I posted this in the Maine forum - your thoughts? It's a wonder anyone lives within 30 minutes of the NH border.
Comparison of Southern Maine vs. NH Seacoast Area
I must be missing something here and would like some feedback.
I'll be moving back to the seacoast area of NH or Maine in 5-6 years after I retire from the AF. I'm looking at buying land now while it's a buyers market in order to have it
paid off by that time. I was born in raised in Kittery, but have also lived in Portsmouth and Dover. I want to be within 45 minutes of Portsmouth, as I may work at the Portsmouth Naval Shipyard or the former Pease AFB upon retirement.
Property taxes are certainly higher in NH and lower in Maine, but only by $1-2K for a house/land valued around $300K (I want an acre or two or three with a 1800 sq ft ranch on it), depending on the town. I saw towns like the Berwicks coming in around $3000, Kittery around $4000, and Wells around $2500-$3000. NH towns that I looked at ranged from $4000 to $6000. Of course, this was an unscientific
survey of comparable properties on the NH and ME MLS, looking at taxes paid for the previous year.
Income tax is an issue in ME. I paid it every year since I started working until I entered the AF. Back then, I don't believe I made enough to really pay a lot. I wanted to see if the lower property taxes in S. Maine would outweigh the $$ I would fork over to the State of ME in income taxes. Land is a little cheaper in ME, maybe 20% depending on the town. Sales tax is not an issue in this area because most shopping would be done a short distance away in NH.
I did a hypothetical calculation based on my projected financial situation when I retire (using today's dollars and tax rates). My military retirement is worth $40K. I assume I'd get a job that pays about $50K (not that hard in the seacoast area). I assumed about $20K per year for my wife's part time employment (nothing high paying). So about $110K total between the wife and I - solidly middle class.
I ran the numbers using a hypothetical Fed and ME 1040. I was shocked to realize I would pay $6129 in income taxes to ME, and that includes a $6K deduction for military pensions. So, if I lived in Maine (and worked in NH or Maine) and saved $2K in property taxes, I'd come out $4K in the red compared to living in NH.
That's a lot of taxes to live in an area that's not much cheaper than across the border in NH. And the money you save with the slightly cheaper land (one time savings) is offset by the yearly check to the Maine Dept of Revenue. I've seen the posts with the discussion back and forth talking about whether Maine is a low or high tax state. Based on my projected income and the property tax rates in the area I want to settle in, I'd say Maine is a very high tax state (at least the Southern part of it).
What am I missing here? It seems like people would be crazy to live 5-10 miles from the NH border and pay all that extra money in income taxes. Maybe I'm just making too much money to make it pay to live in ME? I know the first $38K or so of income is not taxed in ME, but from there it goes up dramatically (8.5%?). Property taxes would have to be a LOT lower to make paying that income tax worthwhile.
I know you folks up north will say "that's why we live in Northern Maine" - noted. I've got family on the Seacoast and want to settle there. What do you folks that live in Southern Maine have to say? I was always leaning towards NH because of the better economy and more fiscal responsibility that NH is known for, but this calculation I did today kinda seals the deal....