Downsizing with Steve & Peggy

Steve & Peggy Bird moved from a 7 bedroom home in Pleasant Grove to a 4 bedroom home in Provo. I interviewed the Birds before and after their downsizing experience.

I’ve helped numerous clients downsize and rightsize, and have worked hard to earn the Senior Real Estate Specialist (SRES) designation.

I can guide you through the emotional and logistical challenges of downsizing, as well as the financial needs, including reverse mortgages or using IRAs to finance a purchase.

I would love to help you or someone you know with your downsizing and rightsizing needs. I offer a free home value analysis. Please call anytime.

Local Artist Finds a Home

    Some of my clients operate a business out of their homes, which requires specialized and multi-functional spaces.

Cindy Briggs, an international artist, had very specific needs when we were searching for her home. Watch this month’s Market Minute to learn more about this fascinating woman and how she uses her home as an art gallery, on-line recording studio, and for teaching individual and small group lessons.


Finding just the right home can be a challenge. It is important to be willing to tour many homes, and having an open mind and being flexible will help as well.

Aging seniors and retirees may find newfound enjoyment in learning a new hobby, such as painting. Please visit CindyBriggs.com for more info on art lessons!

Understanding Rules on Owning Animals in Utah County: Chickens and Bees

I recently sat down with a new client who is interested in buying a home in Utah County. When we went over what they are looking for in a home, one of their desires was the ability to raise chickens and bees on their property. Each city has different rules when it comes to animals in residential areas, so I went to work to find out which cities allow chickens and bees, especially in residential areas.

Orem

Chickens and bees are both allowed in Orem, including residential areas. Bees were banned in Orem prior to 2011, but an amended city ordinance in 2011 now allows the raising of bees. The number of hives allowed depends on location and which zone you live in. See city codes section 22-6-10 L for more specifications.

The number of chickens allowed on a property depend on the size of the lot. The larger the lot, the more chickens that are allowed: 5,000 square feet: 2 chickens; 7,000 square feet: 3 chickens; 8,000 square feet: 4 chickens; 9,000 square feet: 5 chickens; 10,000 square feet: 6 chickens; 20,000 square feet: 10 chickens; 30,000 square feet: 12 chickens. See city codes 22-6-10 C for more information on raising chickens in Orem.

Vineyard

Since Vineyard is a newly established town, they do not have actual written city codes concerning chickens and bees. When I talked to Morgan Brim, Vineyard Community Development Director, he said that most animals are allowed in agricultural areas. Chickens and bees are unofficially allowed (because there is no city code that prohibits it) in residential areas. In regard to bees though, Brim noted that because of the large populations of mayflies and mosquitos, the city regularly sprays for bugs in residential areas and that may affect bees.

Provo

Chickens and bees are allowed in Provo city, but there are size and other regulations. Provo codes states that up to five bee hives are allowed on side or rear lots that are larger than 5,000 square feet. Lots that are one-half acre or larger can have up to ten bee hives. All beekeepers must be registered with the Utah Department of Agriculture and Food. It is also important to be aware of the placement of the hives and their flying patterns. If hives are located close to a property line or public access areas, then flyaway barriers must be in place and secured. Read more in section 8.03 of Provo city codes.

Chickens are allowed in residential areas if the sole purpose is to produce eggs. The number of chickens allowed depends on the size of the lot, but it can vary from two to six. Limitations and other maintenance guidelines are outlined in section 8.02.190 of Provo city codes.

Springville

Springville recently updated their city zoning codes to allow bees. The number of colonies allowed depends on the size of the lot. For properties smaller than half an acres, five colonies are allowed. Properties larger than half an acre can have 10 colonies. In agricultural zones, any number of bee colonies are allowed. There are specific rules regarding the housing, equipment, and raising of bees, so read over Article 9 in section 3-7 of city codes.

Photo Credit: Adam Clarke, Flickr. com

As of March 2014, chickens are allowed in all of Springville, including residential areas. Some residential zones have a limit to how many chickens are allowed, but there is no minimum size lot to raise chickens. City codes, section 3-7-801, outlines specific regulations regarding chickens.

