1.3 percent on property value, while New Hampshire has the largest at 4.9 percent. The average percentage among is somewhere in the range of 2.3 percent.

While Alabama has a tax rate of 1.3, which would seem to make it an attractive location for a home or business owner, someone with property a few feet away in neighboring Georgia would have to pay 2.6 percent, and more than double in Florida with a tax rate of 3.1 percent.

Just how to spend the revenue (or waste it, as is the case with many governments) generated by taxing property values ​​is determined by state legisllatures. A state's legislature also has say over reducing or raising the tax rate along with determining how often it should be collected. Additionally, there may also set limits on how much increase, if any, there can be every year.

Property tax definitely helps states with revenue. But while much needed, property tax can also be a deciding factor in where an individual lives or their ability to retain the American Dream of owning land.

Delaware, and the rest of the original British Colonies, has some land that is leased rather than owned by the residents of that land. Much of it is not evident to the casual observer.

The land on Lewes Beach is leased, not owned by the home owners. The land of Lewes Beach is owned by the Town of Lewes. The lands of Rehoboth by the Sea and Dewey Beach include leased land too. Most of the leases on that land will NOT be renewed but will return to the owners and the homes on top of that land will be removed by the home owners at their expense. Much of the land in Riverdale, on Indian River Bay, adjacent to Oak Orchard is leased as well. In Riverdale the leased land is owned by Chief Clark of the Nanticoke Indians.

We have about half the inhabitants of Sussex County living on leased land; most of that leased land is found in what people call mobile home parks or communities. However, in those communities there are seldom any homes that are truly mobile and there are even two story stick built homes on some of the leased lands in those communities. Condominiums and town houses are sometimes found on leased land as well. Some folks find all this rather difficult to understand.

We Realtors and Attorneys use the term fee simple to describe land that is being sold as real property; that is real estate. We used the term leased land or leasehold interest to describe land that is not transferring as real estate.

This rather lengthy text is regarding Leased Land, Real Estate, Private Property, Chattels, Mobile Homes, Homes on Leased Land and a legal dissertation to define, describe and determine the differences.

Terminology is important when discussing Real Estate, i.e. real property.

Black’s Law Dictionary is the recognized, definitive source for legal definitions under our American Law; which is derived from English Law

PROPERTY: In the strict legal sense, an aggregate of rights which are guaranteed and protected by government. BL6, p. 1216.

PERSONALTY: Personal property; movable property; chattels; property that is not attached to real estate. BL6, p. 1144

PROPERTY: (personal property) – In broad and general sense, everything that is the subject of ownership, not coming under the denomination of real estate. A right or interest less than a freehold in realty, or any right or interest which one has in things movable. BL6, p. 1217

Therefore personal property, is that which can be easily removed from the real estate, and is not real estate. Personal property includes crops, trees, shrubs, trailers, sheds, cars, mobile homes, manufactured homes that have a Department of Motor Vehicle title instead of a deed, and the contents of a home or building. In a home or business the personal property includes drapes, lighting fixtures, rugs (not installed carpeting) free-standing cabinets and cupboards, furniture, and all the contents of closets, drawers and buildings. Buildings without a foundation, that is sheds that are just supported by blocks are chattel property, that is personal property, and not part of the real estate. Such chattel includes dog houses and particularly the little storage buildings that are so common outside of homes today.

LANDS: In the most general sense, comprehends any ground, soil or earth whatsoever… Black’s Law dictionary 6th Ed. (BL6), p.877

PRIVATE PROPERTY: As protected from being taken for public uses, is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. Property of a specific, fixed and tangible nature, capable of being in possession and transmitted to another, such as houses, lands, and chattels. BL6, p. 1217. Private property is land, houses, and chattels. Private property is protected from being taken for public uses. Private property is owned absolutely.

REAL ESTATE synonymous with real property” and p.1218 REAL PROPERTY … A general term for lands, tenements, hereditaments (those things which are hereditary); which on the death of the owner intestate, passes to his heir.” BL6, p1263

ESTATE: The degree, quantity, nature and extent of interest which a person has in REAL and PERSONAL property. An ESTATE in lands, tenements, and hereditaments signifies such interest as the tenant has therein. BL6, p.547 The definitions here all refer to: real estate = real property = estate = lands, tenements, and hereditaments. At first, one might think that ‘real property’ is the proper term for ‘all lands’. But it doesn’t state the manner of ownership as clearly as the definition of estate. We just had a huge instance of this when the thousands of leased land lots under the homes of several thousand people, in Angola, Pots Nets, and Long Neck areas owned by the Robert Tunnel family was inherited by the children.

