Do I buy in MA or RI?? ~Please Help!~ (Boston: low income, sales)

[minnievelour]

I have been working in Middletown, RI for 15 years. I'm single with no children, so school system has no bearing on my decision. I have rented in Rhode Island for most of my adult life and am more than familiar with RI politics, economy, etc.

This is my year to buy! I am looking for a condo or small house (~$250K) My problem is where do I buy??? I have been never lived close to work and have been doing a 80+ commute for a long time now. My ideal scenario would be to buy something closer to Middletown but the personal/property taxes are so high in Rhode Island compared to Massachusetts!

Does anyone know if you are "double taxed" if you live in MA but work in RI? From everything I've read, it is much more tax friendly in Massachusetts and I could live in a border town like Seekonk or Swansea.

I will be a first time home owner and any advice would be great! Thanks!

[smarty]

Rhode Island collects taxes from its residents at the following rates over five income brackets.

For single taxpayers:
-- 3.75 percent on the first $32,550 of taxable income
-- 7 percent on taxable income between $32,551 and $78,850
-- 7.75 percent on taxable income between $78,851 and $164,550
-- 9 percent on taxable income between $164,551 and $357,700
-- 9.9 percent on taxable income of $357,701 and above.

For married persons filing joint returns:
-- 3.75 percent on the first $54,400 of taxable income
-- 7 percent on taxable income between $54,401 and $131,450
-- 7.75 percent on taxable income between $131,451 and $200,300
-- 9 percent on taxable income between $200,301 and $357,700
-- 9.9 percent on taxable income of $357,701 and above.


Massachusetts imposes two tax rates:

-- A 5.3 percent rate that applies to wages, interest and dividends and long-term capital gains.
-- A 12 percent rate applies to short-term capital gains, long- and short-term capital gains on collectibles and installment sales before 1996 that are classified as capital gain income.

A Massachusetts full-year and/or part-year resident is required to file a state tax return if his or her Massachusetts gross income is in excess of $8,000.

====================
Basically, for income tax, you pay the higher of the two states. If you live in MA and work in RI and make $33K, you pay 3.75% to RI and 1.55% to MA. You have to file in both state. If you make $100K, you pay 7% to RI and nothing to MA.

As to real estate or property tax, it has no bearing on your state tax. You can deduct the property tax on your Federal tax only.

Unless you get a really good deal on the house, I suggest you NOT buy. You are paying a mortgage, property tax and maintenance (like condo fee $$$). If you add them up, I hope you can justify buying vs renting. In many towns close to Boston, you are talking about easily $1-2K more per month extra when you buy versus rent.

[scald4893]

I live in Mass and have the opportunity to work in either RI or Mass. With no other factors considered, which is better tax-wise? (will transferring to the RI office hurt me with bottom line?)

[professorsenator]

Originally Posted by scald4893

I live in Mass and have the opportunity to work in either RI or Mass. With no other factors considered, which is better tax-wise? (will transferring to the RI office hurt me with bottom line?)

It depends, but probably Mass. RI's income tax rates are lower than MA for low income people. But for middle to upper income people, MA is better.

As previously mentioned, when you work in either RI or MA and work on the other state, you pay the higher of the two state income tax rates. So most middle/upper middle class folks are better off in MA. What's more, property tax are usually a little lower in MA.