The draw of the Big Apple: there’s nothing quite like it. There’s just something magical about the bright lights of New York City. But, unless you’re prepared to pay for it, then the city so nice they named it twice could be just a dream. Even if you have enough to buya home in the area, you might not have enough to pay the taxes. So, if you’re looking to move the big city, then make sure you can afford the tax bill.
Property Taxes Are Sky High
Here’s why you need to be ready. Property taxes in the entire tri-state area are generally right around 10 percent. That’s right. If you own a home in New York or the surrounding area then you would have to set aside 10 percent of your hard-earned money just to pay your property taxes. Of course, it’s not a flat rate, but as one example, homeowners in the Westchester area pay about $15,000 a year on average in property taxes. That is roughly 10 percent of the average adjusted gross income in that area, which is $148,775.
Manhattan Also High on the List
Manhattan residents pay about $14,400 annually in property taxes, but their average income is roughly $60,000 more than residents’ in Westchester County. So Manhattan residents are generally paying a smaller percentage of their income to property taxes. But $14,400 is still a hefty bill and it’s enough to come in second place in the tri-state area. You don’t have to look much further to find the rest of the counties with the highest property taxes. Two more counties in New York, five counties in New Jersey and one county in Connecticut make up the rest of the top 10 most expensive counties for property taxes.
Renting Is Another Option
If you’re looking to buy in the area, then you have no choice to consider the potential property tax bill. That’s why for some, renting has become a more feasible option. The numbers bear that out. According to a report from Zillow, from 2006 to 2016, the renter rate in the tri-state area has increased five percentage points to 36 percent. Part of the problem for New Yorkers is the new Tax Cut and Jobs Act. Homeowners used to be able to deduct their entire property tax bill from their taxes. But starting this year, they can only deduct up to $10,000in state and local taxes from their federal returns. Anyone with annual property taxes exceeding $10,000 is left to foot the entire bill, without any additional deductions.
Check Your Numbers
For some the high taxes aren’t enough to persuade them to look outside of the Big Apple area. But for others, the high property tax bill could be too much to swallow. So if you want to come to the New York City area, or the western part of the state, you better be sure the tax bill fits into your budget.
The post Consider the Taxes if You’re Buying in the Big Apple first appeared on Advisors to the Ultra-Affluent – Groco.