Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
He served at the Pentagon as an army jag. He
graduated from Notre Dame and has two law degrees from
Boston University and Georgetown University. He's been practicing law for
over thirty years. He's your family's personal attorney. It's time
for the David Carrier Show.
Speaker 2 (00:21):
Hello, and welcome to the David Carrier Show. I'm David Carrier,
your family's personal attorney, and you have found a place
where we talk about a state planning, elder law, real
estate and business law. So give us a call. I
don't just six one six seven seven four twenty four
twenty four. That's six one six seven seven four twenty
four twenty four. We'll get your question, comment or concern, Question,
(00:46):
comment or concern. I don't care if it's a question
coming or concern any of that stuff on the air,
especially if it has to do especially we're not limited
to I mean, we're very you know, when you look
at the Thanksgiving table and you've got six different kinds
of potatoes and half a dozen green bean cast roles,
you know you get to appreciate the variety of life.
(01:09):
Shall I even say, the diversity, oh, diversity of you know,
people's efforts, and so you know, we'll take questions, comments
and concerns about practically anything. But but if you you know,
if you focus, I don't say limit yourself, I say
focus on the state planning right, little trusts and probate
(01:32):
that kind of thing, if if it is up to you,
but you do what you want, if you want to.
If you want us to talk about I don't know,
long term care, how about that? How about you know,
how do we beat the high cost of long term care?
How do we make sure that you feel secure, that
you know that you're secure, that you know that you
are not gonna go broke in long term care? And
(01:54):
you know, people say, oh, that will never happen to
me because I will never need long term care because
my kids will take.
Speaker 1 (02:00):
Care of me.
Speaker 2 (02:01):
Yeah. Right, And Rudolf the red nose of the reindeer
delivered Thanksgiving dinner. You know, pull the other one anyway,
but you can believe that if you want to. I mean,
I'm perfectly a okay with Rudolph being the provider of Thanksgiving. No,
not actually anyway, but you believe which one. We also
(02:23):
deal with real estate, right, So if you're looking to
buy sell a house, although God knows that with the prices,
it's getting pretty difficult to do that. But if that's
what you're into, give us a call. Six one six
seven seven four twenty four twenty four. And that's sixty
one six seven seven four twenty four twenty four. And
and if you've decided to carve up your part of
(02:45):
the American dream and be an entrepreneur, an entrepreneur, as
the guy in the Garden Show says, you know an entrepreneur,
somebody who kills the garden anyway, uh six one six
seven seven four twenty four twenty four. Where I've only
been at this now for you know, well we're one
year away. It'll be forty four years. That's a long time.
(03:07):
That's a long time to be given advice, don't you think? Yeah, well,
too bad. The doctor say I'm good for another ten
so uh yeah, country, blessings on that one six one
six seven seven four twenty four twenty four. If you'd
like to get your question, comment or concerned on the air,
you can also go to the website Davidcarrier law dot com.
(03:28):
Squash it all together, make one word out of it,
Davidcarrier law dot com. And if you don't have a
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(03:50):
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that's a that's a fine question. Ask that question, and
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on that thing and it will actually talk to you.
You can actually have a bit of a conversation. Now
(04:11):
it is AI. It is trained on my stuff. So
you're going to get not what I would say, but
you know, a reasonable approximation of it. It doesn't get
too detailed, but I'll tell you what, it's a hell
of a lot better than Have you ever gone to
a website and you're like, oh, I'm going to find
out something here and you start poking and clicking and
poking and clicking and clicking and poking and all that. Yeah,
(04:31):
it gets to be most websites. We knew this back
when I was at the Pentagon I was the software
development officer for the JAG Corps. So one of the
things we knew was that nobody this is even back
in the day. This is like in the eighties, right, No,
it was as primitive software as we had then, nobody
(04:51):
was using most of it, right, Most of the software,
most of the features in the software weren't being used.
And that is exactly what's going going on with estate
planning an older law right now. There are so many
great things that people can do right that they're not doing.
It's like it's like Thanksgiving dinner. Oh yeah, this is great,
(05:14):
this works, right. It's like going to Thanksgiving dinner. Right,
you get those whole table full of twenty three varieties
of everything, right, and what do you get? Oh oh
look a glass of water and a stale crust. You
get this whole banquet over there. It's like, yeah, yeah,
but you know, I just needed some calories and some hydration.
So I got the stale bread and the lukewarm water.
(05:38):
That's good for me. And it's like, okay, but it
could be so much more than that, you know. And
that's the deal with the state plan, where it's a
deal with so many things in life. Right where there's
so much out there's so much that's available that's really
going to be great, all right if anyone would take
the time to present it. Okay, and a thanksgiving you
(06:01):
see that. That's where people go all out and they
do the extra thing and all the right wonderful, wonderful Okay.
But that is not what happens with estate plan With
estate planning, you know, you go to the restaurant and
it's like, oh, yes, it's a very fine water. It
is uh liquid the water here it is and perfectly
(06:22):
at room temperature. We had to work very hard to
make it at room temperature, exactly room temperature, you know,
and with no flavor at all. No, it's wonderful.
Speaker 1 (06:33):
Oh n z.
Speaker 2 (06:34):
The aged bread, yes, bread, age to perfection. You know
we baked it three weeks ago and that has a
bit of mold on it, you know, well because we
we aged it perfectly. Here you go enjoy your expensive
you know, and that's what that's what you're getting. Well,
that's what you're getting with typical estate planning. It's like
(06:55):
here's a crust of bread right age to perfection, and
what it is is it perfectly tepid. Yes, room you know,
and it's like you're being sold to stuff as if
it was half way decent, this was something you should
actually Oh boy, this is great.
Speaker 1 (07:13):
You know.
Speaker 2 (07:13):
I get to be hydrated and some calories here. Wonderful,
And there's so much more, so much more that can
be done. You know, we were estimating just the other
day when it comes to you know, because you know,
my big deal is, I think middle class people getting
ripped off. I think it's terrible. I think it's a
freaking abomination. The way that middle class folks who are
(07:37):
the ones who actually built what you see around you, right,
You're the ones who built the submarines. You're the ones
who paid for you know, And the fact that people
are ripping us off to the extent that they are.
If you're gonna be stupid enough to give it to me,
I guess I'm gonna be greedy enough to take it,
even if I have to lie to you to get it. Now,
for me, no lying, And we got to tell exactly
(07:57):
the truth. We got to do exactly what we're supposed
to do. Fraud just you know what you deserve, because
because we actually read the rule book. You know, it's
amazing how many people think reading the rule book is cheating,
actual cheating. We're going to excuse when people lie when
they marry their brother or sister or whatever, right, and
(08:18):
to cheat that and game the system and stuff like that. Right,
when they fake stuff, well, you know you got to
understand that. But if you're actually read the rule book
and you understand how it actually works, and you say, hey, everybody,
look you here, you don't have to go broke. You
don't have to lose everything. You can actually be secure
in yourself and you can be a beneficent, beneficent, beneficent, beneficial, beneficial, generous,
(08:47):
whatever you want to say, interest on the next generation.
You can ensure you know that you're raising up generations
of taxpayers, not leeches, right, producers abundance. You can actually
do that, and you can know that you did it,
and you can know you did it completely according to Hoyle,
going to the rules. You can do that. But there's
(09:08):
this huge banquet out there and everybody's like, oh, crust
the bread. It is very good. And in the meantime,
in the meantime, right, the marauders are out there pillaging
the table. Look, you already paid for you paid for
I paid I paid for the Thanksgiving dinner. I paid
for all that, right, we worked really hard to make this. Yeah, yeah, thanks,
(09:30):
thanks a lot. Shut up? Here, have you ever crusted
the bread? It's like, but but why don't I get
the Why don't I get the good stuff? Shut up?
They explained. It's one of my favorite things, you know,
when when you ask for the explanation and the answer
is shut up, that's life. But we don't like to
(09:53):
We don't like to shut up, and we don't like
to accept that as an explanation. In fact, we like
to read the rules and make sure that you you
get what you have paid for, Okay, what you have earned.