IN OUR AREA THERE ARE NUMEROUS LEASED LAND PROPERTIES AND THOSE PROPERTIES ARE THE REAL ESTATE OF THE OWNER OF THE LAND – NOT THE OWNER OF THE HOME WHICH IS UPON THAT LAND. If you examine the definition for ESTATE it refers to an interest in the same articles defined in real property and real estate.

What is this LAND and WHO owns it and HOW is it owned? Land can be private property OR estate, i.e. real estate. Estate is an interest in “real property” by a person or a tenant. Private property is owned absolutely by an individual.

INTEREST: More particularly it means a right to have the advantage of accruing from anything; any right in the nature of property, but less than title. – BL6, p.812. By this definition it’s clear that INTEREST cannot be TITLE, since it is less than title. Interest may be a property right to land, but it’s not a right to absolute ownership of land. Those who live on leased land, thus, have only an interest in the land; and that interest is a lease-hold interest. Is there a definition of property that says it’s land held in absolute ownership, as does private property’s definition? We can delve into this more.

ABSOLUTE TITLE – As applied to title to land, an exclusive title, or at least a title which excludes all others not compatible with it. An absolute title to land cannot exist at the same time in different persons or in different governments. BL6, p.1485

PRIVATE PROPERTY – … is such property as belongs absolutely to an individual, and of which he has the exclusive right of disposition. BL6, p.1217

OWN – To have a good legal title; to hold as property; to have a legal or rightful title to; to have; to possess. BL6, p. 1105. To “own” is to have title. An interest is LESS THAN TITLE.

ESTATE: The degree, quantity, nature and extent of interest which a person has in real and personal property. An estate in lands, tenements, and hereditaments signifies such interest as the tenant has therein. – – BL6, p.547 From these definitions, it’s plain that we can’t absolutely “own” real estate. We can only have a qualified ownership of qualified and described ownership of Real Estate. Thus, we need that Deed Description to describe it and qualify it. That ownership is also qualified by various government rights, decrees and laws, from antiquity, such as rights against trespass. That ownership is qualified by taxation, zoning, rights of way, and a myriad of other entailments. We need, therefore, a title search to determine those entailments, some of which are invisible.

Therefore there is NOT as much difference in the rights and privileges of ownership and interest as one is led to believe. I have no problem with those who live on leased land instead of owning the land. Usually they are paying far less than it would cost them to own the same property. However, they don’t often get any appreciation of the land; the landlord gets the appreciation in real value, while the resident can appreciate the lifestyle for less cost per month or year.

However, since an interest in leased land is not automatically transferable and is NOT Real Estate and since the chattel property upon it, the mobile home is personal property, without a deed but instead has a title – Realtors are not by law supposed to be involved in the sale of such – but we are. We are supposed to only be selling real property. It gets all cloudy and foggy doesn’t it. That is why there are people and companies who sell mobile homes on leased land who are not realtors and don’t need to be. In fact, although no one will discuss it, Realtors are not supposed to sell mobile homes on leased land. We don’t need to engage in that battle any more than I just did by describing it.

OWNERSHIP: The complete dominion, title, or proprietary, including right in a thing or claim… Ownership of property is either absolute or qualified. The ownership of property is absolute when a single person has dominion over it, and may use it or dispose of it according to his pleasure, subject only to general laws. The ownership is qualified when it is shared with one or more persons, when the time of enjoyment is deferred or limited, or when the use is restricted. – BL6, p. 1106 Such sharing is common with husband and wife, partners, families and corporations, etc.

DOMINION – Generally accepted definition of “dominion” is perfect control in right of ownership. The word implies both title and possession and appears to require a complete retention of control over disposition. – – -BL6, p. 486 I think you’d agree that zoning, building codes, home owners association covenants, condominium documents of use and business licensing is a restriction on the use of land (if it’s Real Estate). And there is obviously the fact that failure to pay property taxes on real estate will result in loss of said property. That’s definitely not absolute ownership. But private property is defined as ABSOLUTE OWNERSHIP, not qualified (interest).

