Reply to I didn't fully comprehend the cost of eldercare

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[quote=Anonymous][quote=Anonymous]...But it’s absurd when we make societal decisions to enable people to drag this out with things like frozen property taxes and other age in place incentives while young families who are paying higher home prices also are saddled with a higher tax liability. They could tap their bloated home equity to pay taxes whereas younger buyers cannot...[/quote]
How is an older person supposed to "tap their bloated home equity to pay taxes" ?
They obviously don't have cash in the bank to pay the property taxes.

Let's say the house is worth $500K (paid off) and the taxes are $12K. If they "tap" the home equity and borrow the $12K, they have to immediately start paying it back. And this would need to happen year after year. So the older person is paying back ~$1K per month year after year, to pay back the equity loan, especially when they would need loan after loan.

Which if they could afford that, they could just pay the property taxes in the first place. You can't just request $12K and agree to pay that back in 10 years when you sell the house. So for an older couple who is fine living in a paid off house but is on a limited monthly income, it would not be cost effective to them or society to have them forced out of the house and into a rental or expensive independent living, simply because property taxes have outpaced their Micare. And once they are on independent and assisted living and run out of the house profits, they go on Medicaid and the working tax payers cover their shortage. It probably would have been cheaper on the whole to the community to freeze their property taxes and let them stay independent.

Many communities have a cap on rising property taxes which allows the retired couple to stay and keep paying some property taxes (and sometimes this benefits working homeowners as well.

And a reverse mortgage is not the answer to tapping into equity. This just shifts the home equity assets to the private company instead of covering future Medicaid costs.
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