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posted: 9/11/2013 4:08 PM

Alaska tops list of 'tax-friendly' states for retired homeowners

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If you don't mind chilly weather, the state nicknamed "America's Last Frontier" can help you stretch a retirement budget.

Q. My husband and I plan to retire soon. We'll make a modest profit from the sale of our home, but we'll have to live on the fixed income from Social Security. We heard a little snippet on the radio that said Alaska is the "most tax-friendly state" for retirees, but the report was short on details. Can you explain?

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A. The report you heard probably was based on a comprehensive study that recently was published at www.kiplinger.com, the website operated by publishing giant Kiplinger's Personal Finance. Researchers looked at a variety of retiree-related issues, from income-tax rules to breaks for older homeowners, and determined that "the Last Frontier" is the kindest of states when it comes to older Americans trying to stretch their budgets.

If you don't mind long winters, Alaska is indeed the place to retire. Alaskans pay no state income taxes: In fact, the state sends all of its permanent residents a check for about $1,000 each year as a dividend from its "oil wealth savings account." There are no state sales taxes, either, although some independent cities and counties charge modest local taxes to cover the cost of providing municipal services.

The state doesn't charge any estate or inheritance taxes. Though Alaskans must pay property taxes, older homeowners get a huge break. Those who are 65 or older, or surviving spouses 60 or older, are exempt from municipal taxes on the first $150,000 of the assessed value of their home. That's more than many of the homes up there sell for.

If the thought of relocating to oft-chilly Alaska sends shivers up your spine, warmer tax-friendly states for retirees cited by the study include Florida, Louisiana, Arizona, Nevada, Georgia and South Carolina. Details for all 50 states are on the website, along with a nifty tool to help you compare one state against another.

Q. I agreed to purchase a home for $129,000 and made a $5,000 deposit, but then found a nicer one for a few thousand dollars more. My sister wants to take over the purchase contract for the first house so she can buy it for herself, but the seller is balking at the idea and is threatening to keep my deposit. What are my rights in this situation?

A. That's a thorny question. Generally, a buyer like you can assign the rights to purchase a property to someone else unless the contract specifically prohibits it, or if the original offer includes what real estate lawyers call a "personal service element."

A personal service element can take several forms. For example, if the original seller accepted your offer and agreed to take back a second mortgage based on your income and credit history, he probably could block a proposed assignment of the contract to a new buyer who makes less money or has a weaker credit score. Or, the seller likely could nix the assignment and keep the deposit if you had agreed to close the transaction in 30 days but the new buyer couldn't complete the deal for several months.

Talk to an attorney if the seller seems intent on blocking the assignment and keeping your deposit.

Q. We recently moved into a new home. Is it necessary for us to notify the three national credit bureaus of our new address?

A. No, you don't need to notify the three big bureaus -- Experian, Trans-Union and Equifax -- about your recent change of address. As long as you've notified your creditors about the move, the information will be updated automatically with the bureaus the next time those creditors file their periodic reports about your recent borrowing and payment activity.

Real estate trivia: Eagle Mountain, Utah (pop. 23,070), has been named the "youngest city in America" by researchers at www.BestPlaces.net. Half of its residents are younger than 20 years old, the other half 20 or older. Durham, N.H. (20.3 years), and Amherst Center, Mass. (20.7), were second and third.

• For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 4405, Culver City, CA 90231-4405.

2013, Cowles Syndicate Inc.

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