I hate it when people say get what you deserve.
A lot of people never get what they deserve. I
understand that. So forget about deserve. That's that sort of morality.
(10:13):
How about get what I earned? How about get what
I paid for? That's what this is really, This is
what this is really all about. Follow the rules, make
the rules work. There you go. Even listening to the
David Carrier Show, I'm David Carrier, thankful that I live
in a country where the rules actually still work.
Speaker 1 (10:34):
This hour of the David Carrier Show is pro bono,
So call in now at seven seven twenty four, twenty four.
This is the David Carrier Show.
Speaker 2 (10:45):
Well, come back, Welcome back to the David Carrier Show.
I'm David Carrier, your family's personal attorney, and you have
found a place where we talk about a state planning,
elder law, real estate and business law. So if you
have a question, comment or concern, if you were wondering,
how do we beat the high cost of long term care?
How do we stop getting ripped off in our own backyard?
(11:07):
How do you do that? How do you make sure?
What if it was possible it's thought experiment here, what
if it was possible to be secure? What it was
possible to know that you wouldn't go broke. You wouldn't
lose the cottage if you got one, You wouldn't lose
the hunting property, if you got any of that. You know,
you wouldn't lose out all right. The cabin I mean,
(11:28):
I've got people, you know, it's like they're not wealthy people.
People work in the line and what have you. And
you know they yeah, they have an unheated shack that
they go to for two weeks out of the year,
deer camp or whatever. Maybe it wouldn't weak anyway. Sometimes
a long weekend, you know, maybe maybe you'd like not
(11:48):
to lose that. Maybe leaving that to the next generation
would be a good thing. Oh, but you can't do it.
Why not? Because if you need long term care, then
you've got to be broke. If you don't have to
be broke, what do you mean, Well, I don't know.
You don't have to be broke to get so security,
do you. Why don't they make you be broke to
(12:09):
get so security? Oh, it's government money, government money. I
hate that when people talk about, you know, oh, it's
the government money and the government is being generous. It's like,
what are you talking about? What are you talking about?
Who do you think gave them the money? Right? Who
do you think they're putting in hock to borrow the money?
(12:30):
That's right? You and yours. Okay, that's just that's just
the reality of it. Okay. So you shouldn't feel bad
about getting your so security because you paid for it,
and ditto for the for the medicare all right, same
way with the medicare. Why would you feel guilty about Oh,
I'm sure other people need it more than I do.
(12:52):
I'm not so sure that, especially with the way your
knee hurts, right, you know, you got some bone on
bone going on in that hip yours. Maybe we should
get that fixed, right and your fingers kind of screnching up,
you know what I'm talking about, that ten tendon whatever
they call it, right, or maybe it's just your eyelids drouping,
or your cataracts are really getting to you or what
(13:12):
have you. That's why we have Medicare. Did you know that?
Did you have your you know, did you know that?
Have you figured that one out?
Speaker 1 (13:21):
Right?
Speaker 2 (13:21):
And you paid for it, which is why it's not
it's not a moral abomination that you should get something
back for it. And the and the Medicaid is exactly
the same thing. It's the same damn thing, right, except
that where Medicare pays for your immediate health needs and
so security provides income. There's different things, I get it, right,
(13:43):
But the Medicaid provides the long term care and you
paid for it. Who do you where do you think
they got the money? What do you think they get
any of this money?
Speaker 3 (13:52):
Right?
Speaker 2 (13:52):
It ain't from the rich people, they're too smart, and
from people at the other end of the spectrum, right,
They actually give those people money, right, and if there
are brothers and sisters, you know, our fellow citizens. Cool,
all right, I just assume people not starve or whatever.
I'm you know, that's good. You know we can charity
starts at home and all the rest of it. Now,
if they're ripping us off, I'm not into that. But
(14:15):
but again, why should the people who say, see this
is what this is what constantly constantly sends me around
the bend. I mean, really, it does, you know. And
it's only been going on thirty six years now that
we've been fighting this fight, but it absolutely drives me
(14:36):
around the bend that people are treated differently based on
how hard they worked, how much they saved, how much
gratification they deferred, right, how much you did what you're
supposed to do, determines how penalized you're going to be.
(15:00):
What kind of twisted nonsense is that? And yet that's
how medicaid, That's how medicaid actually works. Okay, So okay,
all right, that's the that's the starting point. They're hoping
that you don't read the book. They're hoping that you
don't actually know how it works, or I don't know
what they're hoping. Who knows you can't can't read people's minds. Okay,
(15:21):
we look at the system, look at the way that
it's set up, and you, you know, you think, well,
why would they do it like this? Well, they would
do it like that if nobody knew how it actually worked.
Well what if we actually figured out how it actually
worked and we jumped through all their hoops. Well, then
you don't have to lose your house, and you don't
have to lose your cottage, and you don't have to
lose your life savings, and you can actually be a
blessing to the next generation. You can actually you can
(15:45):
actually do that, which is what we've been doing. We
call it older law. Well, you know, I don't know
call it common sense. I think call it don't go
broke law? How about that? About that don't go broke?
Or how about I already paid for that, I ain't
paying for it again law. How about I don't mind
(16:08):
paying my own way, I don't mind paying for fifty
other people's way either. That's fine, But just don't turn
me and my kids into beggars. How about that? Why
wouldn't that be? Why is that so bad? You see?
This is what I don't get why is it so
bad in some people's eyes. Why is it so bad
(16:28):
that the people who paid things off, people who didn't
go into mountains of debt, the people who didn't break
the law, the people who actually played by the rules.
This is the thing that it's like. It's like, there
was this Russian Russian guy check off right. I think
it was checkof he said. He said, they said he
(16:48):
wrote plays, right, And they're like, well, why did you
always write plays about, you know, evil families or twisted
families or something like that. And he replied in Russian.
And I don't know Russian, so maybe this is isn't true,
But I read it a bunch of times, so I
think it is true. But and I wasn't there anyway,
so maybe it's not true. But anyway, what he said
was he said was dysfunctional families. He didn't say that.
(17:13):
There's a Russian word for it. Dysfunctional families are interesting
because they're all different. Good families are all the same,
they're all the same, right, but bad families, dysfunctional families
are all different in interesting ways. Now I think that
I'm part of a functional family. Okay, I got eight kids,
(17:36):
we're all making our way, we've all paid things off,
we're all good, good kids, and they're doing good things
and everything else. And it's like, uh uh Checkov, mister Chakoff,
not the guy on Star Trek. Okay, I'm not talking
about that guy, the playwright, right, the Russian playwright, A
mister Checkoff there? Why did you look at my family?
Speaker 3 (17:58):
You know?
Speaker 2 (17:58):
I got eight characters? I mean like eight genuine. It
was funny because a week ago I spent the weekend
with two of my brothers, and it's like, you know,
in most situations, I'm kind of the loud one, but
you put me next to one of my siblings and
it's two, let alone two of them, and it's like,
you know, I turned into the wallflower because now and
(18:20):
we all love each other and we all get along,
we don't backstab, and we're all good for each other
and everything else. Right. So I would suggest that people
who I think Chekhov got it wrong, I think that
you know, everyone says that, oh, it's good to be
in a bad family because now you're interesting. It's like,
I don't know, I'm in a good family, and I
think it's pretty interesting. They're all doing stuff. They're out
(18:41):
there making it happen, right, and the idea that the
government would say, Okay, you made it happen. Yeah, you
paid tons of taxes to pay for all this stuff,
and now when you need something, we're going to impoverish you.
You worked the line for thirty years, forty years, twenty years,
whatever it was, okay, and now you think you got
(19:03):
everything set up, you think you got your life, and
this is what happens. And then you got somebody with
early on set dementia or you know, or als, one
of those things. Okay, and now it all falls apart.
But because you work so hard already, you think, oh
I'm good, I'm secure, and you're not. You're not unless
(19:24):
you know how the rules work. You follow the rules.
