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about tax advantages if I were to move to one of the "southern states du jour" - what would be the net/net?
I took NC because that's the hot spot, I have a friend who recently moved down and it seems to dominate a lot of the forums.
Granted, this was a very, very rough estimate..anything I may have missed please feel free to add (either way - I know you people won't let anything slide though ):
Assumptions:
DH and my salary is the same (unlikely, but for the sake of apples to apples, let assume)
purchase a similar sized home
same mortgage (so *hopefully* we'd pocket some cash, although the way my house value is falling, I'm not so sure)
*roughly* - I calculated we'd be saving about $3K a year than what we pay now. That takes into account:
higher state income tax in NC
lower property taxes in NC (assume, based on my friend's house, our taxes would go down about 65%)
less writeoffs on federal return - property tax is lower, mortgage interest is same, state income tax is higher...net/net was about $4k more we'd pay in federal tax.
For obvious reasons I don't want to post specific numbers. This does NOT take into account lower car insurance in NC (although I'm not sure about this - we pay about $600/yr each car), and the fact that you pay tax on food and clothing in NC, not here (and I understand food costs are higher there). My homeowners is about $350/yr, don't know how that compares, and my utilities (gas/electric/water/sewer) is about $360/mo (again, don't know how that compares). I don't use toll roads so that's moot. I work from home most of the time so commuting expense would be a wash, probably. What else am I missing?
We could easily blow through that $3K visiting family during the year. Maybe not if we drove.
Thoughts? Although I'm sure this will spiral down into a "NC -vs NJ" thread, that's not my intent. A mature, intelligent discussion about these figures, please.
While I cannot comment on the figures for NC, I did do similar math for IL (Chicago area), and Florida (Tampa area) over the last 2 years. We have family in Chicago and friends in Tampa so we would have help and support either way. Tampa worked out better money wise but when we factored in plane travel Vs driving to Chicago (5-6 times a year) that difference was eaten up quickly. So, financially we would be no better off in either area. Since there was no HUGE advantage we have decided to stay.
The one flaw in your math is in the "same mortgage" portion, IMO. For most people, who don't have a large amount of equity in their homes, if they were to come down here and buy a similarly sized home, their mortgage would be much lower due to the lower cost of the home. For example, lets assume you have a 2,500 sf home in Somerset or Hunterdon County that you bought within the past few years, that you can sell for what you paid, and get out with the DP that you put down (I know, that'd never happen in today's market, but let's say it did....lol). That house sells for maybe $450k, and if you were carrying a $400k mortgage, your monthly P&I was around $2,400.
Now, you come down here and buy a brand new 2,500 sf home in a suburb a similar distance from the city, and that costs $250k max. Assuming the same $50k dp, you've now got a $200k mortgage, which is $1,200/month, a savings of $1,200/month, or $14,400/year. Your current situation is unique because you have alot of equity in your home because you've been in it for some time, and you're also not factoring in the value of that cash you were pocketing in your original assumptions.
Wow- I wrote that and didn't turn it into an "NJ vs the south" post....lol
BTW- I think the other assumptions you've made are about right- the daily food, insurance, gas, etc., costs are just about the same between here and there. The sales tax on food is generally only the county portion, not the state, so it's 2%- on $150 of groceries/week that's $3/week or $150/year- negligible.
about tax advantages if I were to move to one of the "southern states du jour" - what would be the net/net?
I took NC because that's the hot spot, I have a friend who recently moved down and it seems to dominate a lot of the forums.
Granted, this was a very, very rough estimate..anything I may have missed please feel free to add (either way - I know you people won't let anything slide though ):
Assumptions:
DH and my salary is the same (unlikely, but for the sake of apples to apples, let assume)
purchase a similar sized home
same mortgage (so *hopefully* we'd pocket some cash, although the way my house value is falling, I'm not so sure)
*roughly* - I calculated we'd be saving about $3K a year than what we pay now. That takes into account:
higher state income tax in NC
lower property taxes in NC (assume, based on my friend's house, our taxes would go down about 65%)
less writeoffs on federal return - property tax is lower, mortgage interest is same, state income tax is higher...net/net was about $4k more we'd pay in federal tax.
For obvious reasons I don't want to post specific numbers. This does NOT take into account lower car insurance in NC (although I'm not sure about this - we pay about $600/yr each car), and the fact that you pay tax on food and clothing in NC, not here (and I understand food costs are higher there). My homeowners is about $350/yr, don't know how that compares, and my utilities (gas/electric/water/sewer) is about $360/mo (again, don't know how that compares). I don't use toll roads so that's moot. I work from home most of the time so commuting expense would be a wash, probably. What else am I missing?
We could easily blow through that $3K visiting family during the year. Maybe not if we drove.
Thoughts? Although I'm sure this will spiral down into a "NC -vs NJ" thread, that's not my intent. A mature, intelligent discussion about these figures, please.
Are you thinking of turning the light off on us T?
Just thinking here- your post revolves mainly around the tax advantages of moving to NC from NJ- if that's the main or only point for your move (to reduce your tax burden), there are better states to do so. Texas and Nevada both come to mind, and there are others with far lower overall tax burdens as well. As you know, though, the decision to move from NJ to other areas if often driven by far more than just the desire to reduce tax burden.
I did similar calculations. Since I'm a teacher I looked at teacher salaries and benefits in NC & FL vs.NJ. Then factored in the difference in housing, taxes etc. and thanks to all of those union benefits everyone in NJ complains about I'm actually better off here and when my daughter starts school I wont have to send her to private school which is probably where she would have gone in NC or FL because the systems don't compare...there are some areas in those states that are better than others but then housing etc. is higher and you can't afford it on a teachers salary. Of course, I can't afford it here either but the numbers still worked out better here.
I'm thinking of something similar. My wife is a telecommuter and can work from any state in the country. I am considering buying a house in Florida and living there in the winter months (November to May). If we were to purchase a house, I'm wondering if we would be able to tell her employer that we are now Florida residents so we don't have to pay state income tax. I'm tired of the cold weather of NJ. We are burning between 6 and 8 gallons of fuel oil a day. I'm sure we would have to get Florida licenses, etc.
IIRC it wasn't much cheaper to live in NC vs NJ. Especially once we visited and compared houses we would actually be happy in (older established neighborhoods) not the cheap new subdivision hell houses. You thinking of splitting NJ?
We moved to ATL, taxes went from $11k to $2300. No mortgage, auto insurance is half. Most other things are the same. It works for us!
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