Spanish Fork

Spanish Fork allows chickens in residential areas based on the size of the lot. Chickens are not allowed on lots less than 5,000 square feet in size. Up to six chickens are allowed on lots that are at least 5,000 square feet. To raise chickens in Spanish Fork, a permit must be obtained and specific coop and upkeep regulations must be followed. For more information, see section 6.20 of Spanish Fork city codes.

Photo Credit: Cowgirl Jules, Flickr. com

The animal control department of Spanish Fork says that bees are allowed as long as they do not cause problems within residential areas. Residents should contact animal control to make sure they comply with rules regarding raising bees within city limits.

—Stephanie Bahr Bentley

Renting Out a Property: Provo, Utah

Photo credit: steafpong, freedigitalphotos.net

With Utah Valley University, Brigham Young University, and numerous tech and trade schools, Utah county is populated with young students and families looking to rent rather than buy. There is a high demand for rental properties, so if you and your family are interested in renting out a property, Utah Valley is a great place to do so.

Each city has strict rental regulations so make sure you properly research and understand all of the restrictions and requirements for rental properties. This article will focus on Provo, Utah, in terms of its rental dwelling regulations as set forth by Provo city statutes.

Understanding Rental Dwellings and When a License is Required

A rental dwelling is a portion or entire building that is designated to be rented, loaned, leased, or hired out by any amount of people for any time period longer than one month. Renting out a unit for less than a month is considered a short-term rental dwelling and has different requirements. It’s important to understand that even if you do not charge tenants rent, if the owner doesn’t live at the property, then it is still considered a rental property and requires a rental license.

Situations Where a Rental License Isn’t Required

There are a few situations in which Provo city doesn’t require a rental license. No license is required if a property is usually occupied by the owner but is temporarily rented because the owner is in the hospital, a nursing home, or an assisted living facility. Licenses are also not required if an owner temporary leaves and rents out a property because of temporary job assignments, sabbaticals, or voluntary service. Lastly, an accessory apartment in an owner-occupied one family dwelling is not considered a rental property and doesn’t require a license.

How to Apply to Rent a Property

Applications for a rental license are filled out online through the Provo city website. Rental licenses are $20 for a single unit and $60 for more than one unit, such as a duplex.

Once you apply for a rental license and pay the license fee, Provo’s zoning division reviews the application and makes sure the property meets all the license requirements, such as the safety and health requirements.

Rental Dwelling Safety and Health Requirements

Rental properties have to meet certain safety and health requirements.

The property must have structural integrity; proper installation, maintenance and operational condition of all plumbing, electrical, and mechanical systems; appropriate exiting; properly constructed and located stairways; appropriate bedroom egress windows, including proper sill height and size of window openings and window wells for basement rooms; minimum bedroom floor area; adequate guardrails; proper backflow prevention devices; appropriately located and operational smoke alarms; watertight and sound roofing systems; fire-rated separation between dwelling units; and properly placed street addressing. There are also parking requirements for any rental dwelling.

If you apply for a rental license and are denied because the property doesn’t meet the safety and health regulations, Provo city will provide you a list of corrections to bring your property into compliance. Once those are corrected, you can reapply for a rental license.

Rental Licenses Length and Restrictions

All rental licenses expire on July 31 of each year, but you can renew for as long as you want and as long as the property meets all the rental regulations. Renewal notices are typically mailed out the end of July.

Licenses are not transferable, so if you end up moving or selling the property, you have to contact the business license official within thirty days after selling the property, and the new owner has to apply for their own rental license if they also wish to rent out the property.

Another option for rental income is to create an accessory apartment in your home. Please keep in mind that these are closely regulated and require city approval and adherence to safety and parking guidelines. Please check with your city planning office to learn their specific guidelines.

Renting, especially in Utah County and Provo in particular, can be a great investment opportunity. Make sure you understand all that is required so you and your tenants can enjoy the experience of renting.

