New Jersey taxes

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Topic Author
Ani
Posts: 66
Joined: Wed Aug 22, 2018 10:03 pm

New Jersey taxes

Post by Ani »

Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Jags4186
Posts: 5211
Joined: Wed Jun 18, 2014 7:12 pm

Re: New Jersey taxes

Post by Jags4186 »

Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Unless you are recently graduated doctors or lawyers and have just started making big bucks, based on your current level of assets I don’t think you make enough to afford a house with $25k-30K property taxes. Houses in NJ with $25k-$30k property taxes cost $900k+.
arf30
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Joined: Sat Dec 28, 2013 11:55 am

Re: New Jersey taxes

Post by arf30 »

Those must be mansions, because everyone I know in NJ is paying 6-10k per year in property taxes, myself included.
MikeG62
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Location: New Jersey

Re: New Jersey taxes

Post by MikeG62 »

You could move to PA and buy PA bonds so I don’t see this closing the gap. Also, muni’s are way overbought so don’t expect much in the way of yield.

If you have no reason to live in NJ I’d seriously consider moving. FWIW, I live in NJ myself. If not for the fact that our daughters live in the state, we would likely move out of state ourselves.
Real Knowledge Comes Only From Experience
nolesrule
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Re: New Jersey taxes

Post by nolesrule »

We left New Jersey on July 19th. Our property taxes were about $9300/yr on a $320k-ish 1900sq ft wood frame house in western Morris County.
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cashboy
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Location: USA

Re: New Jersey taxes

Post by cashboy »

i live in nj and am looking hard at pa.

pa property taxes are about 50% (or less) of nj - depending upon where you look. but it is not just property taxes...

pa income tax is also lower. i think 3% flat tax.

people are friendly.

i am recently retired (courtesy of megacorp job eliminations), so i am also looking hard at pa 'as a retiree' since pa does not tax SS, IRA withdrawals or pension - NJ does not tax SS but taxes the rest if you have more than $100,000 a year in total income; with my wife still working it pushes me over the limit.

nj is NOT the 'garden state' (as is says on license plates); it is the 'tax me' state. they tax everything - many hidden taxes - ex: 'new tires tax' in addition to sales tax.

also consider that nj's finanical rating has dropped over time for things like the massively underfunded state pension fund. taxes will only go up in nj - they have to.

https://www.mercatus.org/statefiscalrankings/newjersey

i figured i can easily save $14,000 a year by moving.

i am only in nj until my stepson finishes high school.
Last edited by cashboy on Wed Aug 07, 2019 1:14 pm, edited 3 times in total.
Three-Fund Portfolio: FSPSX - FXAIX - FXNAX (with slight tilt of CDs - CASH - Canned Beans - Rice - Bottled Water)
Starnixer
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Re: New Jersey taxes

Post by Starnixer »

arf30 wrote: Wed Aug 07, 2019 11:45 am Those must be mansions, because everyone I know in NJ is paying 6-10k per year in property taxes, myself included.
Guess it depends on your definition of "mansion". I'm also in NJ and certainly don't consider my house to be a mansion but my property taxes are $15.5k.

Everyone knows property taxes in NJ are high but specific area/town is a big factor. If my house was in a different town (within a 10 mi radius) my taxes could realistically be 30-60% lower or higher.
njinvestor2019
Posts: 61
Joined: Sat Jun 29, 2019 10:18 am

Re: New Jersey taxes

Post by njinvestor2019 »

Jags4186 wrote: Wed Aug 07, 2019 11:41 am
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Unless you are recently graduated doctors or lawyers and have just started making big bucks, based on your current level of assets I don’t think you make enough to afford a house with $25k-30K property taxes. Houses in NJ with $25k-$30k property taxes cost $900k+.
We will need to assume that the houses he is looking are indeed are in that price range.
njinvestor2019
Posts: 61
Joined: Sat Jun 29, 2019 10:18 am

Re: New Jersey taxes

Post by njinvestor2019 »

Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
How do you buy NJ turnpike municipal bonds? I would be interested in doing that myself.
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RootSki
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Re: New Jersey taxes

Post by RootSki »

NJ has unfunded debt obligations of over $200 Billion. I for sure would not be investing any extra money into NJ's eventual financial disaster.

Our 5 year plan is to move to PA.
Grt2bOutdoors
Posts: 23148
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Location: New York

Re: New Jersey taxes

Post by Grt2bOutdoors »

Jags4186 wrote: Wed Aug 07, 2019 11:41 am
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Unless you are recently graduated doctors or lawyers and have just started making big bucks, based on your current level of assets I don’t think you make enough to afford a house with $25k-30K property taxes. Houses in NJ with $25k-$30k property taxes cost $900k+.
That’s not true! Depending on the county and specific town, tax base and source of revenues (commercial vs. residential) the tax rate could be higher or lower.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Location: New York

Re: New Jersey taxes

Post by Grt2bOutdoors »

RootSki wrote: Wed Aug 07, 2019 1:15 pm NJ has unfunded debt obligations of over $200 Billion. I for sure would not be investing any extra money into NJ's eventual financial disaster.

