Tax woes

Warning - this is really long....

Sorry I've been so quiet lately - after vacation I was trying to catch up with life, then last week was Thanksgiving, and all the while I've been trying not to freak out about a property tax issue we've been having. I think yesterday I finally got to where I was about to a) take steps to resolve it, and then after some bad news b) have a breakdown and cry for a while so that I could c) regroup and continue working on it. Here's my situation:

Among the mortgage papers we signed was one regarding a special services tax levy - basically the condo developers borrowed approximately $6 million in bonds from our village to make improvements to the property, which was to be repaid by the condo owners through taxes (according to the management company, over the course of 30 years). Somewhere along the line the length of time over which the bonds were to be repaid was screwed up, and as a result so our taxes.

For the last quarter of 2007, before the special assesment was figured in, we paid about $750. Simple math would tell you that if we paid $750 for a quarter, taxes for a full year would be just under $3000. When I opened my tax bill in early November it was almost $5700.

Since our taxes are paid out of an escrow account held by the mortgage company, I called my company's customer service division asking for any assistance because I thought something was wrong with the bill (at that point we did not know exactly what the problem was). They told me to fax my tax bill to the tax services division, along with a letter stating that I thought there was an error and requesting that the mortgage company contact the the county on my behalf. I did just that, right before we went on vacation.

As soon as we got back, I called the mortage company to make sure they received the fax. They did, only they didn't contact the county, they just paid the bill. This resulted in a negative escrow balance, which if it isn't fixed, will mean that my mortgage payments will significantly increase (as it stands, they'd double) when they reassess things in October 2010. I called the management company, who told me they had attorneys working on it, and as soon as they knew something they'd contact us.

Fast forward to the day after Thanksgiving, when I get a letter from the condo association's attorney stating what they thought the problem was ("bond repayment amount to invidividual unit owners being significantly higher than was disclosed to individual unit owners"), as well as the attorney's fees, the approximate length of time this would take to be resolved (2-3 years), and a final line that unit owners were still responsible for paying taxes in the interim.

Now, if this were a one-time tax bill error that could be resolved by the time the mortgage company reassessed things, or if all I had to do was make up the difference in the one tax year, that would be one thing. As it stands, we essentially have to pay an extra $2700 per year in property taxes until this gets resolved (and checking with Onkel Rich, it looks like it will take that long).

Dump this on top of an income reduction for another year and a half while Trey is in school, and an emergency fund that's not really funded, and I was just about having a nervous breakdown (can you tell I pay the bills in the house and tend to carry all of the stress?). If we stopped putting the small amounts we do into IRAs and 401(k)s, and stopped putting away what little we do for vacation and home improvements, we don't even begin to cover another mortgage payment every month. I do not consider wracking up a bunch of credit card debt to be a solution either because I have really good credit, so I figured we'd lose our condo and end up living in my mom's basement.

Anyway, after the breakdown yesterday, I called the mortgage company to ask about payment plans and it turns out they have an Escrow Shortfall Assistance program which would help significantly should we need it. Obviously we'd still owe the tax money, but we'd be able to spread out payments so it wouldn't hurt as much. Plus, if we don't apply until next fall, hopefully we'd only have to worry the larger payments for a shorter time because we'd be that much closer to things being resolved.

I also told Trey yesterday afternoon I felt like I was in this by myself and that I needed him to come up with some ideas in order to help out the situation. Last night we had a great talk and he really came through. He pointed out that I have an oboe, and he has a 2nd French Horn. I told him selling his horn should be a last resort because that's part of how we make a living, but I'm glad he pointed out the oboe. I've actually been thinking of selling my oboe for a couple of years, but using the money to max out my IRA for one tax year, and almost max it out the following year. Now I'm really glad I didn't get my butt in gear on that idea like I normally would do with that kind of idea.

Ok, thanks for letting me vent. I know this will get better, but it's been really stressful for the past month. Hopefully now I'll be a little bit more fun... :-)