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From the February 2001 Issue

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The 10 Commandments of Golf Home Buying

State Taxes: You Can Save a Bundle

The Half-Million Uncle Sam Can’t Tax

The Super Stars of Golf Course Design

The 10 Commandments of Golf Home Buying
Obey these laws for the perfect purchase

by David Lott
Editor/Publisher
GolfCourseHome.net

1. Create Your Best-Case Scenario. Draft in your mind and on paper the ideal home, including the locale, amenities, golf course quality and difficulty, location, weather, atmosphere, social programs, and anything else that you think would affect your happiness at your new community. Then go out and look for it.
   
2. Use the Inside Sales Team. Why? Because you get in on all the deals. Your cousin may work in real estate in the area, but he can't get you the perks the inside sales team can. Buy him lunch instead and ask for tips about the area.
   
3. Consider the Resale Value. Don't go for the best deal, go for the home or lot that will sell quickly when it comes time to either move up or out. Basically, on the green means in the green.
   
4. Eliminate the Ultimate Surprise. "You have to take a close look at the dues structure," says Mike Norton, marketing director at Uwharrie Point, a golf community located 60 minutes west of Pinehurst, NC. "Ask the developer, 'Are these realistic numbers? Are they going to support the club when the developer sells out and the members become responsible for running the club?' 
   
   "Some things are done with the numbers to drive real estate," Norton continues, "so that when it comes time for the owners to take over, there could be a rude awakening-and a big liability. Any developer should be willing to discuss what the numbers will be like when he leaves. "If he won't, head for the door."
   
   .
   Aspen Glen, CO: Close to Aspen, plus golf & fly-fishing.
   
   Norton also says you should look into the developer's background. Examine his track record and his reputation as well as the continuing health of other communities after he has sold out and moved on to other projects. 
   
5. Ask About the Homeowners' Association. If you're looking at an equity club, find out if the developer is propping up the HOA financially. Ask him directly. Some developers support the HOA while in selling mode, then pull the plug when they leave. The result? Huge and unexpected increases in HOA fees. And if you're the last in, the financial squeeze could threaten your financial stability.
   
   
   Ford's Colony, VA: Known for having one of the nation's best homeowner's associations.
   
6. How Private Is It Really? "Outside play" is often a nebulous term that needs clarification-is it certain days of the week, certain times, etc. Get a sense of how much it will take away from your ability to play when you want. Balance that need with the lower (subsidized) dues you will have to pay.
   
7. Is the Marquee Designer Worth It? Think of the golf course designer's name as an amenity that increases the desirability of the community. "It affects the pace of sale," Norton says. "Without the proper amenity, you're not going to get the business." If your prospective community has one of the top names, know you'll pay extra for it, but when you sell, that asset will be working for you in appreciation.
   
   
   Sugarloaf, Duluth, GA: Atlanta's best selling golf community.
   
8. Find Out What the Amenities Will Be and When They Will Be In. If you're first in, you benefit from incentive packages and perks. But you may not be able to enjoy them. That's because the course and a few homes go in first and the clubhouse and other amenities often come later. Find out the schedule for the installation of amenities and determine whether you can wait for them.
   
9. Visit More Than Once, and Talk to Owners. Get the feel of a place by playing the course, talking to neighbors, and visiting more than once. Often a couple will move into a community, and within a few years many of their friends have joined them. Word of mouth is often the best way to learn about the property.
   
10. Investigate the Surrounding Area. Check out the area stores, health facilities, and cultural opportunities. Some communities now have many of these resources within the overall master plan.

When it comes time to consider the cost of living at a community and how much you’ll have to spend each month on mortgage, real estate taxes, living expenses, golf fees, etc., there is one consideration that may not get figured into the equation—state taxes. While Federal tax is uniform, a move to another state forces you to consider myriad tax implications: inheritance taxes, real and personal property taxes, intangibles taxes, sales tax and, of course, income tax.

State governments have found this area to be fertile ground in the battle to win well-off retirees. For example, Florida, Nevada and Texas have no state income tax at all. In Pennsylvania, residents at such communities as Penn National near Gettysburg, can take advantage of there being no state tax on retirement income from pensions, IRAs or Social Security, allowing residents the luxury of affording more of the lifestyle they’ve been looking forward to. 

And the tax is just 2.8% on other income so that Pennsylvania retirees can keep much more of their income. Such advantages can be translated into a home closer to the golf course, or upgrades on interior design options.

The No. 1 state in letting you keep the most amount of your state income is Tennessee, which would keep only $900 in taxes on an annual income of $125,000 (see chart). At the other end of the spectrum, New York City/New York state has the largest hand outstretched and would take $8,278 annually out of the same earnings. That yearly tax bite translates into more than $165,000 over 20 years. 

If you earned the same amount in Tennessee over the same amount of time, you would have had in excess of $147,000 that you could have spent on travel, golf and your new home. Viewed in such a light, your choice of state could have a major impact on not only your cost of living, but on the amount of capital you will have to leave to your heirs.

If you sold your home after May 6, 1997 for $550,000, only $50,000 would be liable to Federal taxes. That’s because the amount of excludable gain was doubled to $500,000 on that date from $250,000. Moreover, the exclusion can be used on a continuing basis—once every two years.

The only hiccups are these: 
1. This exclusion applies only to married individuals who file jointly and either spouse meets the ownership test of having owned the residence for an aggregate of at least two of the five years before the sale or exchange. 

2. That both spouses meet the use test in which they occupied the residence as a principal residence for an aggregate of at least two of the five years before the sale or exchange. 

3. That neither spouse in ineligible for the exclusion by virtue of a sale or exchange of a residence within the last two years.

The exclusion for individuals is $250,000, with the same rules applying.

Besides location, location, location, another major factor in the cost of your golf course home is designer, designer, designer. The same home in the same location on a golf course will have a significantly different price, if the name of the golf course’s architect is Jack Nicklaus, Rees Jones or Robert Trent Jones, Sr., according to Tony Hourston, communications manager at the American Society of Golf Course Architects.

There is no official ranking system and the amount of money received for a signature for one of the top designers varies according to a number of factors. For example, a Nicklaus Signature course will cost the community’s developer more money than if an architect from the Nicklaus design team. 

Often a designer cuts his teeth as a member of a major design team, then sets out on his own after buzz begins to build on the courses he’s done. However, if you were to take a stab at compiling a Top 20 list of the marquee names in the golf course design world today, the list might look like this:

Jack Nicklaus
Tom Fazio
Rees Jones
Robert Trent Jones, Jr.
Pete Dye

Arthur Hills
Ed Seay
Eric Larson
Harrison Minchew
Vickie Martz

Robert Cupp
Roger Rulewich
Ted Robinson
Jack Synder
Forrest Richardson

Mike Hurdzan
Jay Morrish
Keith Foster
Bill Coor
Ben Crenshaw

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