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I've started to think about where I will live in my retirement years since I'm slightly past mid-career. Also, given that living in NYC is very expensive for the average working person, it will be even harder on a fixed income.
Queensgrl, I too have been tossing around the idea of where I would like to retire outside NYC. I think one thing you should know that wherever you decide, you should look into which states will tax your income (pension, IRA, 457) and how much. You may want to consult with an accountant of that state who can give you a clear idea of what you will be living on after taxes. Florida, Texas and Nevada for example, are very attractive states to many people because of the warm weather and they are tax friendly to many retirees.
Along with income tax, you have to consider sales tax, real estate tax if you decide to purchase a home and taxes on some personal property that some of the states charge as well. For example, Virginia has local governments that charge tax based on a percentage of the original cost of your vehicle every year.
Good luck with what your looking for.
Last edited by akatrk; 06-10-2010 at 07:48 PM..
Reason: Grammar
folks in florida learned that just because you dont have a state income tax its not always cheaper then having one...the money has to come from somewhere...
they have seen property taxes soar, tangible taxes and all sorts of other ways of raising tax money... state inheiratance taxes as well as death taxes can be quite brutal...
even right here in new york you have long islanders complaining about their real estate taxes but they forget our city real estate taxes maybe lower but we have a city income tax
I'm advocating in any way you selling your apt, but let's not overstate things to make a point. Once you leave behind the leverage and tax advantages offered by mortgages, you're not seeing long term returns more than a few points above inflation or better than other asset classes. NTM it's an asset that requires continual cash outlay (property taxes, condo fees, maintenance, etc.).
For someone considering retirement, it's not that hard to run the numbers (ballpark) of selling your $X apt, buying a $Y house elsewhere and investing the difference. NTM lowering your cost base of property taxes, condo fees, etc etc.
with a few exceptional areas residential real estate has barely nudged out the lowly treasury bill long term so you are correct..
in 1987 i paid 169,000 for my house and sold it in the mid 2000's for 335,000...sounds great.
however the same amount plunked into a nothing special mix of diversified fidelity funds was worth 1.8 million.. enough to buy 2 homes even after subtracting out all the rent you would have paid...
once properties are paid for there is no leverage as you said and if you want to compare with leverage than do so for both and figure margin on your alternate investments.
folks like to compare the leverage of real estate but forget other investments can be leveraged too when comparing.
its not about buying something ,catching it lucky in a up market in real estate anymore then it would be about buying alternative investments in the markets and being up 100% in 15 months...its all about long long term returns as these are long term investments.
also if your real estate had a mortgage there is a good chance you paid 2 to 3x the price of the property in interest alone that wasnt reimbursed by the time its paid off as dont forget your spending 3 bucks over and above the cost of the property to get back maybe 1 buck or less.
I'm advocating in any way you selling your apt, but let's not overstate things to make a point. Once you leave behind the leverage and tax advantages offered by mortgages, you're not seeing long term returns more than a few points above inflation or better than other asset classes. NTM it's an asset that requires continual cash outlay (property taxes, condo fees, maintenance, etc.).
For someone considering retirement, it's not that hard to run the numbers (ballpark) of selling your $X apt, buying a $Y house elsewhere and investing the difference. NTM lowering your cost base of property taxes, condo fees, etc etc.
I own my coop outright (it was only 110K), and though I guess the coop pays property taxes I get a rebate; the maintenance is a little over 800 and includes family package cable, electricity, gas, maintenance, and 24 hour gated security.
I don't carry a mortgage but do receive tax advantages because the coop has a mortgage. That's the thing about coops versus condos; I only own shares so any tax advantages from mortgage tax breaks trickles down to me. I also get a STAR tax credit, I guess cuz I have no kidz.
As far as long term returns, as I stated adamantly, NYC real estate is an investment that will always pay off, barring an "escape from New York" scenario. Manhattan is more vulnerable to downturns, but the Bx coop has appreciated in value, albeit modestly. It has no where to go but up. I bought it cheap, and if I ever sell, I'll sell when/if it goes up considerably but I will always maintain at least one NYC residence even if I do extended travel, etc.
