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Pay NO Income Tax in These 7 States



Location! Location! Location!

Where you happen to live has a huge impact on how much of your money you get to keep. This is particularly true if you happen to be a high net worth individual, retiree, professional athlete, celebrity, or any other person who happens to fall into the upper “one percent” income category, for that matter.

It’s not surprising, therefore, that the exodus of high net worth individuals from states such as California and New York to places such as Nevada and Florida — places with a more “hospitable” income tax climate — continues. Just ask Tiger Woods, who left California because of high income taxes in 1996.

Tiger+Woods+owns+12+acre+80+million+mansion+Hnltlx3gANRlHow much money did Woods save by moving to Florida?

From 1996 to 2012, the gifted golfer saved a whopping $60.7 million, with savings of up to $7.6 million in taxes in 2012 alone.

A 50% Tax Rate!

California raised state income tax levels to the highest in the nation in 2012. Income tax for high net worth individuals in California is a colossal 13.3%, exceeding even New York’s 8.82%.

When you add federal taxes and the 1% “millionaire” tax passed during the Schwarzenegger era, it’s not uncommon for high wage earners and the top 1% who still live in California to pay a more than 50% income tax rate in federal and state taxes combined.

It’s no wonder that Phil Mickelson, who has amassed a net worth of $180 million, threatened to move from California in 2013 as a result of the highly unfavorable tax climate.

But Woods is not the only celebrity to actually make the move to a state offering income tax benefits.

LeBron-James-Miami-house-Miami-Florida

LeBron James paid a 6% income tax in Ohio when playing for the Cavaliers. In contrast, he pays no home state income tax playing for the Miami Heat.

When you take his $100+ million contract into consideration, he saved millions in state income taxes by moving to Florida, one of seven U.S. states including Alaska, South Dakota, Texas, Washington, Wyoming, and Nevada with no income tax.

This is What Hospitality Looks Like…

As such, states like Texas, Nevada, and Florida have become highly attractive to high net worth individuals, including highly paid athletes and celebrities.

Sure, the favorable climate, warm weather, and lifestyle certainly play a role, but it doesn’t take a math genius to figure out why these states are so attractive. Take Nevada’s “hospitable” income tax climate as an example. It includes:

  • No personal income tax
  • No corporate income tax
  • No franchise tax
  • No gross receipts tax
  • No inventory tax
  • No tax on sale of transfer of shares
  • No inheritance or gift tax
  • No unitary tax
  • No estate tax
  • Competitive sales and property taxes
  • Anonymity of owners — total privacy

We have seen a surge in the demand for luxury homes in markets that offer a lifestyle coupled with tax advantages.

I’m particularly optimistic about continued growth in places such as Lake Tahoe and Las Vegas, where affluent buyers from states including California continue to flood the local market, driving up prices.

According to a report published in the Tahoe Daily Tribune, brokers are seeing more closings in the wealthy enclaves that line Lake Tahoe, with 40% of the sales attributed to Californians looking to avoid the exorbitantly high income tax rates.

I also like Miami’s coastal communities, where we have seen a steady increase in demand. Luxury condo and town home median prices jumped 26.8% in Fort Lauderdale in the first quarter of 2014, and Palm Beach’s luxury market condos and homes jumped 51.1% to approximately 10 million in the first quarter.

Given the continued increase in income taxes in many states and rising salaries coupled with wealth accumulation as a result of rising stock market prices, I believe we will see a further growth in the luxury real estate market in states that offer not only a unique lifestyle but also tax incentives that entice high net worth buyers and the upper “one percent.”

An increase in demand for luxury homes will have a trickle-down effect on homes in every price range in the aforementioned markets, making even the most ground-floor condos an interesting play, thus providing interesting opportunities for everyday investors looking for solid returns on their investments.

Right now, my team is looking at multiple deals in multiple price ranges, so I can provide you with my top picks soon!

Until then, you may also want to check out this report. It outlines an interesting opportunity for real estate investors in the state of Maryland, where a recently discovered loophole is allowing regular investors to buy property at a huge discount and then resell it for extraordinary gains.

Until next time,

Paul Benson Signature

Paul Benson
Global Real Estate Consultant

Source: Wealth Daily 

 

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