And now you're going to get back a little bit
of payback, like soial security, like medicare, you can to
get a little bit of payback for what you paid in,
and now you truly can be secure. Truly. We've got
forty two people right now, right now, receiving the benefits,
and they're not worried about going broke. They're not worried
(19:45):
about their spouses going broke. They're not worried that their
kids won't get something right. And that's the number keeps
going on. It goes up and down, you know, it varies,
but right now we're at forty you know, head counts
at forty two, people are actually getting the benefits from
this kind of planning. You've been listening to the David
Carrier Show. I'm David Carrier, your family's personal attorney. Yeah,
(20:10):
that's for all you Michigan fans. Yeah you lost, all right,
the Ohio State finally broke your wind streak. Let's cry,
let's cry. But we played an extra long part of
hill to the victors, so you know, so you got
that going for you. In the meantime, you know, Notre
Dame of course crushed Stanford. You know, yeah, they didn't
(20:32):
get to seventy points this week. Oh that's a shame.
Family got to what forty nine? So anyway, you know,
cheer for old Notre Dame and hail to the victors
and everybody else who is playing playing college football or
as we say, the Junior Pro league. It's amazing, isn't it.
It's amazing when you think about where we've come from,
(20:54):
I mean from from Oh it's it's student athletes to
where we are now. And I don't even know where
we are now, but it's on. I tell you what,
if you took anybody from even ten years ago, think
about it, even five years ago, you PLoP them down
now and say, oh yeah, they get paid by the sponsors.
Oh yeah, they can trade, Oh yeah, they can all
(21:16):
this stuff. Who'd have believed it? But that's our brave
new world. You're listening to the David Carrier Show. I'm
David Carrier, your family's personal attorney, trying to make some
sense of it all. But I can see it makes
no sense at all. And if you have a question,
comment or concern, you can call six one six seven
seventy four twenty four, twenty four and we'll see what
(21:38):
we can see if we can make some sense of it.
We got Scott on the line. Hello Scott, Welcome to
the David Carrier Show.
Speaker 3 (21:45):
Happy, thanks lady, thanksgiving.
Speaker 2 (21:47):
Mister Carrier, Well, thank you so much.
Speaker 3 (21:51):
I have a I'm a kind of a splitting here question.
It goes with the property text on capping in the
twenty fourteen of law that allowed certain circumstances for you
to transfer property and not become uncapped. And I'm going
to zero in on the commercial activity side of things
now where it can't be a commercial otherwise. From on that,
(22:15):
if property gets transferred in and this is where I'm
splitting the hairs, if a person were to run that
gets that property, or to run like a home office
where they would end up, you know, taking a home
office deduction, does that violate? I mean where where does
that line get drawn out to commercial activity? I know
(22:35):
you can't rent it out, couldn't turn into like an
Airbnb or something like this, but you know, could could
you have like an home office and because of your
ongoing you know, you have your own business or whatever
it is.
Speaker 2 (22:49):
Okay, So let's be let's be fair to Let's be
fair Scott. Let's be fair to everybody who has no
clue what we're talking about here, Okay, and kind of
recap the thing. Sure, the way taxes work in Michigan,
starting twenty thirty years ago, when we had a constitutional
amendment that raised the sales tax from four to six percent,
we said that money's going to the schools, right because
(23:10):
we had poor school districts that were gonna broke. They
actually going bankrupt, closing the schools and stuff like that,
and it was very dependent, one hundred percent dependent on
the local property tax. The consequence of that was the
property taxes would go up so high because valuations were
going up so high, the assessments were going up so
(23:30):
high that that people were getting taxed off the farm,
taxed out of their house, et cetera, et cetera. To
fix that, to bring some equity across school districts throughout Michigan,
right was you get the idea of the state grant.
And the way that was going to work is they
took the two percent raise the extra which is a
(23:50):
fifty percent increase in the sales tax, but two percent
of the sales tax goes into this per pupil grant
that school districts get okay, which is why the head
count is so important on the days where they measure
a head count blah blah, because that determines how much
state money they get. So that's where the new money
came from. The way they adjusted the property tax was
(24:13):
to say, okay, your property tax can only go up
a certain amount every year. The rate of inflation, right,
the rate of inflation, or what they call the headley
amount or Dick Headley who was a senator who had
this thing for figuring property tax whatever it was back
in the day, the heady amount, and that it was
(24:34):
roughly roughly two percent, three percent something like that. It
was based on a bunch of factors. But the point
was that your taxable value, what you paid tax on
in your house, would go up very slowly year by year,
no more than inflation, but potentially quite a bit less
(24:55):
than inflation. Good good. So people weren't getting taxed out
of their houses anymore. That's good. But then the question
is when does the property tax go back to reality
to when do we start taxing at the state equalized value,
which is one half of the actual cash value, which
(25:16):
is what the assessor thinks to your house would actually
sell for, which everybody knows is ridiculous because no one
would ever sell it for two times the SEV. But
forget about that fiction anyway. The point is there's a
number out there on your tax bill called the state
equalized value, which is one half of what they kind
of sort of think it would actually sell for more
(25:38):
than market. Now, over the years, the difference between especially
with lakefront properties, especially with recreational property that kind of stuff,
but regular houses too. The difference between the taxable value
what you're paying tax on and the SEV the state
equalized value, has grown to be enormous. And then the
(26:00):
question is when do we uncap the value? When do
we bounce up to the SCV. And the answer is
when there's a transfer of the property. Oh, that sounds easy, Well,
when do you transfer it? Well, if mom gives it
to dad, is that a transfer? No? If husband gives
it to wife, is that a transfer. No? If mom
(26:22):
and dad add the kids to the deed, is that
a transfer? Looks like one. No, No, that's not a transfer.
If mom and dad died leaving the kids with the property,
is that a transfer? Uh, Supreme Court, I had to say, no,
it isn't. So what you had was people adding all
kinds of people, all kinds of their kids. Had to
(26:43):
be kids adding their kids onto the deed, which is
like unbelievably stupid, but for other reasons. But people were
doing it to avoid jumping up in the taxes. And
then what they said was, oh, okay, if you're giving
it to a relative of the first degree, your kids, brother, whatever,
relative to the first degree, then then we're not going
(27:07):
to uncap it unless unless you use it for commercial purposes. Well,
who the hell's gonna admit that you're using it for
I mean, how you ever enforced that one? Right? And
the thing is once you jump, once you uncap the value,
you don't you don't bring it back again. There's no
(27:28):
mechanism for bringing it back. So let's say you've got
the family cottage and you're rented it out for a
summer to pay the property taxes. Let's just say and
now it's commercial property. Well, now you're paying. You know,
we've got people properties they bought back in the sixties
on Lake Michigan, right with like two hundred thousand valuation,
a million, multimillion dollar properties. Well, these people can't afford
(27:52):
even to pay the property taxes on them. The kids can't, right,
let alone what they're actually worth. Right, they only got
them because mom and dad back in the fifties and
sixties bought these things when they were going for nobody
wanted to go there. Okay, So that's the that's what's
going on here, Okay, And what what Scott is talking
(28:14):
about is, hey, how far can I push that commercial use?
Is it commercial use? Yes, if I rented out, that's
commercial use. If I turn it into a you know,
rental then obviously, or I put a shop in it
or something that's clearly commercial use. Is it commercial use
if I just have a home office? Okay, So there's
(28:38):
that's the context. That's the question, and now I'm out
of time to answer it. But Scott, is that is
that basically what you're asking me? Is that kind of
the idea?
Speaker 3 (28:46):
Great you did, you did it, you did a great recap,
so I appreciate that for your listeners. But yes, and
that's basically what I'm asking where you know, is a
home office seduction or with that trigger it to be
commercial use if anybody were to find out. But I'm
not going there just the I like to be. I
like to I like to live by the rule. Because
you were talking about your monologue monologue yeah yeah, yeah.
Speaker 2 (29:04):
Yeah yeah righty oh, So I'll tell you what, just
to keep people listening to through the commercials instead of
going to get a cup of coffee or going to
some other radio station out that there are any we're
gonna that music means I got to go to commercial now,
So let's uh, let's answer that question. On the other side.