Our 5 year plan is to move to PA.
Which has its own problems.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: New Jersey taxes

Post by Grt2bOutdoors »

arf30 wrote: Wed Aug 07, 2019 11:45 am Those must be mansions, because everyone I know in NJ is paying 6-10k per year in property taxes, myself included.
Where do you live? Must be a town that has large commercial base.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
TBillT
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Re: New Jersey taxes

Post by TBillT »

NJ escapee here.
I would think PA is lower income tax too, so to the extent you can work in PA, PA ought to pay off.
We were in South Jersey, during the time when lots of PA folks were going to NJ, in part due to the Philly wage tax at the time.
But the trend may be the other way now, not sure.

With the the new tax laws, defineitely a trend for weathier taxpayers to escape NY, NJ, CA. We left some years ago for work reasons.
http://garyshilling.blogspot.com/2019/0 ... dents.html
Last edited by TBillT on Wed Aug 07, 2019 1:38 pm, edited 1 time in total.
renegade06
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Re: New Jersey taxes

Post by renegade06 »

My mom lives in Ocean County, NJ (near the Shore). Her taxes are $9k per year and her house is valued at about $500k.

NJ is awful in terms of taxes and governance. I think it will only get worse as they continue to raise taxes. If you have nothing big keeping you there, I'd move over the border to PA. The drive to see family might be a little bit longer, but I can't imagine it would be that bad.
joe-kr
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Re: New Jersey taxes

Post by joe-kr »

I live in Somerset county NJ (central Jersey). My house is about 600k and my taxes are just over 12k. I’m surprised at the 25k number from the OP, unless they are looking at houses over 1 mil. Or just a very high tax town.

For the bonds, I own VNJUX (Vanguard New Jersey Long-Term Tax-Exempt). I would rather own that then a specific NJ bond for some diversification.
Jags4186
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Re: New Jersey taxes

Post by Jags4186 »

Grt2bOutdoors wrote: Wed Aug 07, 2019 1:20 pm
Jags4186 wrote: Wed Aug 07, 2019 11:41 am
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Unless you are recently graduated doctors or lawyers and have just started making big bucks, based on your current level of assets I don’t think you make enough to afford a house with $25k-30K property taxes. Houses in NJ with $25k-$30k property taxes cost $900k+.
That’s not true! Depending on the county and specific town, tax base and source of revenues (commercial vs. residential) the tax rate could be higher or lower.
You’d be hard pressed to find a house with $30k property taxes for much under $900k in NJ. That’s not the same as a $900k home will have $30k property taxes.
Topic Author
Ani
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Re: New Jersey taxes

Post by Ani »

Hello, all thank you for all these replies.

Yes , we're looking to buy a home in the 800 to 990k range and yes were are doctors.
Jags4186
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Re: New Jersey taxes

Post by Jags4186 »

Ani wrote: Wed Aug 07, 2019 1:50 pm Hello, all thank you for all these replies.

Yes , we're looking to buy a home in the 800 to 990k range and yes were are doctors.
👍 my only recommendation would be to make sure you live in a town where you won’t consider sending your kids to private school. This means Millburn/Chatham/Mountain Lakes type towns over Montclair/Hoboken.
Grt2bOutdoors
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Re: New Jersey taxes

Post by Grt2bOutdoors »

Jags4186 wrote: Wed Aug 07, 2019 1:47 pm
Grt2bOutdoors wrote: Wed Aug 07, 2019 1:20 pm
Jags4186 wrote: Wed Aug 07, 2019 11:41 am
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
Unless you are recently graduated doctors or lawyers and have just started making big bucks, based on your current level of assets I don’t think you make enough to afford a house with $25k-30K property taxes. Houses in NJ with $25k-$30k property taxes cost $900k+.
That’s not true! Depending on the county and specific town, tax base and source of revenues (commercial vs. residential) the tax rate could be higher or lower.
You’d be hard pressed to find a house with $30k property taxes for much under $900k in NJ. That’s not the same as a $900k home will have $30k property taxes.
You have not been to Essex county, have you? Visit Montclair for instance. Try Maplewood next, the Oranges (pick one), keep going....they are there and they sell for less than 900k.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
RNJ
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Re: New Jersey taxes

Post by RNJ »

Ani wrote: Wed Aug 07, 2019 1:50 pm Hello, all thank you for all these replies.

Yes , we're looking to buy a home in the 800 to 990k range and yes were are doctors.

Live where you think you can be happiest. Seriously.
njinvestor2019
Posts: 61
Joined: Sat Jun 29, 2019 10:18 am

Re: New Jersey taxes

Post by njinvestor2019 »

renegade06 wrote: Wed Aug 07, 2019 1:35 pm My mom lives in Ocean County, NJ (near the Shore). Her taxes are $9k per year and her house is valued at about $500k.

