Miami Woos New York Homebuyers Fleeing Over Tax Law

https://www.bloomberg.com/news/articles/2019-01-11/miami-woos-n-y-s-tax-exiles-as-latin-american-buyers-retreat

by pseudolus • 8 years ago

42 54 8 years ago

credit_guy• 8 years ago

Non-sense. Their example assumes that some new-yorker who earns $10MM as regular income (not capital gains) not only buys property in Miami but also moves with the job there. Well, good luck finding a job that pays $10MM in Miami. But even if you do, it's still non-sense. Here's the tax picture before and after the new law (from the article):

-before: NYC $5.1MM, Miami $4.2, difference $900k

-after: NYC $4.9MM, Miami $3.9, difference $1MM

So for some reason, you decided the NYC lifestyle is worth a $900k hit in your total income (which after tax is about $5MM), but $1MM will make you pack up and move to Miami. Really?

If you earn only capital gains, please note that your property tax rate in Miami is much higher. Sure, you'll be able to deduct more for federal tax purposes, but that's faint consolation as overall, you'll still end up paying more.

All in all, this is probably a submarine piece by the realtors in Miami hoping to get the rich guys in NYC to spend of few minutes even considering buying property there. It doesn't matter that the tax calculus does not make sense, maybe they'll like the sun ...

dahdum• 8 years ago

There are many articles over the years reporting the hedge fund moves from NY/CY to Miami. So they are bringing their $10M jobs with them in that case.

If you’re wealthy enough to travel most of the year for businesss or pleasure, why wouldn’t you make your resident state Florida?

1. https://www.bloomberg.com/news/articles/2018-06-04/florida-n...

2. https://www.reuters.com/article/us-appaloosa-hedgefunds-miam...

ryanackley2• 8 years ago

What the article misses is that it's most likely being sold as a tax dodging scheme. In other words, buy a house in Miami, claim FL residency, avoid all of these taxes but spend most of your time in NY.

patwolf• 8 years ago

Technically you couldn't spend most your time in NY and still claim residency in FL. Laws require you to spend at least half the year in FL and have done other things besides buy a property to show that you really do live in that state.

woofyman• 8 years ago

That makes no sense. If you own property anywhere, you have to pay property taxes. Plus you don’t have to own property to claim residence. Fraudulently or not.

travisp• 8 years ago

Wait, why would capital gains make less of a difference? New York does not have a separate capital gains tax -- it's taxed at the same rate as regular income. It makes zero difference to the article's analysis if your income comes from investments or ordinary income (in fact, I would think that the NY vs FL difference is probably even more tempting to someone with capital gains income even if the raw dollar amount is the same).

You've also mixed up your before and afters for NYC when you tried to copy from the chart (NYC became more expensive after the new law, Miami became less expensive). The difference before the new law was about 700k, and the difference after the new law is about 1.2m. As the article says, the difference between taxes in Miami and NYC has gotten $450,000/year worse with the new law, not $100,000 worse.

I think you're probably right about the overall impact being small, however.

ctlby3• 8 years ago

An anecdote that I previously posted on another thread and will repeat here:

A couple months back, I flirted with moving from NYC to Las Vegas for tax reasons. I was shocked at the expense of luxury housing there, and construction costs were similarly high (I was quoted $450-$500/sqft, on par with NYC). My realtor explained to me that rich Californians were "stampeding" into Nevada and had increased the cost of all things high-end by 50-100%--basically in the span of a year! She was very bearish on the market.

It seems some measure of rich flight is playing out in California/Nevada; enough to transform segments of the housing market. It's not far-fetched to imagine the same with New York/Florida.

jseliger• 8 years ago

I don't know WTF you were looking at, but I was just in LV with my Dad looking at property. Many of the brand new Turnberry high rises (they're like 20 - 35 stories) rent for $1/square foot/month and sell for like $100 - $200/square foot. They are absurdly cheap, as most of the other places he looked, and they're modern.

Keep in mind that some have unreasonable asking prices. So I don't know what you were looking at, but the market is falling in LV (my Dad has been seeing price drops over the time period he's been looking). Here is some quick data via Duck Duck Go: https://ballenvegas.com/las-vegas-real-estate-market-report/...

anomaloustho• 8 years ago

I’m not sure if there’s much of a reason to become downright upset about the article.

As a Miami resident, it’s clear that Miami is extremely influenced by NY and NY’ers living there to begin with. So I’m not sure if this is really news. NY’ers essentially built up what is Miami now and there is a strong sphere of influence from NY in Miami.

Miami is basically a satellite economy of NY. The big thing that Miami doesn’t have is high paying jobs. And tech in Miami is virtually nonexistent.

But wealthy folks residing in Miami don’t really need to worry about landing a decent job in the first place.

C1sc0cat• 8 years ago

If they wanted to save on property taxes move to London :-)

wittyusername• 8 years ago

In the UK instead you pay 'stamp duty', whichever you want to think of it is sort of like paying 10 years of property tax upfront.

appleflaxen• 8 years ago

nothing more seductive than waterfront waiting to be submerged within your lifetime

ourmandave• 8 years ago

It's the next underwater mortgage crisis.

vasilipupkin• 8 years ago

yes, because NYC is so far inland that it doesn't have this problem.

koolba• 8 years ago

There’s two great reckonings coming to high tax States in the coming years.