(29:26):
See see I was coolful of yeah I did that.
Speaker 1 (29:28):
There you go.
Speaker 2 (29:29):
All right, thank you, Scott. We'll see you in a
couple of minutes. All right, you've been listening to the
David Carrier Show. I'm David Carrier, your family's personal attorney.
Speaker 1 (29:37):
David's perking and working and taking your calls. Now this
is the David Carrier Show.
Speaker 2 (29:46):
Wellcome back to the David Carrier Show. I'm David Carrier,
your family's personal attorney. Now we're talking with Scott about
home office. Putting a home office in a inherited property
where the property taxes haven't gone up and haven't there
hasn't been an uncapping of the property because property was
(30:07):
not used for commercial purpose. Now here's the thing. Well,
let's let's talk about this one in particular. The way
taxes work is that the well, let me give you
an example. Remember Obamacare, right, Well, Obamacare is pretty clearly illegal.
(30:30):
There's no basis for it. Okay, it's an illegal idea.
Accept accept that the taxing there, there's a there's a
tax component to it, and there's no way the federal
government has any right to mess around with insurance and
all the rest of this stuff, but they put this
tax thing in, and so they hung the whole Obamacare
(30:53):
thing is all based on the Affordable Care Act is
all based on the tax component. Because the taxing power
is that broad. Okay, So if you can call something
a tax, then the government gets to do it. And
courts are very deferential to tax power. Put it that way.
(31:16):
So if there's any way on God's green earth that
they could construe this as being a commercial use, they're
gonna all right. So the fact that you know that
ten percent of the house or ninety nine percent of
the house is residential, you taking a home office deduction
(31:37):
makes it makes that part of it commercial. And then
what you have to ask yourself is what would the
local assessor do? What would the Michigan Tax Tribunal do?
What would the Court of Appeals do? And I don't
think we've got any real clear guide. I just did
a real brief search. I don't think we've got any
clear guidance on this yet. But once bitten twice shy,
you know, it's like Abraham Lincoln was Mark Twain actually
(32:01):
who said that a cat, uh, you know, once a
cat jumps on a hot stove, it will never jump
on another hot stove, but it won't jump on a
cold stove either. Okay, so maybe this is not a problem,
but I don't believe it because when you look at
what the power of the government to once it's using
the taxing power, right, you don't have you know, if
(32:24):
they can construe it as some exercise the taxing power
or whatever, then you lose. Does that make sense, Scott?
Speaker 3 (32:34):
So, then a kind of a related question to that is, Okay,
I choose not to use the home office deduction, so
I know I don't get the financial benefit of that,
but I still use that space to you know, do
books or something like that, right, you know. You know.
So so while I'm I have a commercial enterprise, the house,
(32:55):
other than having to rip over my head, does not
benefiting me financially if I don't use the home office
deduction for instance. So I didn't know if I mean
technically I'm probably no still in violation, but I'm not
getting the the economic benefit that would or would necessitate
a commercial enterprise. You know, I guess consideration maybe.
Speaker 2 (33:22):
Okay, So here's so are you ready for you know,
legal analysis extraordinaire?
Speaker 3 (33:29):
Yeah?
Speaker 2 (33:31):
All right, So here here here it comes. There's a
there's a constitutional law case called Griswold v. Connecticut Griswell v. Connecticut.
And in Griswoll v. Connecticut, it was a contraception case, right,
and so the state of Connecticut said you can't buy
contraceptives back in the sixties whatever it was, you can't
(33:52):
buy them. And the Supreme Court said, well, wait a second,
write a privacy. Okay, you can't go into somebody's bedroom
and ask them are you using these things? So because
you can't go into their home, into their bedroom desk,
are you using these things? Then you can't prohibit them.
And it's why it's extraordinary because it's sort of like that.
(34:15):
I mean, it's what it reminded me of. You know,
It's like because your question is exactly where I was going.
It was like, Okay, well, what if I don't ask
for any tax benefits for it? I mean, can the
government regulate what I do in the privacy my own home? Well? Yeah,
if I want to make methamphetamine in my own home,
they can do that. If I want to put grow
lights in But you know, there was just a case
(34:37):
in California where the utility was turning over utility records
to the police of people who were using extraordinary amounts
of water and electricity, which would indicate that they were
doing a grow your own, you know, hydroponic thing with
the marriage iauana there, and they say you can't do that, Okay,
(34:58):
you can't turn over those right records. So I kind
of think that if if you're not doing something that's illegal,
and you're doing it in the privacy of your own home, now,
could you be could you be building cars in the garage?
Speaker 1 (35:12):
No?
Speaker 2 (35:13):
I mean if you have a pole barn, right and
you've turned it into a factory. I don't think so,
you know, but you know, uh, but but maybe maybe
they could do that, you know, if they found out
that you were keeping books, you know. But then again,
I mean think of think of so much that that
(35:33):
you that you do. You know, so if you read
a business book in your easy chair, I mean that's
all I ever read, you know, business stuff, you know,
marketing stuff, whatever. You know. Oh you you know you
you read that book from uh you know, Dan Kennedy
or whatever while you were while you're at home. Ah,
Now your whole house is commercial. I don't think so,
(35:57):
you know what I mean if you claim the home
office deduction, you'd be saying that would be an absolute
affirmation on your part that you're using it for commercial purpose,
and I think you're screwed in that case. But other
than that, I can ask.
Speaker 3 (36:13):
A related question to expand this. I mean, yeah, yeah, yeah, sure, yeah,
and then and then I'm gonna have to run off
the church. But I'm gonna ask the question. I'll listen
to my way, and that is, if I were to
have an agricultural piece of property and I let somebody
grow crops on it, I don't charge them a you know,
acre fee or something like this. I just let them
(36:35):
grow crops on it because it's a productive piece of property.
Is that something that you know, them doing that activity
where they get a benefit because they're growing crops, but
I don't get a benefit. Would the property be considered commercial.
Speaker 2 (36:50):
Well, you know it's residential property where you get the exemption. Okay,
so if it's being used for agricultural purposes, I think
it's going to uncamp anyway. What they didn't want to
do is they didn't want to throw the grandkids out
of Grandma's house. What they didn't want to do was
they didn't want to throw people out of the out
of the lakefront cottage. You know, that's been in the
(37:12):
family for generations and now you know, the current generation
can't even afford to pay the property taxes, which of
course made lakefront property communities like Saga, I mean Saga,
Tuck and Douglas must have been sick when they passed
the rule like this. But you know they must have
been counting on jacking up their taxes. But but it
didn't work out that way. Whips, Sorry, but I don't
(37:35):
think it works. It doesn't work with agricultural property. You know,
if you're using it, if you're using it to grow,
if anybody's using it for the agricultural purpose. You know,
but what if they had field in your front yard
and they were just like your landscaper, You're like, no,
I just kind of like to look at the amber
waves of grain there, you know what I mean.
Speaker 3 (37:53):
And he's just made right. Property has its own has
its own tax benefits. Shall we say from curiosty.
Speaker 2 (38:03):
Question, Yeah, yeah, yeah, Well you're not paying the school
operating millage, that's right. It's like it's like the principal
residence exemption. You're not paying the school operating millage. But
the uncapping still happens. And that's you know, when we're
talking about the un capping, I don't you know. And
so many people live on the farm, you know what
I mean, And so could you claim, you know, it's
(38:24):
a residential use for the whole thing. I think you
got a problem there. I think we sh just start
making money on something. Then it's difficult. I think when
you're improving yourself, or you're doing the books at home,
or you know what I mean. I think that's that's
what they would call incidental use. So all right, we'll
say a prayer for Dave Carrier, if you would please.
(38:45):
He needs them, Okay, and take care of now, Drive safe,
all right. Even listening to the David Carrier Show, I'm
David Carrier, your family's personal attorney.
He served at the Pentagon as an army jag. He
graduated from Notre Dame and has two law degrees from
Boston University and Georgetown University. He's been practicing law for
over thirty years. He's your family's personal attorney. It's time
for the David Carrier Show.
