Retirement - Maine vs. New Hampshire Taxes (Hope: for sale, real estate)

[markc]

We're planning to retire in a few years and had planned for years to retire to Maine. However, the tax burden in Maine is a concern and we are thinking about living in southern New Hampshire to minimize the tax burden in retirement (our hearts are in Maine though).

Does anyone have information (or links to credible sites) on the true relative tax burdens of the two states? NH has no income tax but they have relatively higher real estate taxes. On the other hand, it appears that NH taxes capital gains and dividends at 5% (a key consideration for a retiree living on investment income).

[AlisonL]

Taxes by State

Hope this will be of some help to you.

[forest beekeeper]

'Tax burden' is one of those things which gets hotly debated.

Unfortunately many Mainers still confuse a high 'tax burden' with high taxes. And they insist that Maine has high taxes. Because Maine has a higher portion of people who have lower incomes, it makes the taxes they pay 'appear' to be higher.

Go to the websites and figure it out for yourself.

We do not have the highest taxes, nor the lowest.

Everyone everywhere wants to whine about paying taxes.

I was able to move to Maine after I retired: buy 42 acres with riverfrontage, and build a house. I do not believe that in my case, that I would have been able to afford doing any of that in NH.

I simply did not have enough of a nestegg. I could not have afforded to buy a forested woodlot with river frontage in NH. I could not have afforded to build a house there. And I would have problems affording the property taxes there.

I bought forested woodlot with river frontage for $900/acre. The last two years my taxes have been $1.05/acre.

If you can find unspoiled land like this for under a thousand dollars an acre, and be able to pay a buck per acre each year in taxes for that land; go for it!

My in-laws bought forested woodlot [with no river] for $350/acre. I consider that a good deal. And I know of more woodlot land that is still for sale at that price.

My town's millrate is 0.00842

[clf71]

I don't know the exact numbers on taxes but I have relatives in NH and we are in Maine. We compared a similar sized house and lot in NH with ours in ME and the property taxes were within a couple hundred dollars of one another, except we also had to pay income tax. Excise tax is also expensive here and can be a burden each year depending on the age of your vehicle and how many you own. I think your expenses will depend on where you live. I have a home in southern maine with 5 acres and paid almost the same as the guy above who has 42 acres. I'm not sure how he gets the 1.05 per acre for taxes, mine equals out to be 440 per acre. I also know that health insurance costs are higher here. Though Maine is a larger state and we have more room to stretch out on...good luck

[flycessna]

Housing will probably be a little more expensive comparing southern and coastal Maine with NH. As forest said there are opportunities to move to Northern Maine and buy on the cheap and have cheap property taxes.

But if your going to compare apple's to apple's....No sales tax....no income tax(NH) compared to one of the highest income taxes in the country and a 5% sales tax on almost everything including clothes(Maine).

The average cost of health ins. in Maine also costs twice as much than NH.

Maine is one of only a few states that has kept its inheritance tax rate the same and has chose not to follow the federal inheritance tax rate (most states inheritance tax guidelines follow what the federal gov has. And since the federal government has been reducing their inheritance taxes most states have followed right along. Maine chose to keep theirs the same and NOT reduce it).

Maine’s capital Gains tax also follows their income tax rate of 8.5%.

My advice…take last years, or wait and take this years tax returns and fill them out for both Maine and NH and see what the difference is. Then figure out property taxes, sales taxes, health ins, gas tax ect.

[mollysmiles]

I also think it's important to be looking at quality of life factors as well, and medical availability. It's important to be able to afford to live where you ultimately choose, however, if you're spending time fighting traffic, sprawl, incredible growth in population over a few square miles....well, if I could afford to pay a little more in taxes for a better quality of life, then I'd do it in a heartbeat.

[FLtoMaine]

Originally Posted by mollysmiles

..well, if I could afford to pay a little more in taxes for a better quality of life, then I'd do it in a heartbeat.

well said. we'll be up there just as soon as we can. we KNOW we are going to be gving up some $$ - but will do so happily if we can find that little piece of paradise up there. Less concrete, more nature...I can work with that. We might not be able to choose how we die, but we can choose how we live. And may i just say thank yo to you all - this forum is a wealth of information (and entertainment) for a hopeful transplant like myself.

[Coaster]

Originally Posted by markc

We're planning to retire in a few years and had planned for years to retire to Maine. However, the tax burden in Maine is a concern and we are thinking about living in southern New Hampshire to minimize the tax burden in retirement (our hearts are in Maine though).

Does anyone have information (or links to credible sites) on the true relative tax burdens of the two states? NH has no income tax but they have relatively higher real estate taxes. On the other hand, it appears that NH taxes capital gains and dividends at 5% (a key consideration for a retiree living on investment income).

Mark, as already noted Maine taxes cap gains and dividends as income, and the highest tax rate of 8.5 percent kicks in at less than $20,000. NH taxes them, too, but at a lower rate. Also, as noted, NH doesn't have a sales tax, its excise taxes are lower, and inheritance laws are more lenient. Its property taxes are, depending on the town, as much as 30 percent higher than comparable rates in Maine, but that is usually easily offset by the lack of other taxes. If a lot of your retirement income will come from dividends and interest, that might not make as much difference in your case.

This is one of those cases where 1) you definitely should consult a knowledgeable tax and/or estate attorney; 2) the difference may be so small that your desire to live in Maine is more important than the few extra dollars you'd save by living in NH.

[flycessna]

Originally Posted by mollysmiles

I also think it's important to be looking at quality of life factors as well, and medical availability. It's important to be able to afford to live where you ultimately choose, however, if you're spending time fighting traffic, sprawl, incredible growth in population over a few square miles....well, if I could afford to pay a little more in taxes for a better quality of life, then I'd do it in a heartbeat.

well said!

True quality of life includes "all" aspects of living.

I think the origional question was specifically targeted at the tax differences between NH and Maine. I do not think I need to over sell its quality of life factors like its geography, low crime rate, affordable home ownership and other things associated with Maine.

Most of the people on this forum who are thinking about coming to Maine have already concluded that it is a beautiful state. I feel what is the biggest reason that holds them back is the issue with the taxes and economy. And it is there where we need clarity.

People will have to decide whats best for them. For me My biggest tax is property taxes, and then sales taxes. I would be better living on the border in Maine where the property taxes are less and then just shop in NH But that would be illegal

[DavidoftheNorth]

Originally Posted by forest beekeeper

'Tax burden' is one of those things which gets hotly debated.
I bought forested woodlot with river frontage for $900/acre. The last two years my taxes have been $1.05/acre.

If you can find unspoiled land like this for under a thousand dollars an acre, and be able to pay a buck per acre each year in taxes for that land; go for it!

My in-laws bought forested woodlot [with no river] for $350/acre. I consider that a good deal. And I know of more woodlot land that is still for sale at that price.

My town's millrate is 0.00842

Forest, can you tell us a little about the school system where you live? Where do the high school kids go and how does that work financially?