The first is when people realize that without tax offsets the appetite for their real estate plummets. It’s already started at the high end and is working it’s way down to the standard northeast 4/3/2.5 suburbs.

The second reckoning will come after the tippping point of high income earners leave for low/no tax States like Florida and Nevada. What remains will be an eroded income tax base with decades of unfunded pension obligations. They’ll raise taxes further to compensate for the spread in a vicious cycle that will push out more of the tax base. Fun times ahead.

awinder2• 8 years ago

No one in their right mind is moving from New York to Nevada. More likely, in fact much more likely, is that the double taxation policy that was carved out against high-tax-base states is corrected once Republican national losses continue to pile up.

One can only hope that democrats remember how important it was to harm high-output states when they regain power and provide equivalent justice to the loaner states.

rayiner2• 8 years ago

From 2010-2016, nearly a million people left the NYC metro area for other locations within the US: https://zicklin.baruch.cuny.edu/wp-content/uploads/sites/10/...

jdhn• 8 years ago

the double taxation policy that was carved out against high-tax-base states

It's funny how the same liberals who call for higher taxes on the rich are so against capping a subsidy that primarily benefits rich people. If anything, the tax bill should've gone further and completely eliminated the mortgage and property tax deductions as these deductions primarily benefit the rich.

helen___keller• 8 years ago

I'm not sure I see any evidence the latter one happens in the forseeable future. Many high tax states hold top-performing cities which are struggling to handle massive incoming migration that has been happening a good 20 years.

The biggest gripe in my cost of living is by far housing. If I moved back to my home town in Florida, it would be so I can live near my parents and so I can afford a house . Not for taxes.

I suppose states without top cities, like Vermont, might run into problems. But even that is speculation - how many people actually uproot their lives just to save on state income tax?

rayiner2• 8 years ago

What do you mean “many?” Basically just SF and LA. There is huge net domestic outmigration from day NYC.

milliondollar• 8 years ago

Going from living in VT to NH right now, for those very reasons. A huge number of VT tax refugees along the border of VT and NH.

fiblye• 8 years ago

Demand for real estate plummets and prices drop. Sounds absolutely horrifying.

The high income earners all fly off to states like Nevada, where the population is low and chances to earn a high income are even lower. That's definitely going to happen. Meanwhile, America's megarich continue to settle and grow their wealth in California, New York, and Washington and upcoming rich folk continue to pop up in those states while the best employment opportunities for other people also tend to be in regions where people are, not where tax benefits happen to be the best. Nevada's advantage is less the taxes and more the rapidly growing population and low rents due to a lack of high income earners driving rent prices up.

dsfyu404ed2• 8 years ago

There’s two great reckonings coming to high tax States in the coming years.

Unfortunately all the people that pushed the policy that resulted in these states being high tax* will be able to move to gated communities, expensive suburbs and overpriced downtown apartments in other states. The people who will be left behind to be burnt will be all the poor people who can't escape the hell they didn't create.

Things tend to bounce between extremes so I wouldn't be surprised if in the next 50yr a few currently high tax states go bankrupt then extremely low tax low service then back to some middle ground.

*High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good. A huge amount of the money disappears into an opaque, graft ridden black hole. If people actually got something proportionate in return (like they do in a few parts of Europe) taxes wouldn't be bad.

del82• 8 years ago

*High tax isn't a problem by itself. The problem it that high tax states in the US don't turn around and deliver a proportionate amount of public good.

I certainly agree that there's waste, and more taxes leads to more waste. To your point, though, about "proportional amount of public good", I think there's a case to be made that higher tax areas do generally enjoy better services. An example is in quality of public schools, which is very important to me and my spouse.

NYC and its suburbs (including Westchester and Nassau Counties) are very high-tax areas. If you look at the US News ranking of public high school quality[0], you'll find that 42 of the top 50 public high schools in New York State are in NYC, Westchester, or Nassau; 3 more are in southern Putnam County (just north of Westchester) or western Suffolk County (just east of Nassau).

There are legitimate questions to be asked about how much signal is in USNWR's rankings, but the quality of schools is one of the things that keeps my spouse and me in the NYC metro area.

[0] https://www.usnews.com/education/best-high-schools/search?st...

aNoob70002• 8 years ago

How's the job market in Miami? I left there about 12 years ago, and even though I got paid decent money, real estate prices were crazy and only reflective of the influx of wealthy people from Venezuela and other Central and South American countries.

I currently live near Atlanta, and I feel jobs and affordability are much better here.

xfitm3• 8 years ago

The tech market is terrible. Miami is great socially but it’s not a city to grow your career IMO. I would much rather stay a little farther north - West Palm or Boca. Still, the job market sucks.

AJ007• 8 years ago

Mediocre, with some exceptions like medicine and law, you need to run your own company or work remotely to live very comfortably.

imroot• 8 years ago

I live in Miami, and the tech scene here is...small, and there's not really a lot of potential for moving up/around.

There are some good employers with a startup mindset like Ultimate Software (payroll/HR software) who pay well, but, the pay is marginal for everyone else. ADT and Office Depot are in the Boca Raton area (great if you've got Hadoop skills or retail experience), but, I haven't heard that people are paid above the average around here.

I live in Downtown Miami (and work from home), so, I can't comment on commute:

aNoob70002• 8 years ago

How's the rent in downtown Miami? Last time I passed through Brickell and checked what rentals were going for I almost passed out?

Miami Woos New York Homebuyers Fleeing Over Tax Law

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