Your Money

Aloha!

By Allan Rolnick, CPA

Coronavirus has millions of Americans rethinking where they choose to live, especially crowded cities. Back in February and March, New Yorkers led the charge, fleeing the petri dish that Manhattan had become to vacation homes in plac es like the Hamptons and Martha’s Vineyard. Silicon Valley tech-bros are gazing longingly across the Pacif ic to New Zealand. Few of the urban expats have returned, and many are surprised to find they prefer the pace and community of rural life to wait ing hours for a table at the newest seeand-be-seen bistro or club. But where to settle for good? If you’re on Team Tropical, you should know that Hawaii County, encompassing the entire “Big Island” of Hawaii, is giving mainlanders even more incentive to make the island paradise their full-time home. While the county just raised tax on vacation and investment properties to $11.10 per $1,000 of taxable value up to $2 million, plus $13.60 per $1,000 above that amount, full-time residents will pay just $6.15 per $1,000, no matter how much their homes are worth. If you ever really “needed” an excuse to call Hawaii home, could this be it? Property tax on a million-dollar home averages $10,800 in the United States. But Hawaii has the lowest average property tax rate in the country, and the bill on that same million-dollar home would cost you just $2,880 in Honolulu County. Now imagine shelling out $23,580 on the same million-dollar home in Essex County, New Jersey — without the gentle breezes, perfect beaches, or ‘illima papa bushes with their beautiful yellow flowers! Unfortunately, while Hawaii has the lowest property tax rate, it also has the highest property values. According to Zillow.com, Hawaii’s median home value is $636,541. (If you’re looking for more affordable digs, consider taking a country road to “wild, wonderful” West Virginia, where the median house costs just $108,236.) Hawaii also imposes a transfer tax when you sell your home, ranging from $0.10 per $100 of value on the low end to $1.10 per $100 for homes over $10 million. Hawaii also has one of the highest state income taxes in the country, with a top rate of 11% kicking in on income over $200,000 (singles) or $400,000 (joint filers). Property taxes in general pinch

harder since passage of the Tax Cuts and Jobs Act of 2017. Until then, you could deduct an unlimited amount of state and local income and property

Few of the urban expats have returned, and many are surprised to find they prefer the pace and community of rural life to waiting hours for a table at the newest see-and-beseen bistro or club

tax, so long as you itemized deductions. The IRS even helpfully provided safe harbor sales tax amounts you could deduct if you lived in a state like Texas or Florida with no income tax. The new law caps that deduction at just $10,000. And sometimes, unique properties just mean unique property tax bills. Fox News heir Lachlan Murdoch just bought “Chartwell,” the instantly-recognizable Clampett mansion from the Beverly Hillbillies. (Ironically, it’s set in Bel Air.) He’ll pay $1.3 million in annual tax on his new pad. Of course, he’ll get 25,000 square feet with 18 bedrooms, 24 baths, and a 12,500-bottle wine cellar set on 10 acres with a “see-ment pond” out back — so don’t feel too sorry for him. (Everyone in L.A. knows that Beverly Hills proper is where the poor rich people live.) Coronavirus is likely to inspire all sorts of changes in your life. And many of those changes will involve taxes. So be sure to bring us into those discussions. Remember that today’s trend towards virtual work means we can continue to serve your needs no matter where you move

Allan J Rolnick is a CPA who has been in practice for over 30 years in Queens, NY. He welcomes your comments and can be reached at 718-896-8715 or at allanjrcpa@aol.com.