PROPERTY (tangible) – All property that is touchable and has real existence (physical) whether it is real or personal. – – BL6, p. 1218 In summation, it takes a good attorney, and one well versed and experienced in real estate to understand the complex definitions, rights, liabilities, and privileges of real estate ownership. I have been buying and selling real estate for myself and assisting others in the buying and selling of real estate for thirty years. I have taught courses on real estate and real estate law. And, I would NOT consider purchasing a property, or purchasing property on leased land without the professional and paid assistance of an attorney who is a real estate specialist in the exact county in which the property is located. Other attorneys from other areas are not valid choices at all.

Copyright © 2001 – 2005 by www.JodyHudson.com>

While most investors have got involved in property investing because they understand the opportunities to make money through leverage and capital growth or high yields, I still see and hear of many who do not fully understand opportunity cost.

Remember anyone that gets into property is usually in it to generate money or income – how many deals/properties you own is insignificant.

So what does opportunity cost mean?

Well according to the encyclopedia, “Opportunity cost is a term used in economics, to mean the cost of something in terms of an opportunity foregone (and the benefits that could be received from that opportunity), or the most valuable foregone alternative. For example, if a city decides to build a hospital on vacant land that it owns, the opportunity cost is some other thing that might have been done with the land and construction funds instead. In building the hospital, the city has forgone the opportunity to build a sporting center on that land, or a parking lot, or the ability to sell the land to reduce the city’s debt, and so on.”

So in property investing terms, if an investor decides to invest £50k in a property in for example Wales, the opportunity cost would be what he could have made by investing in Spain, Ireland or Dubai. Or similarly if an investor decides to keep equity of 50k in a property, the opportunity cost is what he/she could alternatively have invested this money in and the resultant value.

Now again this will depend on your specific strategy – and many people are not too concerned about opportunity cost, they are just keen to buy 1-2 properties that can hold onto for 15-25 years to use as a pension. That is fine if that is your strategy – but for me that is too broad a strategy, carries risks and is not maximising the opportunities available.

For me I have always had a philosophy, rightly or wrongly, that I should always be working my money hard. What does this mean? Well as soon as I feel my money has made a significant return and the returns are likely to drop off, compared to other possibilities, then I will look at realising my profits and investing elsewhere ie when I feel the opportunity elsewhere is greater than the current opportunity.

The great thing with property is this does not necessarily mean selling, as you can refinance, and invest money elsewhere.

This is no different to any other type of investing, such as buying stocks and shares – you make/lose your money depending on what price you paid, and what price you sold at – although clearly with property is good opportunity to earn a regular income as well – if hold onto for 15-25 years you should make money, but most likely will be a few scares along the way!

To be a successful investor, must know when to enter the market, and leave the market. And the people that do best buy low, and sell high!

I’ll give an example – while buying off plan has now got a bit of stick in the UK – I have done it successfully over the last few years – but the key is having a clear strategy.

For example, by doing all my due diligence I have managed to buy property at the right price in right location, but then sold on within a year of completion as I felt that was the period I would see the maximum returns in – and opportunities would be greater elsewhere over the next 3 years.

So to go through the numbers, I have just sold one that I bought off plan last year 12 months before completion. I bought at a price that was already £10k below market value based on my research in an area that had little buy to let competition. This was secured with only a £5k deposit. On completion, I put another £28k into deposit – so tied up £33k of my own money. There was no stamp duty in this area.

I then put on market on completion, now even with things slowing down in the area, I have just sold it for a £23k profit. So I tied up £5k for 1 year, and a further £28k for 6 months, to get back £56k.

Why did I sell? Did I consider refinancing?

My first choice would have been to refinance and let out, but the rental would not have stacked up. So while the rental would have stacked up at the price I paid for the property, I would have had 56k in equity sat not doing very much for me. So as I do not forecast huge capital growth in the area over the next 3-5 years, and the yield was not attractive enough for me it was best for me to release this equity and find another investment – ie I felt there were better opportunities for me to spend my £56,000 on, to generate more money.

