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Not sure I believe the report. I think the author minimized the exorbitant real estate taxes of New Jersey.
My guess, this is Republican propaganda calling for yet another state income tax cut on personal and corporate rates and on the already low property taxes...the taxes paid by the rich.
(Perhaps matched with another hike in the Sales tax, the major local tax on the poor.)
Not sure I believe the report. I think the author minimized the exorbitant real estate taxes of New Jersey.
My guess, this is Republican propaganda calling for yet another state income tax cut on personal and corporate rates and on the already low property taxes...the taxes paid by the rich.
(Perhaps matched with another hike in the Sales tax, the major local tax on the poor.)
NJ Property taxes are high but necessary because there isn't any city taxes. If you live in NYC you pay a lower property tax but you have to pay city tax.
The bottom line is NYC resident must pay NYC+NYS income tax. If you rent in NJ, you simply pay NJ State income tax so it is much cheaper to live and work in NJ than in NYC.
NJ Property taxes are high but necessary because there isn't any city taxes. If you live in NYC you pay a lower property tax but you have to pay city tax.
The bottom line is NYC resident must pay NYC+NYS income tax. If you rent in NJ, you simply pay NJ State income tax so it is much cheaper to live and work in NJ than in NYC.
Pretty much this^^, but it depends whether you're poor or middle class. In general NYC is tax friendly to the poor, but not so for the middle class and up.
For a couple that makes 300k, and lives in a new $1mil condo in non-prime LIC. Post any tax abatements the property tax would be around 12k+. The NYC income tax on the 300k of income is about 10-11k. So they are really paying 22k+ in property taxes to live in a tiny 2 bedroom condo next to warehouses in a non-prime area of LIC. Not to mention that the NYC income tax portion can't be deducted from itself, while the entire 20k property tax for a similarly priced 3000+ sq feet McMansion in an upscale part of NJ can be deducted. So factoring in the tax deductibility, that 20k property tax in NJ is really 13-14k for a couple with that income while the property tax for the similarly priced condo in queens less than a third the size is 16-17k post deduction and factoring in the NYC income tax. For the poor the situation is entirely reversed since they don't have much income to deduct the 20k NJ property tax against and they also barely pay any NYC income tax if at all.
This is the reason the majority of couples with kids making decent, but not outrageous $$ don't live in NYC. In my department I'm like one of the only ones with kids that actually owns and lives in NYC. I think it's because I'm one of the only ones at work that actually grew up in NYC and transplants are not New Yorkers and will move away in an instant once the fun is over. Pretty much everyone making 150k to 400k lives in NJ, Westchester, LI, or CT. The high rollers making upper six figures+ to seven figures live in Manhattan proper along with the young and/or childless transplants that may make less, but just want to live near work. You have to really love it to live here if you're middle to upper middle class with kids and I question myself a lot whether I should just sell and move instead of feeding the bottomless welfare pit.
Last edited by bumblebyz; 01-22-2016 at 09:12 AM..
I think what you could do like many do is hold on to that NYC property and either convert to rentals or sell for a very high profit. If you live elsewhere but still owns a rental property you are technically a non-resident and only your rental income is subject to NYC income taxes which can be deducted from your state income tax elsewhere.
NYC hides a lot of taxes and breaks them down so they don't appear very high but the sum of all taxes is a very high tax liability.
Pretty much this^^, but it depends whether you're poor or middle class. In general NYC is tax friendly to the poor, but not so for the middle class and up.
For a couple that makes 300k, and lives in a new $1mil condo in non-prime LIC. Post any tax abatements the property tax would be around 12k+. The NYC income tax on the 300k of income is about 10-11k. So they are really paying 22k+ in property taxes to live in a tiny 2 bedroom condo next to warehouses in a non-prime area of LIC. Not to mention that the NYC income tax portion can't be deducted from itself, while the entire 20k property tax for a similarly priced 3000+ sq feet McMansion in an upscale part of NJ can be deducted. So factoring in the tax deductibility, that 20k property tax in NJ is really 13-14k for a couple with that income while the property tax for the similarly priced condo in queens less than a third the size is 16-17k post deduction and factoring in the NYC income tax. For the poor the situation is entirely reversed since they don't have much income to deduct the 20k NJ property tax against and they also barely pay any NYC income tax if at all.
This is the reason the majority of couples with kids making decent, but not outrageous $$ don't live in NYC. In my department I'm like one of the only ones with kids that actually owns and lives in NYC. I think it's because I'm one of the only ones at work that actually grew up in NYC and transplants are not New Yorkers and will move away in an instant once the fun is over. Pretty much everyone making 150k to 400k lives in NJ, Westchester, LI, or CT. The high rollers making upper six figures+ to seven figures live in Manhattan proper along with the young and/or childless transplants that may make less, but just want to live near work. You have to really love it to live here if you're middle to upper middle class with kids and I question myself a lot whether I should just sell and move instead of feeding the bottomless welfare pit.
Probably the first ever actually correct tax analysis I've seen on CD of the situation in suburbs vs NYC for middle, low and upper incomes in NYC. The other factor (psychological) is that in the NYC burbs those moving there with children see exactly what schools, sports fields, pools, and extracirrculars etc they are getting for their tax money. In NYC, its more often of feeling of all the NYC income tax and property taxes that one pays being thrown into a pot for the common good..... but that in fact a lot of that $ isn't spent on the common good, and is wasted, and whether you get good schools or not for your children becomes a bit of a crapshoot. Probably a reason NYC suburbs still remain so in demand even when many other suburban areas are dying or stagnant.
high cost of living areas are high cost for reasons .
they don't become high cost in a vacuum .
the tristate area is high cost because it is desirable to live here because that is where the high paying jobs are .
real estate taxes are high because property values are high .
that is a huge plus down the road when you retire . you can sell a long island hobble for hundreds of thousands of dollars and relocate to cheapsville like a king .
those that lived in cheapsville all their lives rarely have as much as a transplant .
don't forget leverage is your friend , a 150k house that doubles in price is very different than a 600k house that doubles .
Pretty much this^^, but it depends whether you're poor or middle class. In general NYC is tax friendly to the poor, but not so for the middle class and up.
For a couple that makes 300k, and lives in a new $1mil condo in non-prime LIC. Post any tax abatements the property tax would be around 12k+. The NYC income tax on the 300k of income is about 10-11k.
property tax for multifamily (1-3 unit) townhouse in LIC worth over $1mm is under $6k. If you are paying $1mm apartment it best be for the view or location (Manhattan). Co-op also has tax deductions for maintenance (property tax included).
high cost of living areas are high cost for reasons .
they don't become high cost in a vacuum .
the tristate area is high cost because it is desirable to live here because that is where the high paying jobs are .
real estate taxes are high because property values are high .
that is a huge plus down the road when you retire . you can sell a long island hobble for hundreds of thousands of dollars and relocate to cheapsville like a king .
those that lived in cheapsville all their lives rarely have as much as a transplant .
don't forget leverage is your friend , a 150k house that doubles in price is very different than a 600k house that doubles .
That window already closed a long time ago. Unless NYC goes under water, predicted to be in hundred or so years. There are no $150k property in NYC within the 20mi radius in NY. Sure you can find cheap properties in Newark or Far Rockaway but they're hardly that cheap.
10+ yrs ago, there were more people leaving NYC than coming here because the boom in housing in the burbs. The only way to create RE value today is to get in on hotbed properties and they all start at $300k+
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