Speaker 2 (00:21):
Hello, and welcome to the David Carrier Show. I'm David Carrier,
your family's personal attorney, and you have found a place
where we talk about a state planning, elder law, real
estate and business law. So give us a call. I
don't just six one six seven seven four twenty four
twenty four. That's six one six seven seven four twenty
four twenty four. We'll get your question, comment or concern, Question,
(00:46):
comment or concern. I don't care if it's a question
coming or concern any of that stuff on the air,
especially if it has to do especially we're not limited
to I mean, we're very you know, when you look
at the Thanksgiving table and you've got six different kinds
of potatoes and half a dozen green bean cast roles,
you know you get to appreciate the variety of life.
(01:09):
Shall I even say, the diversity, oh, diversity of you know,
people's efforts, and so you know, we'll take questions, comments
and concerns about practically anything. But but if you you know,
if you focus, I don't say limit yourself, I say
focus on the state planning right, little trusts and probate
(01:32):
that kind of thing, if if it is up to you,
but you do what you want, if you want to.
If you want us to talk about I don't know,
long term care, how about that? How about you know,
how do we beat the high cost of long term care?
How do we make sure that you feel secure, that
you know that you're secure, that you know that you
are not gonna go broke in long term care? And
(01:54):
you know, people say, oh, that will never happen to
me because I will never need long term care because
my kids will take.
Speaker 1 (02:00):
Care of me.
Speaker 2 (02:01):
Yeah. Right, And Rudolf the red nose of the reindeer
delivered Thanksgiving dinner. You know, pull the other one anyway,
but you can believe that if you want to. I mean,
I'm perfectly a okay with Rudolph being the provider of Thanksgiving. No,
not actually anyway, but you believe which one. We also
(02:23):
deal with real estate, right, So if you're looking to
buy sell a house, although God knows that with the prices,
it's getting pretty difficult to do that. But if that's
what you're into, give us a call. Six one six
seven seven four twenty four twenty four. And that's sixty
one six seven seven four twenty four twenty four. And
and if you've decided to carve up your part of
(02:45):
the American dream and be an entrepreneur, an entrepreneur, as
the guy in the Garden Show says, you know an entrepreneur,
somebody who kills the garden anyway, uh six one six
seven seven four twenty four twenty four. Where I've only
been at this now for you know, well we're one
year away. It'll be forty four years. That's a long time.
(03:07):
That's a long time to be given advice, don't you think? Yeah, well,
too bad. The doctor say I'm good for another ten
so uh yeah, country, blessings on that one six one
six seven seven four twenty four twenty four. If you'd
like to get your question, comment or concerned on the air,
you can also go to the website Davidcarrier law dot com.
(03:28):
Squash it all together, make one word out of it,
Davidcarrier law dot com. And if you don't have a
pop up blocker on or if you click on the
little there's a little goofy thing there, you click on it,
and the artificial intelligence because natural intelligence just not enough, uh,
the artificial intelligence assistant will pop up and answer your
(03:50):
personal questions. And the one that's preloaded, of course, is
why should I trust David Carrier. Well, that's a good question,
that's a that's a fine question. Ask that question, and
if you click on it, it'll give you a song and
dance about me. But you can also click a button
on that thing and it will actually talk to you.
You can actually have a bit of a conversation. Now
(04:11):
it is AI. It is trained on my stuff. So
you're going to get not what I would say, but
you know, a reasonable approximation of it. It doesn't get
too detailed, but I'll tell you what, it's a hell
of a lot better than Have you ever gone to
a website and you're like, oh, I'm going to find
out something here and you start poking and clicking and
poking and clicking and clicking and poking and all that. Yeah,
(04:31):
it gets to be most websites. We knew this back
when I was at the Pentagon I was the software
development officer for the JAG Corps. So one of the
things we knew was that nobody this is even back
in the day. This is like in the eighties, right, No,
it was as primitive software as we had then, nobody
(04:51):
was using most of it, right, Most of the software,
most of the features in the software weren't being used.
And that is exactly what's going going on with estate
planning an older law right now. There are so many
great things that people can do right that they're not doing.
It's like it's like Thanksgiving dinner. Oh yeah, this is great,
(05:14):
this works, right. It's like going to Thanksgiving dinner. Right,
you get those whole table full of twenty three varieties
of everything, right, and what do you get? Oh oh
look a glass of water and a stale crust. You
get this whole banquet over there. It's like, yeah, yeah,
but you know, I just needed some calories and some hydration.
So I got the stale bread and the lukewarm water.
(05:38):
That's good for me. And it's like, okay, but it
could be so much more than that, you know. And
that's the deal with the state plan, where it's a
deal with so many things in life. Right where there's
so much out there's so much that's available that's really
going to be great, all right if anyone would take
the time to present it. Okay, and a thanksgiving you
(06:01):
see that. That's where people go all out and they
do the extra thing and all the right wonderful, wonderful Okay.
But that is not what happens with estate plan With
estate planning, you know, you go to the restaurant and
it's like, oh, yes, it's a very fine water. It
is uh liquid the water here it is and perfectly
(06:22):
at room temperature. We had to work very hard to
make it at room temperature, exactly room temperature, you know,
and with no flavor at all. No, it's wonderful.
Speaker 1 (06:33):
Oh n z.
Speaker 2 (06:34):
The aged bread, yes, bread, age to perfection. You know
we baked it three weeks ago and that has a
bit of mold on it, you know, well because we
we aged it perfectly. Here you go enjoy your expensive
you know, and that's what that's what you're getting. Well,
that's what you're getting with typical estate planning. It's like
(06:55):
here's a crust of bread right age to perfection, and
what it is is it perfectly tepid. Yes, room you know,
and it's like you're being sold to stuff as if
it was half way decent, this was something you should
actually Oh boy, this is great.
Speaker 1 (07:13):
You know.
Speaker 2 (07:13):
I get to be hydrated and some calories here. Wonderful,
And there's so much more, so much more that can
be done. You know, we were estimating just the other
day when it comes to you know, because you know,
my big deal is, I think middle class people getting
ripped off. I think it's terrible. I think it's a
freaking abomination. The way that middle class folks who are
(07:37):
the ones who actually built what you see around you, right,
You're the ones who built the submarines. You're the ones
who paid for you know, And the fact that people
are ripping us off to the extent that they are.
If you're gonna be stupid enough to give it to me,
I guess I'm gonna be greedy enough to take it,
even if I have to lie to you to get it. Now,
for me, no lying, And we got to tell exactly
(07:57):
the truth. We got to do exactly what we're supposed
to do. Fraud just you know what you deserve, because
because we actually read the rule book. You know, it's
amazing how many people think reading the rule book is cheating,
actual cheating. We're going to excuse when people lie when
they marry their brother or sister or whatever, right, and
(08:18):
to cheat that and game the system and stuff like that. Right,
when they fake stuff, well, you know you got to
understand that. But if you're actually read the rule book
and you understand how it actually works, and you say, hey, everybody,
look you here, you don't have to go broke. You
don't have to lose everything. You can actually be secure
in yourself and you can be a beneficent, beneficent, beneficent, beneficial, beneficial, generous,
(08:47):
whatever you want to say, interest on the next generation.
You can ensure you know that you're raising up generations
of taxpayers, not leeches, right, producers abundance. You can actually
do that, and you can know that you did it,
and you can know you did it completely according to Hoyle,
going to the rules. You can do that. But there's
(09:08):
this huge banquet out there and everybody's like, oh, crust
the bread. It is very good. And in the meantime,
in the meantime, right, the marauders are out there pillaging
the table. Look, you already paid for you paid for
I paid I paid for the Thanksgiving dinner. I paid
for all that, right, we worked really hard to make this. Yeah, yeah, thanks,
(09:30):
thanks a lot. Shut up? Here, have you ever crusted
the bread? It's like, but but why don't I get
the Why don't I get the good stuff? Shut up?