Now clearly when are looking into the future is element of risk and speculation and are no definite answers – so you are having to forecast as well as you can with the data currently available ie how you forecast interest rates, buying/selling costs, supply and demand, employment, the overall economy and market sentiment over the next time period in the markets/regions you are investing/looking to invest in.

Although opportunity cost can be hard to quantify, its effect is universal and very real on the individual level. The principle behind the economic concept of opportunity cost applies to all decisions, not just economic ones, for example when Steven Gerrard decided to stay with Liverpool last summer, his home club and where he is captain, the opportunity cost was what he could have achieved if he had moved to Chelsea. It will be interesting to see what he decides this summer- he may now feel the opportunity cost is too great to turn down.

Hope this makes sense, and remember to consider opportunity cost when next making an investment decision.

Imagine, if you will, Tinyville, a community of only ten houses. All ten houses were the same size and style, built at the same time on similarly-sized lots, using similar architectural drawings and building materials, each with comparable views and amenities, and each sold to its initial owner for the same price, $ 250,000. Assuming the fair market value of each of these houses was $ 250,000, (because after a reasonable amount of time that's the price at which the sellers and buyers had meetings of the minds, neither being under duress,) Tinyville's tax assessor valued each property at $ 250,000 , resulting in an underlying total property value of $ 2.5M for all of Tinyville.

Like any municipality, Tinyville has expenses: police & fire departments, schools & libraries, water & sewer, sanitation workers, judges & clerks, engineers & inspectors, tax assessors & collectors, officials, and secretaries. To keep the math simple, let's imagine that Tinyville's annual budget is a mere $ 100,000, and that it has no other sources of revenue (such as parking meters, local sales or income taxes, or hunting / fishing permits). In order to meet its annual expenses, Tinyville's tax assessor divides its $ 100,000 of budgeted expenses (known as a total tax levy) by each property's proportionate share of the $ 2.5M total assessed value of the community. Dividing $ 250,000 by $ 2.5M means that each house is responsible for 10% of Tinyville's property tax levy. Each homeowner (or their mortgage bank) gets a tax bill for $ 10,000.

For years, everyone is happy in Tinyville. The families each have kids in Tinyville's schools, they march in Tinyville's parades, and compete in Tinyville's pie-eating contests. In the natural course of events, two of the original families were more prosperous than others and moved into better digs in Mediumville, one retired to Southville, one got transferred to his company office in Westville, and one died in a tragic car accident, but their heirs in Bigville did not want to move back to their family homestead. Anyway, five of the homes went on the market and because the market had been doing well for the past several years, four were sold for $ 300,000 … except the one belonging to the heirs of the deceased couple – they let the house fall into disrepair, stopped mowing the lawn, and eventually squatters moved in and started trashing the place. When they finally sold it as a "handyman special," they got $ 150,000 for it.

Before any year tax assessment becomes "final," it is sent to each homeowner to review. Each homeowner has an opportunity to dispute the assessment. The five original homeowners continued to be assessed at a rate commensurate with their $ 250,000 property value, and knowing that many of their neighbors sold their comparable homes for $ 300,000, they silently accepted this assessment. The four new owners who paid $ 300,000 each are also assessed at $ 250,000. Strangely, it is illegal for a municipality to perform a "spot assessment" of individual properties so despite the "fair market value" of those four homes has increased by 20% since last appraised, they continue to be assessed at $ 250,000 each. The tenth home, purchased by the handyman for $ 150,000, is also assessed at $ 250,000, but he disputes his assessment. He argues that the fair market value of his home should be based on his recent purchase price, and through the various legal methods at his disposal, he has the house reassessed at $ 150,000.

Assuming the total tax levy is unchanged at $ 100,000, what happens to each homeowner's property taxes? Nine of the ten houses are still assessed at $ 250,000 each, but the last is now assessed at only $ 150,000. One might quickly (and incorrectly) guess that the houses with unchanged assessed values ​​would have no change in their $ 10,000 property tax bill, and that the tenth house would pay just $ 6,000, but that doesn't add up correctly; Tinyville needs to collect $ 100,000 in taxes to balance its budget, and this formula only adds up to $ 96,000. What actually happens is that the denominator changes, too. Tinyville's total assessed property value is recalculated based on each property's assessed value, and now adds up to just $ 2.4M. That means that each of the $ 250,000 houses now accounts for just over 10.4% of the total, and is now responsible for that percentage of the $ 100,000 levy, increasing each of their assessments to $ 10,417. The handyman's $ 150,000 assessed value accounts for 6.25% of the total, so he's now responsible for just $ 6,250 of Tinyville's tax levy.