—Stephanie Bahr Bentley

Property Inheritance or Gifting

Photo credit: Ken Mayer, flickr.com

An important question to consider for homeowners is what are we going to do with our homes and property once we are gone? Is the best course of action to gift the property to a son or daughter, or just let them inherit everything? It’s important to consider the value and tax implications for gifting or inheriting property.

Taxes for Giving versus Inheriting

When you gift or deed a property to someone, the initial value of the home does not change when the property changes hands. So if you bought the home at $200,000, then gift it to your children, and they sell it for its then current value of $400,000, then they have to pay capital gains tax on the entire difference of the initial value and the selling value—a substantial tax.

However, if you pass on and your children inherit the home, they inherit it at the current value of $400,000 (up from your original purchasing of $200,000). That becomes the base value for them, so when they sell the house, they only pay capital gains tax on the difference between the value of the home when they received it and when they sold it—which is, in most cases, a substantially lower taxable amount.

It might be worthwhile to talk over your plans with a financial advisor, but consider this example presented by InTouch.

Gift or Inheritance – Does It Matter?

A person called into a radio talk program with a situation that was troubling to the caller and disturbing based on the potential tax liability that may have been avoided.

The caller’s elderly father had deeded his home to his daughter a few years earlier because in his mind, his daughter was going to get the home eventually and this would be one less thing to be taken care of after his death. The daughter didn’t really care because the father was going to continue to live in the home and take care of it so that it would be no expense to her.

Obviously, unknown to either the father or the daughter, transferring the title of a home from one person to another could have significant tax implications. In this case, when the father “gave” the home to his daughter, he also gave her the basis in the home, which is basically what he paid for it. If she sells the home in the future, the gain will be the difference in the net sales price and her father’s basis, which could be considerably higher than had she inherited it.

If the home was purchased for $75,000 and worth $250,000 at the time of transfer, there is a possible gain of $175,000. However, when a person inherits property, the basis is “stepped-up” to fair market value at the time of the decedent’s death.  If the adult child had inherited the property at the time of the parent’s death, his or her new basis would be $250,000 or the fair market value at the time of death, and the possible gain would be zero.

In most cases, there are less tax consequences with inheritance than with a gift. There are other factors that may come into play but being aware that there is a difference between a gift and inheritance is certainly an important warning flag that would indicate that expert tax advice should be sought before any steps are taken.

Sometimes Downsizing is Hard on the Ego

Photo by Phiseksit, FreeDigitalPhotos.net

There are many benefits to downsizing, such as less space to take care of and smaller monthly bills. But with smaller bills, comes a smaller house—which can sometimes be hard on the ego.  

In a recent article in the Wall Street Journal, a retirement expert pointed out some pertinent questions regarding downsizing, one of them asking if your ego can handle a downsize.

Often we see our homes as the showcase of our hard work, so a large or spacious home signifies success. But with downsizing, that likely means giving up that image. If that is a major deterrent for you and your quest to downsize, consider other benefits that might still allow you to showcase your life accomplishments.

Furnishing a smaller home

Even if a home is smaller, it can still look impressive. New furniture, paintings, and other artwork can go a long way to showcase the home and its owners. Size is not all that matters when giving value to something—order and style contribute greatly to the image of a home. And with a smaller home, it will be considerably easier to keep everything organized. You also might be able to afford those new leather couches.

Traveling the world

Nothing says luxury like travelling. With less house expenses, you can now hit the beach in Hawaii or Baja California. Take the long-awaited cruise to Alaska or the Bahamas. Consider a trip with the grandkids to Disneyland or Harry Potter World. Start a blog and post pictures and tales from your trip. Downsizing can lower your home expenses and open up new avenues for travel adventures.

Buying a vacation home

Once you’ve cut your house bill in half by downsizing, consider investing in a vacation home. If the beaches or mountains call your name, look into purchasing property for a getaway home. A second home may require some work and time, so make sure you consider the costs and upkeep requirements. Sometimes there is nothing better than a cozy stay at your cabin in the woods.

It is never easy to part with one’s home, especially if it is full of cherished memories and mementos from your family. However, downsizing may just be the right opportunity to keep some of the most important memories and start creating new ones.

— Stephanie Bahr Bentley