They explained. It's one of my favorite things, you know,
when when you ask for the explanation and the answer
is shut up, that's life. But we don't like to
(09:53):
We don't like to shut up, and we don't like
to accept that as an explanation. In fact, we like
to read the rules and make sure that you you
get what you have paid for, Okay, what you have earned.
I hate it when people say get what you deserve.
A lot of people never get what they deserve. I
understand that. So forget about deserve. That's that sort of morality.
(10:13):
How about get what I earned? How about get what
I paid for? That's what this is really, This is
what this is really all about. Follow the rules, make
the rules work. There you go. Even listening to the
David Carrier Show, I'm David Carrier, thankful that I live
in a country where the rules actually still work.
Speaker 1 (10:34):
This hour of the David Carrier Show is pro bono,
So call in now at seven seven twenty four, twenty four.
This is the David Carrier Show.
Speaker 2 (10:45):
Well, come back, Welcome back to the David Carrier Show.
I'm David Carrier, your family's personal attorney, and you have
found a place where we talk about a state planning,
elder law, real estate and business law. So if you
have a question, comment or concern, if you were wondering,
how do we beat the high cost of long term care?
How do we stop getting ripped off in our own backyard?
(11:07):
How do you do that? How do you make sure?
What if it was possible it's thought experiment here, what
if it was possible to be secure? What it was
possible to know that you wouldn't go broke. You wouldn't
lose the cottage if you got one, You wouldn't lose
the hunting property, if you got any of that. You know,
you wouldn't lose out all right. The cabin I mean,
(11:28):
I've got people, you know, it's like they're not wealthy people.
People work in the line and what have you. And
you know they yeah, they have an unheated shack that
they go to for two weeks out of the year,
deer camp or whatever. Maybe it wouldn't weak anyway. Sometimes
a long weekend, you know, maybe maybe you'd like not
(11:48):
to lose that. Maybe leaving that to the next generation
would be a good thing. Oh, but you can't do it.
Why not? Because if you need long term care, then
you've got to be broke. If you don't have to
be broke, what do you mean, Well, I don't know.
You don't have to be broke to get so security,
do you. Why don't they make you be broke to
(12:09):
get so security? Oh, it's government money, government money. I
hate that when people talk about, you know, oh, it's
the government money and the government is being generous. It's like,
what are you talking about? What are you talking about?
Who do you think gave them the money? Right? Who
do you think they're putting in hock to borrow the money?
(12:30):
That's right? You and yours. Okay, that's just that's just
the reality of it. Okay. So you shouldn't feel bad
about getting your so security because you paid for it,
and ditto for the for the medicare all right, same
way with the medicare. Why would you feel guilty about Oh,
I'm sure other people need it more than I do.
(12:52):
I'm not so sure that, especially with the way your
knee hurts, right, you know, you got some bone on
bone going on in that hip yours. Maybe we should
get that fixed, right and your fingers kind of screnching up,
you know what I'm talking about, that ten tendon whatever
they call it, right, or maybe it's just your eyelids drouping,
or your cataracts are really getting to you or what
(13:12):
have you. That's why we have Medicare. Did you know that?
Did you have your you know, did you know that?
Have you figured that one out?
Speaker 1 (13:21):
Right?
Speaker 2 (13:21):
And you paid for it, which is why it's not
it's not a moral abomination that you should get something
back for it. And the and the Medicaid is exactly
the same thing. It's the same damn thing, right, except
that where Medicare pays for your immediate health needs and
so security provides income. There's different things, I get it, right,
(13:43):
But the Medicaid provides the long term care and you
paid for it. Who do you where do you think
they got the money? What do you think they get
any of this money?
Speaker 3 (13:52):
Right?
Speaker 2 (13:52):
It ain't from the rich people, they're too smart, and
from people at the other end of the spectrum, right,
They actually give those people money, right, and if there
are brothers and sisters, you know, our fellow citizens. Cool,
all right, I just assume people not starve or whatever.
I'm you know, that's good. You know we can charity
starts at home and all the rest of it. Now,
if they're ripping us off, I'm not into that. But
(14:15):
but again, why should the people who say, see this
is what this is what constantly constantly sends me around
the bend. I mean, really, it does, you know. And
it's only been going on thirty six years now that
we've been fighting this fight, but it absolutely drives me
(14:36):
around the bend that people are treated differently based on
how hard they worked, how much they saved, how much
gratification they deferred, right, how much you did what you're
supposed to do, determines how penalized you're going to be.
(15:00):
What kind of twisted nonsense is that? And yet that's
how medicaid, That's how medicaid actually works. Okay, So okay,
all right, that's the that's the starting point. They're hoping
that you don't read the book. They're hoping that you
don't actually know how it works, or I don't know
what they're hoping. Who knows you can't can't read people's minds. Okay,
(15:21):
we look at the system, look at the way that
it's set up, and you, you know, you think, well,
why would they do it like this? Well, they would
do it like that if nobody knew how it actually worked.
Well what if we actually figured out how it actually
worked and we jumped through all their hoops. Well, then
you don't have to lose your house, and you don't
have to lose your cottage, and you don't have to
lose your life savings, and you can actually be a
blessing to the next generation. You can actually you can
(15:45):
actually do that, which is what we've been doing. We
call it older law. Well, you know, I don't know
call it common sense. I think call it don't go
broke law? How about that? About that don't go broke?
Or how about I already paid for that, I ain't
paying for it again law. How about I don't mind
(16:08):
paying my own way, I don't mind paying for fifty
other people's way either. That's fine, But just don't turn
me and my kids into beggars. How about that? Why
wouldn't that be? Why is that so bad? You see?
This is what I don't get why is it so
bad in some people's eyes. Why is it so bad
(16:28):
that the people who paid things off, people who didn't
go into mountains of debt, the people who didn't break
the law, the people who actually played by the rules.
This is the thing that it's like. It's like, there
was this Russian Russian guy check off right. I think
it was checkof he said. He said, they said he
(16:48):
wrote plays, right, And they're like, well, why did you
always write plays about, you know, evil families or twisted
families or something like that. And he replied in Russian.
And I don't know Russian, so maybe this is isn't true,
But I read it a bunch of times, so I
think it is true. But and I wasn't there anyway,
so maybe it's not true. But anyway, what he said
was he said was dysfunctional families. He didn't say that.
(17:13):
There's a Russian word for it. Dysfunctional families are interesting
because they're all different. Good families are all the same,
they're all the same, right, but bad families, dysfunctional families
are all different in interesting ways. Now I think that
I'm part of a functional family. Okay, I got eight kids,
(17:36):
we're all making our way, we've all paid things off,
we're all good, good kids, and they're doing good things
and everything else. And it's like, uh uh Checkov, mister Chakoff,
not the guy on Star Trek. Okay, I'm not talking
about that guy, the playwright, right, the Russian playwright, A
mister Checkoff there? Why did you look at my family?
Speaker 3 (17:58):
You know?
Speaker 2 (17:58):
I got eight characters? I mean like eight genuine. It
was funny because a week ago I spent the weekend
with two of my brothers, and it's like, you know,
in most situations, I'm kind of the loud one, but
you put me next to one of my siblings and
it's two, let alone two of them, and it's like,
you know, I turned into the wallflower because now and
(18:20):
we all love each other and we all get along,
we don't backstab, and we're all good for each other
and everything else. Right. So I would suggest that people
who I think Chekhov got it wrong, I think that
you know, everyone says that, oh, it's good to be
in a bad family because now you're interesting. It's like,
I don't know, I'm in a good family, and I
think it's pretty interesting. They're all doing stuff. They're out
(18:41):
there making it happen, right, and the idea that the
government would say, Okay, you made it happen. Yeah, you
paid tons of taxes to pay for all this stuff,
and now when you need something, we're going to impoverish you.
You worked the line for thirty years, forty years, twenty years,
whatever it was, okay, and now you think you got
(19:03):
everything set up, you think you got your life, and
this is what happens. And then you got somebody with
early on set dementia or you know, or als, one
of those things. Okay, and now it all falls apart.