Some (including the handyman) would argue that the handyman's house is worth less, and consequently, he should pay less tax than his neighbors. Others (including his neighbors) would argue that his house is the same size and shape, takes up as much land, and places the same demand on Tinyville's police, fire, schools, libraries, sewers, and other services, and that he should pay the same amount as the other houses. Some (including the original five families) would argue that the resold houses should be assessed at their new, higher market values, and that the new owners should pay proportionally more taxes. Others (including the four new owners) would argue that the fair market values ​​of their homes (as evidenced by their sale prices) are indicative of the actual fair market value of the five unsold homes, despite the fact that those homes haven't recently changed hands. These are the sort of issues that confound homeowners and plague tax assessors, assessment review boards, and courts in every municipality, every year.

In a perfect world, when the handyman files for building permits to repair and restore his home's value, the new value he creates by the work he does should bring his tax assessment back in line with the other comparable houses, thus reducing his neighbors' percentage of the total tax, accordingly. Unfortunately, not everyone applies for building permits, and not every project even requires building permits. Upgrading your kitchen appliances improves the value of your home without requiring building permits. Many municipalities don't require a building permit to add a new layer to your roof or to retile your bathrooms. Of course, there are also homeowners who build bedrooms in attics or lofts over their garages without permits, and not every new home buyer is savvy enough to realize that they are paying for such unpermitted improvements. If you complain to the tax assessor that your neighbor has an unpermitted finished basement, the tax assessor does not have the same authority as a building inspector to knock and demand to see that basement so as to tax them appropriately … and not every building department inspector is willing to perform inspections on an anonymous tip, so you may have to go on record as the guy who ratted out his neighbor. Consequently, a lot of home improvements are not reflected on the tax assessment rolls.

Since buying a home in a market downturn gives you the ability to grieve your tax assessment based on its new apparent fair market value, other home owners can actually use your new "fair market value" to argue that their house is comparable to yours, and that their assessment should be lowered, too. This creates added burden on the assessors as they try to determine new values ​​of homes that haven't recently sold based on evidence created by comparable homes that did. As more and more homeowners grieve their assessments, it reduces the denominator in the municipality's total assessed value, increasing the actual tax bills for houses for which assessments haven't been grieved. Naturally, that reinforces the process, inciting more and more homeowners to grieve their taxes, creating more and more work for assessors. However, taken to the unimaginable extreme, in a community where home values ​​have fallen, it may take a few years for all of the homeowners to realize that they are being unfairly assessed (as compared to their neighbors), but ultimately, when the last of them finally grieves his taxes, everyone's proportion to the new denominator should be comparable to their proportion to the original denominator, meaning that they'll all on average, eventually pay just about as much tax as they did before. In the intervening years, the ones who got onboard first and had the largest and earliest reductions in their assessed home values ​​will reap the greatest short-term benefits. Some would go so far as to argue that this is fair, like so many other instances in life when the early bird gets the proverbial worm.

The intervening chaos and disparity, however, causes more work, thus costing municipalities more in assessments, review boards, and grievance hearings. In the worst cases, when grievance processes fail and are left for courts to decide, municipalities have to pay unanticipated refunds to vindicated homeowners, which reduces their immediate coffers and further increases tax levies in subsequent years to make up for those losses. For scholars of economic theory, Keynes would argue that these machinations are a necessary and productive part of the system, and that they employers who otherwise would earn less; these lawyers rent offices, hire staff, and buy office supplies, and in effect, keep the economy's wheel turning. Hayek would retort that these legal costs do not so much enrich the system, as they do redirect capital that would have been employed elsewhere, such as the tax savings permitting the homeowners to buy new furniture, hire a gardener, or take a vacation. He would consider these inefficiencies in the tax assessment process an unnecessary cost that allocated resources in a less-than-optimal manner … and I'd tend to agree with him. I don't know what the solution is, but I know that we should try to come up with a better one.