How is your tax return this year?

[BBCjunkie]

Here's a rent/buy story. A friend of mine sold his house a few years ago to a couple who had been renting a house in Babylon Village for the past year while waterfront house-hunting and being really choosy. Their landlord decided not to renew their lease and so they were under the gun to find a house to buy before their lease expired in four months. Landlord already had another tenant lined up.

So they buy my friend's house, take out a mortgage, yadda yadda. Two years after the sale my friend hears through the grapevine that his old house is up for sale again (and at a significantly higher price than the people paid for it.) Long story short, the house takes 8 months to sell, asking price going steadily down down down, until finally it sells. After deducting the typical 4% realtor commission it turned out that the people lost $15K vs what they paid my friend for the house two years before. The people did NOTHING to the house in the interim; didn't even repaint. Essentially it became a 2 year house rental.

The taxes on the house were approximately $24K/yr at the time, so just for that they were paying the equivalent of $2000/month in rent, plus whatever the (front loaded) interest on the mortgage payments were, plus the cost of utilities and insurance. Their mortgage was about $500K according to what my friend told me. So figure that living in that house must have cost these people about $5000 per month, all things considered and after rolling their ultimate $15K loss of principal into the mix as well. It's a pretty sure bet that their house rental in Babylon Village was less than that, so on paper it looks like renting was cheaper -- until you factor in that (a) the people were able to deduct almost $50K in SALT during those two years, and (b) my friend's house was 5000 sq ft and on a canal, so the people didn't have to pay marina fees to dock their boat.

So it MAY have come out to the same thing or better in the end for them to own, even just for those two years, rather than rent. Especially if having a big house with docking was important to them. Friend said it was weird that they had changed NOTHING in the house. He went to one of the open houses and said that they hadn't even filled in the nail holes where he'd hung his pictures! LOL So it was almost as if they'd been treating it as a rental. I mean really... who buys a house to live in and changes absolutely nothing??!?!?

ETA: People were Boomer age, not a young couple. Friend said they looked to be in their early 60s probably, and he's a boomer himself.

Back in the early 2000s I sold my house to a retired couple who had been living in Queens, I forget whether they were coming from a small house or from apartment or co-op though. It was a similar situation: They wanted a larger house with more bedrooms and docking right there, so their adult kids and their grandkids could visit by boat and stay over during the summer. They lived there for about 12 years and did a decent amount of work to it while there (new pool, landscaping, driveway, kitchen, redid one of the bathrooms, repainted everything, made a half bath into a full bath, etc.) which probably cost them close to $100K all told. Figure the kitchen and full bath was 50% of that at least.

[kajimenez]

Originally Posted by ShirlMastic Beach

We can do better.

I'm not sure if your comments are tongue in cheek, but as New Yorkers, we pay some of the most highest taxes. The more money we make as middle income earners, the more is taken from us. Where does that money go. The proportion of spending is astronomical compared to other states. What do we see for it? Are our roads better? Are our schools better? Is our water better? What are we actually getting for the money we spend? We spend more than almost all of the states in our nation. What more can we do better?

[Joe63]

The higher standard deduction on federal income taxes led some charitable organizations to worry that an incentive to donate was lessened. After I had gathered my figures and proofs of donations, I discovered that yes, the higher federal standard deduction made that work unnecessary. The surprise came when I transferred the numbers to the New York IT-201 and learned that itemizing deductions (rather than taking the standard) worked better there. The record maintenance was not in vain. Of course, helping charitable organizations ought supply more motivation than just getting a deduction.
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On both federal and state levels, any talk of tax credits (different from tax deductions) is scary because it distorts the role of taxation.

[OhBeeHave]

What's a tax return? After years of having to pay, I do not expect anything to be any different for us. Will be back to grouse or celebrate next month.

[ShirlMastic Beach]

Originally Posted by kajimenez

I'm not sure if your comments are tongue in cheek, but as New Yorkers, we pay some of the most highest taxes. The more money we make as middle income earners, the more is taken from us. Where does that money go. The proportion of spending is astronomical compared to other states. What do we see for it? Are our roads better? Are our schools better? Is our water better? What are we actually getting for the money we spend? We spend more than almost all of the states in our nation. What more can we do better?

These are all great questions for your local politicians. Unfortunately they are not educated to answer them and will revert to finding scapegoats instead of taking responsibility. Unitl they can take responsibility, we'll just continue to keep paying more and more. Politics wasn't supposed to be a trade or profession.

[mathjak107]

Based on agi our effective tax rate this year was 1% less than last year

[NSHL10]

Marginal tax rate down 3%, effective tax rate down 6%.