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Lewes, Delaware
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September 1, 2006     Cape Gazette
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September 1, 2006
 

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CAPE GAZETTE - Friday, September 1 - Monday, September 4, 2006 - 33 BUSINESS, RE00L E;%,TE Condominium sales hot despite cooling market Dewey conversions boost tax revenues By Molly Albertson Cape Gazette staff An ordinance that allows Dewey Beach motels to be con- verted to condominium units pro- duced a lawsuit, a moratorium and deep antagonism between some town leaders and business owners. But condominium owners say brisk sales of condos in a cooling real estate market is providing a much needed boost in sagging transfer-tax revenues. Condominium owners say the new dwellings produce not only transfer taxes, but they will also attract visitors willing to spend money in town. Still, some town officials remain leery, saying Dewey should not be so depend- ent on the real estate industry and the 1.5 percent real estate transfer tax that accrues for the town. "You'll not persuade me that the more we sell condos the better off we'll be financially," said Commissioner Bob Fitzgerald, chairman of the finance commit- tee. Fitzgerald said the town must not base its budget on unpre- dictable property sales. Opal Condominiums expects settlement on several units and hopes to see people moving in this week. Opal owner Aaron Georgelas said he expects settle- ment on enough units to send more than $200,000 to town cof- fers, and about half of the units are still on the market. Bell Buoy owner Tim Mahoney said he also expects a nice transfer tax revenue from the building's six condominiums, demonstrating the benefit of condominiums in Dewey. Commissioner Dale Cooke who supports condominium conver- sion, remains leery of re transfer taxes. "We'll get a nice chunk of transfer tax, but we need to set the money aside and invest it to make sure we have it for the future." Day trippers still welcome Condominium owners say transfer tax isn't the only way Dewey will gain from converting hotels to condominiums. "The number of dollars going into the town will increase based on the people who buy nicer condos . bringing in money," Georgelas said. People who buy half-million dollar houses also drop more money on their vacations, he said. He also said families won't be excluded. "Day trippers can still visit. If they can't get a motel, they'll change their strategy because they Submitted photos The exterior view of the new Marina View Condominiums that are comp--Te- in Dewey Beach. The condos were converted from the old Marina Suites Motel. come for the way of life - the beach and the entertainment," he said. He suggested they may rent condominiums instead of staying in motels. "Just our fees to build the con- dos was $60,000, probably more," said Bill Galbraith, owner of Marina View Condominiums. Galbraith also said more home- owners in town means more civi- cally minded people. "Hotel peo- pie are transients and they make their noise and leave their trash, but homeowners have a vested interest in the health and well- being of the town," he said. Cooke agrees that condomini- um owners might be more involved in the town, which he said would help the infrastructure of Dewey. Mayor Courtney Riordan, who has called for a calmer, quieter Dewey Beach, opposes the con- versions. He said the to,n should maintain its motel roomsand not allow businesses to convert to res- idential units. As_commissioner, Riordan served as the attorney for homeowners who sought to over- turn the ordinance that allowed condominium conversions. Condominium owners and Cooke also agree that fewer Continued on page 46 Back to scnool: Plan now and pay later The parents of children heading off to school may be breathing a sigh of relief. Meanwhile, the parents of young adults heading off to college are reaching into their wallets. Adjust today's col- lege costs for inflation and multi- ply by four years and by the num- ber of children in your family, and the total outlay can be staggering. For many people, paying these costs requires saving in advance, combined with using cash flow during the years of college atten- dance - and in many cases, the use of loans to create an extended payment period. Grants and scholarships are also available through schools, the government, and many independent sources. FINANCE Thomas McGIone However, a gift to a UGMA/UTMA account is irrevo- cable: The money belongs to the Eligibility varies by program and.. child, and control goes to the child state. Whatever your strategy, the sooner you start saving, the better. Custodial Accounts - Uniform Gifts to Minors Act (UGMA) or Uniform Transfers to Minors Act (UTMA) accounts are popular education savings options and offer certain tax advantages. Once the child is 14 or older, the income that these accounts earn is taxed to the child in his/her brack- et - which is usually considerably lower than the parents'. iit-..the age of majority, which varis,y state. Ctodian cannot change their minds 'and take the money back And because the custodial acconut belongs to the child, the balance in the account can reduce the ability to qualify for financial aid, loans or certain scholarships. . As a result of the Econoihic vehicles - Coverdell education savings accounts (formerly known as Education IRAs) and qualified state tuition programs - have \\;become more attractive. Coverdell savings accounts - The cCoverdell savings account ha' maximum annual contribu- tion limit of $2,000. In addition, qualified distributions will include withdrawals made to cover ele- mentary and secondary school expenses, as well as tuition for private and religious schools. Qualified state tuition programs (529 Plans) - These plans are state-sponsored investment pro- grams that have special tax status under Section 529 of the Internal Revenue Service code. These plans usually include both a pre- paid tuition program and a sav- ings-account plan. The 529 plans offer investors professionally managed tax-advantaged portfo- lios to help meet rising college expenses. Currently contributions in these plans grow tax-deferred [1] and withdrawals are tax-free to the student when. made for the payment of qualified education Growth and Tax ReKef"  expenses. Proceeds can be used at Reconciliation Act of 2001, two lla, accredited post-secondary other tax-advantaged savings "-school in the United States. [2] Anyone may contribute on behalf of a child - including par- ents, grandparents, other relatives and family friends - regardless of income or state residency. Maximum contributions vary from state to state but typically exceed $125,000. With the high contribution maximums and no income restrictions for participa- tion, these plans have become a very popular tax-advantaged sav- ings vehicle. And qualified with- drawals from 529 plans are free of federal income tax, although state income taxes may still apply. By contrast with custodial accounts, the account owner retains control over distributions from the account and the asset is considered a parental asset for financial-aid purposes. If the child decides not to attend college, the account owner still controls withdrawals and is free to change beneficiaries - any new benefici- ary must be related to the original beneficiary - [3] leave the assets in the plan for later use or with- draw the assets. The earnings por- tion of any nonqualified With- drawals is generally taxed at the owner's tax rate and is subject to a 10 percent penalty. If the child wins a scholarship, the owner will be refunded the scholarship amount without penalty. To further encourage savings for this important goal, the law now permits contributions to be made to both a Coverdell educa- tion savings account and a 529 plan during the same year for the same beneficiary. For most people, saving for col- lege requires systematic disci- pline. Start early, be consistent, and you should be able to meet the challenge of college costs. Your financial adviser can analyze your college funding needs, determine how much you need to save and recommend appropriate invest- ments to get you there. Many education saving strategies have tax and/or legal implications, so be sure to discuss your situation! with your tax and legal advisers before taking action. Editor's note: Thomas McGlone is first vice president of invest- ments with Wachovia Securities in Lewes. For more information, call 644-4431, email Thomas. mcglone @ wachoviasec, c om or go to www.investcreative- , ly. com.