Should you leave New York in retirement? As a REALTOR in Delaware for 20 years, I dealt with many New Yorkers and others from Connecticut and North Jersey looking ahead to their retirement. Ever since the real estate crash of 2008, the market has gone up every year. So has the stock market, which opened up opportunities to cash out on their existing home and decide where and how they wanted to spend those retirement years.
Higher property values also meant higher property taxes for some. Then, starting with the 2018 tax year, the maximum SALT deduction available was reduced to $10,000. Previously, there was no limit. Here’s an article that talks more about that impact – SALT Deductions. On top of this, along came COVID, and offices shut down. As remote work and Zoom meetings became the norm, so did early retirement and accelerated decisions about relocating.
Hello Delaware, North Carolina, Florida!
A new group of buyers began to flood the market in Delaware, North Carolina, Florida, and other attractive markets. And, those that had vacation homes decided to upgrade them and make them primary. Why not work remotely from the beach house and travel when necessary to make an occasional in-person meeting?
The average age of relocating retirees dropped, and sales soared. But, not everyone who thought about leaving New York ended up doing so. Whenever I think of New Yorkers I had a chance to work with, a few always stand out in my mind.
Maria and Joe, the Jets fan
Maria filled me in on their upcoming retirement and their desire to escape Long Island taxes. Her husband, Joe, didn’t contribute much. The look on his face said, “what am I doing here? I don’t want to be here,” as he folded his hands over his green Jets sweatshirt and sat there. They had never been to Delaware before and admitted the only reason they were there was that they heard about the low property taxes.
As she peppered me with questions, I looked over at her husband and asked, “Joe, where are you from in New York?” He glared back and said, “I was born in Flushing General Hospital!” “So was I”, I responded, catching him off guard. From then on, he relaxed, and we had a pleasant conversation.
They shared their wish list and what they wanted to spend, and I had to tell them that it just wouldn’t work. Delaware property taxes are a fraction of what they paid on Long Island, but home prices were not as low as expected. They equated low taxes with inexpensive real estate, but the Delaware Beaches are a resort area. In comparison, new home prices were less than new homes in New York but not low enough in this case. They decided to stay in their current home.
The lesson in this story is that low taxes are just that, lower taxes. On a comparable home, you will pay much less in property tax in Delaware than you would in New York or New Jersey, Connecticut, or anywhere in the surrounding states. On top of that, Delaware has no Sales Tax. But the purchase price of your dream home might not be feasible; how much are you willing to compromise?
Rose, the New York Mom
Rose had lived in New York her entire life. She was thinking of leaving New York at retirement and made her first visit to Delaware, looking for a retirement home, but it was clear from the beginning that she did not want to move.
Why did she come? Like Maria and Joe, she had heard that property taxes in Delaware were only 10% of her current tax bill and that homes were more affordable. However, that was all she knew, so I decided to give her a quick tour. I bundled her into the passenger seat, and off we went. I called it my Circle Tour.
She did not seem impressed, and the first thing she asked was, “can you take me to some neighborhoods on higher ground? It’s too flat here.” I had to laugh and tell her we did not have that. She did not seem amused! Delaware is flat if you haven’t noticed. Your aging knees will be very happy to ride your bike for hours and hours on nice flat paths and roads. But if you are looking for mountains or even hills, you won’t find them in Delaware.
Her other requirement was to find a multifamily home so that her two sons could move too. She was still thinking of the type of properties you could find back in Brooklyn or the Bronx.
What is a multifamily home?
Google multifamily housing in New York, and you’ll find descriptions like this –
What Is Multifamily Housing? A multifamily home is any residential property that contains more than one housing unit, such as a duplex, a townhome or an apartment complex. If a property owner chooses to live in one of their multifamily units, it’s considered an owner-occupied property.
New duplexes or townhomes being built now, at least in Delaware, are sold separately, not together.
Escaping From and Moving To
These two stories remind us that “escaping from and moving to” somewhere are two different motivations. Leaving New York at retirement will help you escape from high taxes, but it’s a negative motivation. If you can find positive reasons to relocate, you increase your chances of being happy in your new location.
Loved it!