But because you work so hard already, you think, oh
I'm good, I'm secure, and you're not. You're not unless
(19:24):
you know how the rules work. You follow the rules.
And now you're going to get back a little bit
of payback, like soial security, like medicare, you can to
get a little bit of payback for what you paid in,
and now you truly can be secure. Truly. We've got
forty two people right now, right now, receiving the benefits,
and they're not worried about going broke. They're not worried
(19:45):
about their spouses going broke. They're not worried that their
kids won't get something right. And that's the number keeps
going on. It goes up and down, you know, it varies,
but right now we're at forty you know, head counts
at forty two, people are actually getting the benefits from
this kind of planning. You've been listening to the David
Carrier Show. I'm David Carrier, your family's personal attorney. Yeah,
(20:10):
that's for all you Michigan fans. Yeah you lost, all right,
the Ohio State finally broke your wind streak. Let's cry,
let's cry. But we played an extra long part of
hill to the victors, so you know, so you got
that going for you. In the meantime, you know, Notre
Dame of course crushed Stanford. You know, yeah, they didn't
(20:32):
get to seventy points this week. Oh that's a shame.
Family got to what forty nine? So anyway, you know,
cheer for old Notre Dame and hail to the victors
and everybody else who is playing playing college football or
as we say, the Junior Pro league. It's amazing, isn't it.
It's amazing when you think about where we've come from,
(20:54):
I mean from from Oh it's it's student athletes to
where we are now. And I don't even know where
we are now, but it's on. I tell you what,
if you took anybody from even ten years ago, think
about it, even five years ago, you PLoP them down
now and say, oh yeah, they get paid by the sponsors.
Oh yeah, they can trade, Oh yeah, they can all
(21:16):
this stuff. Who'd have believed it? But that's our brave
new world. You're listening to the David Carrier Show. I'm
David Carrier, your family's personal attorney, trying to make some
sense of it all. But I can see it makes
no sense at all. And if you have a question,
comment or concern, you can call six one six seven
seventy four twenty four, twenty four and we'll see what
(21:38):
we can see if we can make some sense of it.
We got Scott on the line. Hello Scott, Welcome to
the David Carrier Show.
Speaker 3 (21:45):
Happy, thanks lady, thanksgiving.
Speaker 2 (21:47):
Mister Carrier, Well, thank you so much.
Speaker 3 (21:51):
I have a I'm a kind of a splitting here question.
It goes with the property text on capping in the
twenty fourteen of law that allowed certain circumstances for you
to transfer property and not become uncapped. And I'm going
to zero in on the commercial activity side of things
now where it can't be a commercial otherwise. From on that,
(22:15):
if property gets transferred in and this is where I'm
splitting the hairs, if a person were to run that
gets that property, or to run like a home office
where they would end up, you know, taking a home
office deduction, does that violate? I mean where where does
that line get drawn out to commercial activity? I know
(22:35):
you can't rent it out, couldn't turn into like an
Airbnb or something like this, but you know, could could
you have like an home office and because of your
ongoing you know, you have your own business or whatever
it is.
Speaker 2 (22:49):
Okay, So let's be let's be fair to Let's be
fair Scott. Let's be fair to everybody who has no
clue what we're talking about here, Okay, and kind of
recap the thing. Sure, the way taxes work in Michigan,
starting twenty thirty years ago, when we had a constitutional
amendment that raised the sales tax from four to six percent,
we said that money's going to the schools, right because
(23:10):
we had poor school districts that were gonna broke. They
actually going bankrupt, closing the schools and stuff like that,
and it was very dependent, one hundred percent dependent on
the local property tax. The consequence of that was the
property taxes would go up so high because valuations were
going up so high, the assessments were going up so
(23:30):
high that that people were getting taxed off the farm,
taxed out of their house, et cetera, et cetera. To
fix that, to bring some equity across school districts throughout Michigan,
right was you get the idea of the state grant.
And the way that was going to work is they
took the two percent raise the extra which is a
(23:50):
fifty percent increase in the sales tax, but two percent
of the sales tax goes into this per pupil grant
that school districts get okay, which is why the head
count is so important on the days where they measure
a head count blah blah, because that determines how much
state money they get. So that's where the new money
came from. The way they adjusted the property tax was
(24:13):
to say, okay, your property tax can only go up
a certain amount every year. The rate of inflation, right,
the rate of inflation, or what they call the headley
amount or Dick Headley who was a senator who had
this thing for figuring property tax whatever it was back
in the day, the heady amount, and that it was
(24:34):
roughly roughly two percent, three percent something like that. It
was based on a bunch of factors. But the point
was that your taxable value, what you paid tax on
in your house, would go up very slowly year by year,
no more than inflation, but potentially quite a bit less
(24:55):
than inflation. Good good. So people weren't getting taxed out
of their houses anymore. That's good. But then the question
is when does the property tax go back to reality
to when do we start taxing at the state equalized value,
which is one half of the actual cash value, which
(25:16):
is what the assessor thinks to your house would actually
sell for, which everybody knows is ridiculous because no one
would ever sell it for two times the SEV. But
forget about that fiction anyway. The point is there's a
number out there on your tax bill called the state
equalized value, which is one half of what they kind
of sort of think it would actually sell for more
(25:38):
than market. Now, over the years, the difference between especially
with lakefront properties, especially with recreational property that kind of stuff,
but regular houses too. The difference between the taxable value
what you're paying tax on and the SEV the state
equalized value, has grown to be enormous. And then the
(26:00):
question is when do we uncap the value? When do
we bounce up to the SCV. And the answer is
when there's a transfer of the property. Oh, that sounds easy, Well,
when do you transfer it? Well, if mom gives it
to dad, is that a transfer? No? If husband gives
it to wife, is that a transfer. No? If mom
(26:22):
and dad add the kids to the deed, is that
a transfer? Looks like one. No, No, that's not a transfer.
If mom and dad died leaving the kids with the property,
is that a transfer? Uh, Supreme Court, I had to say, no,
it isn't. So what you had was people adding all
kinds of people, all kinds of their kids. Had to
(26:43):
be kids adding their kids onto the deed, which is
like unbelievably stupid, but for other reasons. But people were
doing it to avoid jumping up in the taxes. And
then what they said was, oh, okay, if you're giving
it to a relative of the first degree, your kids, brother, whatever,
relative to the first degree, then then we're not going
(27:07):
to uncap it unless unless you use it for commercial purposes. Well,
who the hell's gonna admit that you're using it for
I mean, how you ever enforced that one? Right? And
the thing is once you jump, once you uncap the value,
you don't you don't bring it back again. There's no
(27:28):
mechanism for bringing it back. So let's say you've got
the family cottage and you're rented it out for a
summer to pay the property taxes. Let's just say and
now it's commercial property. Well, now you're paying. You know,
we've got people properties they bought back in the sixties
on Lake Michigan, right with like two hundred thousand valuation,
a million, multimillion dollar properties. Well, these people can't afford
(27:52):
even to pay the property taxes on them. The kids can't, right,
let alone what they're actually worth. Right, they only got
them because mom and dad back in the fifties and
sixties bought these things when they were going for nobody
wanted to go there. Okay, So that's the that's what's
going on here, Okay, And what what Scott is talking
(28:14):
about is, hey, how far can I push that commercial use?
Is it commercial use? Yes, if I rented out, that's
commercial use. If I turn it into a you know,
rental then obviously, or I put a shop in it
or something that's clearly commercial use. Is it commercial use
if I just have a home office? Okay, So there's
(28:38):
that's the context. That's the question, and now I'm out
of time to answer it. But Scott, is that is
that basically what you're asking me? Is that kind of
the idea?
Speaker 3 (28:46):
Great you did, you did it, you did a great recap,
so I appreciate that for your listeners. But yes, and
that's basically what I'm asking where you know, is a
home office seduction or with that trigger it to be
commercial use if anybody were to find out. But I'm
not going there just the I like to be. I
like to I like to live by the rule. Because
you were talking about your monologue monologue yeah yeah, yeah.