Even if you're sick of NYC and want to retire elsewhere, maintaining and subletting your NYC coop/condo will give you income you can use wherever you go. Like I said earlier, my cousin moved to California, kept her NYC coop, and doesn't have to work. 'Nuff said.
with a few exceptional areas residential real estate has barely nudged out the lowly treasury bill long term so you are correct..
in 1987 i paid 169,000 for my house and sold it in the mid 2000's for 335,000...sounds great.
however the same amount plunked into a nothing special mix of diversified fidelity funds was worth 1.8 million.. enough to buy 2 homes even after subtracting out all the rent you would have paid...
once properties are paid for there is no leverage as you said and if you want to compare with leverage than do so for both and figure margin on your alternate investments.
folks like to compare the leverage of real estate but forget other investments can be leveraged too when comparing.
its not about buying something ,catching it lucky in a up market in real estate anymore then it would be about buying alternative investments in the markets and being up 100% in 15 months...its all about long long term returns as these are long term investments.
also if your real estate had a mortgage there is a good chance you paid 2 to 3x the price of the property in interest alone that wasnt reimbursed by the time its paid off as dont forget your spending 3 bucks over and above the cost of the property to get back maybe 1 buck or less.
Yes, there are certainly advantages to selling and investing in more lucrative ventures (like real estate mutual funds lol), but my strategy is to do both. History shows that property in NYC goes up and up. They're not building any more land, and it's prime property. And this way if you get nostalgic and want to return, you still can go home again (lol).
folks in florida learned that just because you dont have a state income tax its not always cheaper then having one...the money has to come from somewhere...
they have seen property taxes soar, tangible taxes and all sorts of other ways of raising tax money... state inheiratance taxes as well as death taxes can be quite brutal...
even right here in new york you have long islanders complaining about their real estate taxes but they forget our city real estate taxes maybe lower but we have a city income tax
It might be worth noting that social security is only 50 percent taxable. So you might be in a retirement tax bracket where you pay no taxes or even get a refund.
I know property taxes in NY/LI are outrageous, but as I said for a coop you only reap the advantages from the coop corporation paying property taxes and mortgage interest...in the form of a tax deduction for the shareholder.
And though it's possible to get a dud tenant, the good thing about coops is that you need board approval so you know your neighbors, both shareholders and tenants, have been screened financially and otherwise.
folks in florida learned that just because you dont have a state income tax its not always cheaper then having one...the money has to come from somewhere...
they have seen property taxes soar, tangible taxes and all sorts of other ways of raising tax money... state inheiratance taxes as well as death taxes can be quite brutal...
even right here in new york you have long islanders complaining about their real estate taxes but they forget our city real estate taxes maybe lower but we have a city income tax
Florida and other states took quite a hit in the economic/real estate downturn, but NYC is the exception to the rule. Yes, there was some temporary depreciation, but it was modest compared to other areas of the country. Florida, Las Vegas, and most other areas of the country were hurting, and I imagine still are.
Queensgrl, I too have been tossing around the idea of where I would like to retire outside NYC. I think one thing you should know that wherever you decide, you should look into which states will tax your income (pension, IRA, 457) and how much. You may want to consult with an accountant of that state who can give you a clear idea of what you will be living on after taxes. Florida, Texas and Nevada for example, are very attractive states to many people because of the warm weather and they are tax friendly to many retirees.
Along with income tax, you have to consider sales tax, real estate tax if you decide to purchase a home and taxes on some personal property that some of the states charge as well. For example, Virginia has local governments that charge tax based on a percentage of the original cost of your vehicle every year.
Good luck with what your looking for.
Just wanted to say again that social security is only taxed at 50 percent which depending on your other income might mean that your taxable income puts you in a good spot tax wise.
For those who have kids, one alternative would be to give or rent the property to them. I believe there are some tax advantages to that; the gift tax law allows up to about 10 or 12 grand per year so possibly the parents could give that toward the maintenance/mortgage. That way it all stays "in the family," and I can't think of a better gift than a piece of NYC real estate.
Yes, there are certainly advantages to selling and investing in more lucrative ventures (like real estate mutual funds lol), but my strategy is to do both. History shows that property in NYC goes up and up. They're not building any more land, and it's prime property. And this way if you get nostalgic and want to return, you still can go home again (lol).
i used to think they werent making anymore of it then i saw them build battery park city right where the water was..then starret city appeared right in the marshes in jamaica bay and co-op city in the swamps....then i realized will rogers may have been wrong when he said that....
Last edited by mathjak107; 06-11-2010 at 03:56 AM..
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