Speaker 2 (29:04):
Yeah yeah righty oh, So I'll tell you what, just
to keep people listening to through the commercials instead of
going to get a cup of coffee or going to
some other radio station out that there are any we're
gonna that music means I got to go to commercial now,
So let's uh, let's answer that question. On the other side.
(29:26):
See see I was coolful of yeah I did that.
Speaker 1 (29:28):
There you go.
Speaker 2 (29:29):
All right, thank you, Scott. We'll see you in a
couple of minutes. All right, you've been listening to the
David Carrier Show. I'm David Carrier, your family's personal attorney.
Speaker 1 (29:37):
David's perking and working and taking your calls. Now this
is the David Carrier Show.
Speaker 2 (29:46):
Wellcome back to the David Carrier Show. I'm David Carrier,
your family's personal attorney. Now we're talking with Scott about
home office. Putting a home office in a inherited property
where the property taxes haven't gone up and haven't there
hasn't been an uncapping of the property because property was
(30:07):
not used for commercial purpose. Now here's the thing. Well,
let's let's talk about this one in particular. The way
taxes work is that the well, let me give you
an example. Remember Obamacare, right, Well, Obamacare is pretty clearly illegal.
(30:30):
There's no basis for it. Okay, it's an illegal idea.
Accept accept that the taxing there, there's a there's a
tax component to it, and there's no way the federal
government has any right to mess around with insurance and
all the rest of this stuff, but they put this
tax thing in, and so they hung the whole Obamacare
(30:53):
thing is all based on the Affordable Care Act is
all based on the tax component. Because the taxing power
is that broad. Okay, So if you can call something
a tax, then the government gets to do it. And
courts are very deferential to tax power. Put it that way.
(31:16):
So if there's any way on God's green earth that
they could construe this as being a commercial use, they're
gonna all right. So the fact that you know that
ten percent of the house or ninety nine percent of
the house is residential, you taking a home office deduction
(31:37):
makes it makes that part of it commercial. And then
what you have to ask yourself is what would the
local assessor do? What would the Michigan Tax Tribunal do?
What would the Court of Appeals do? And I don't
think we've got any real clear guide. I just did
a real brief search. I don't think we've got any
clear guidance on this yet. But once bitten twice shy,
you know, it's like Abraham Lincoln was Mark Twain actually
(32:01):
who said that a cat, uh, you know, once a
cat jumps on a hot stove, it will never jump
on another hot stove, but it won't jump on a
cold stove either. Okay, so maybe this is not a problem,
but I don't believe it because when you look at
what the power of the government to once it's using
the taxing power, right, you don't have you know, if
(32:24):
they can construe it as some exercise the taxing power
or whatever, then you lose. Does that make sense, Scott?
Speaker 3 (32:34):
So, then a kind of a related question to that is, Okay,
I choose not to use the home office deduction, so
I know I don't get the financial benefit of that,
but I still use that space to you know, do
books or something like that, right, you know. You know.
So so while I'm I have a commercial enterprise, the house,
(32:55):
other than having to rip over my head, does not
benefiting me financially if I don't use the home office
deduction for instance. So I didn't know if I mean
technically I'm probably no still in violation, but I'm not
getting the the economic benefit that would or would necessitate
a commercial enterprise. You know, I guess consideration maybe.
Speaker 2 (33:22):
Okay, So here's so are you ready for you know,
legal analysis extraordinaire?
Speaker 3 (33:29):
Yeah?
Speaker 2 (33:31):
All right, So here here here it comes. There's a
there's a constitutional law case called Griswold v. Connecticut Griswell v. Connecticut.
And in Griswoll v. Connecticut, it was a contraception case, right,
and so the state of Connecticut said you can't buy
contraceptives back in the sixties whatever it was, you can't
(33:52):
buy them. And the Supreme Court said, well, wait a second,
write a privacy. Okay, you can't go into somebody's bedroom
and ask them are you using these things? So because
you can't go into their home, into their bedroom desk,
are you using these things? Then you can't prohibit them.
And it's why it's extraordinary because it's sort of like that.
(34:15):
I mean, it's what it reminded me of. You know,
It's like because your question is exactly where I was going.
It was like, Okay, well, what if I don't ask
for any tax benefits for it? I mean, can the
government regulate what I do in the privacy my own home? Well? Yeah,
if I want to make methamphetamine in my own home,
they can do that. If I want to put grow
lights in But you know, there was just a case
(34:37):
in California where the utility was turning over utility records
to the police of people who were using extraordinary amounts
of water and electricity, which would indicate that they were
doing a grow your own, you know, hydroponic thing with
the marriage iauana there, and they say you can't do that, Okay,
(34:58):
you can't turn over those right records. So I kind
of think that if if you're not doing something that's illegal,
and you're doing it in the privacy of your own home, now,
could you be could you be building cars in the garage?
Speaker 1 (35:12):
No?
Speaker 2 (35:13):
I mean if you have a pole barn, right and
you've turned it into a factory. I don't think so,
you know, but you know, uh, but but maybe maybe
they could do that, you know, if they found out
that you were keeping books, you know. But then again,
I mean think of think of so much that that
(35:33):
you that you do. You know, so if you read
a business book in your easy chair, I mean that's
all I ever read, you know, business stuff, you know,
marketing stuff, whatever. You know. Oh you you know you
you read that book from uh you know, Dan Kennedy
or whatever while you were while you're at home. Ah,
Now your whole house is commercial. I don't think so,
(35:57):
you know what I mean if you claim the home
office deduction, you'd be saying that would be an absolute
affirmation on your part that you're using it for commercial purpose,
and I think you're screwed in that case. But other
than that, I can ask.
Speaker 3 (36:13):
A related question to expand this. I mean, yeah, yeah, yeah, sure, yeah,
and then and then I'm gonna have to run off
the church. But I'm gonna ask the question. I'll listen
to my way, and that is, if I were to
have an agricultural piece of property and I let somebody
grow crops on it, I don't charge them a you know,
acre fee or something like this. I just let them
(36:35):
grow crops on it because it's a productive piece of property.
Is that something that you know, them doing that activity
where they get a benefit because they're growing crops, but
I don't get a benefit. Would the property be considered commercial.
Speaker 2 (36:50):
Well, you know it's residential property where you get the exemption. Okay,
so if it's being used for agricultural purposes, I think
it's going to uncamp anyway. What they didn't want to
do is they didn't want to throw the grandkids out
of Grandma's house. What they didn't want to do was
they didn't want to throw people out of the out
of the lakefront cottage. You know, that's been in the
(37:12):
family for generations and now you know, the current generation
can't even afford to pay the property taxes, which of
course made lakefront property communities like Saga, I mean Saga,
Tuck and Douglas must have been sick when they passed
the rule like this. But you know they must have
been counting on jacking up their taxes. But but it
didn't work out that way. Whips, Sorry, but I don't
(37:35):
think it works. It doesn't work with agricultural property. You know,
if you're using it, if you're using it to grow,
if anybody's using it for the agricultural purpose. You know,
but what if they had field in your front yard
and they were just like your landscaper, You're like, no,
I just kind of like to look at the amber
waves of grain there, you know what I mean.
Speaker 3 (37:53):
And he's just made right. Property has its own has
its own tax benefits. Shall we say from curiosty.
Speaker 2 (38:03):
Question, Yeah, yeah, yeah, Well you're not paying the school
operating millage, that's right. It's like it's like the principal
residence exemption. You're not paying the school operating millage. But
the uncapping still happens. And that's you know, when we're
talking about the un capping, I don't you know. And
so many people live on the farm, you know what
I mean, And so could you claim, you know, it's
(38:24):
a residential use for the whole thing. I think you
got a problem there. I think we sh just start
making money on something. Then it's difficult. I think when
you're improving yourself, or you're doing the books at home,
or you know what I mean. I think that's that's
what they would call incidental use. So all right, we'll
say a prayer for Dave Carrier, if you would please.
(38:45):
He needs them, Okay, and take care of now, Drive safe,
all right. Even listening to the David Carrier Show, I'm
David Carrier, your family's personal attorney.
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