NJ is awful in terms of taxes and governance. I think it will only get worse as they continue to raise taxes. If you have nothing big keeping you there, I'd move over the border to PA. The drive to see family might be a little bit longer, but I can't imagine it would be that bad.
It all depends. If you are a federal employee your traditional TSP (401K) contributions are not tax deferred. Therefore, if you move to a different state then would tax you again on your contributions. NJ you would get a prorata share deduction on what you paid versus your earnings.

Why leave if you already have been taxed?
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TomatoTomahto
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Re: New Jersey taxes

Post by TomatoTomahto »

Jags4186 wrote: Wed Aug 07, 2019 2:02 pm
Ani wrote: Wed Aug 07, 2019 1:50 pm Hello, all thank you for all these replies.
Yes , we're looking to buy a home in the 800 to 990k range and yes were are doctors.
👍 my only recommendation would be to make sure you live in a town where you won’t consider sending your kids to private school. This means Millburn/Chatham/Mountain Lakes type towns over Montclair/Hoboken.
That’s what we thought when we moved to Short Hills (shares government and schools with Millburn). Things were peachy-ish in elementary school, but the great schools were anything but for my kids. IME, if they make a tracking error with your kid, they will not reevaluate; too busy reading their press clippings. So, high property taxes plus $40k/year/child for private school.

No longer an issue for us: our kids are older and we moved to a Boston suburb. We love the upgrade.
I get the FI part but not the RE part of FIRE.
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Ged
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Re: New Jersey taxes

Post by Ged »

joe-kr wrote: Wed Aug 07, 2019 1:47 pm I live in Somerset county NJ (central Jersey). My house is about 600k and my taxes are just over 12k. I’m surprised at the 25k number from the OP, unless they are looking at houses over 1 mil. Or just a very high tax town.

For the bonds, I own VNJUX (Vanguard New Jersey Long-Term Tax-Exempt). I would rather own that then a specific NJ bond for some diversification.
I live in Monmouth County. My house is valued at about $450K and I pay about $8K/yr in RE tax. I'm retired here and currently pay no state income tax because NJ exempts SS income and my other income total is below $100,000/yr.

I can live with that.

However I would not own NJ state bonds.

I agree with TomatoTomahto about the schools in Massachusetts though. Simply the best in the US, and by a lot.
Last edited by Ged on Wed Aug 07, 2019 2:38 pm, edited 1 time in total.
HMdocinPA
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Re: New Jersey taxes

Post by HMdocinPA »

Doctor here that moved from NJ to PA, I left for my residency and never went back. Car insurance is half, income tax is half, live in a nice home in a great town with excellent public schools. Property taxes are very town dependent even in eastern PA so it takes some research. Doctors in general also make more in PA I believe. Worth the move for me, probably worth it for you as well.
Jags4186
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Re: New Jersey taxes

Post by Jags4186 »

Grt2bOutdoors wrote: Wed Aug 07, 2019 2:13 pm You have not been to Essex county, have you? Visit Montclair for instance. Try Maplewood next, the Oranges (pick one), keep going....they are there and they sell for less than 900k.
I’ve only lived in Essex County for my entire life except for the 4 years I was in college. Any cursory glance at Zillow listings would confirm what I’m saying.
retiringwhen
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Re: New Jersey taxes

Post by retiringwhen »

Jags4186 wrote: Wed Aug 07, 2019 3:24 pm
Grt2bOutdoors wrote: Wed Aug 07, 2019 2:13 pm You have not been to Essex county, have you? Visit Montclair for instance. Try Maplewood next, the Oranges (pick one), keep going....they are there and they sell for less than 900k.
I’ve only lived in Essex County for my entire life except for the 4 years I was in college. Any cursory glance at Zillow listings would confirm what I’m saying.
One persons mansion is another’s hovel.
retiringwhen
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Re: New Jersey taxes

Post by retiringwhen »

The best way to do better with taxes is to leave NJ. Pa is the best option if want to be nearby. It is not optimal though. Probably 35 states would be better if you are willing to leave the NYC area.
Topic Author
Ani
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Re: New Jersey taxes

Post by Ani »

joe-kr wrote: Wed Aug 07, 2019 1:47 pm I live in Somerset county NJ (central Jersey). My house is about 600k and my taxes are just over 12k. I’m surprised at the 25k number from the OP, unless they are looking at houses over 1 mil. Or just a very high tax town.

For the bonds, I own VNJUX (Vanguard New Jersey Long-Term Tax-Exempt). I would rather own that then a specific NJ bond for some diversification.
I am looking at homes in denville/ mendham/randolph area- homes costing from 700-900k/1 million range anywhere between 20-25k in per annum taxes
Topic Author
Ani
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Re: New Jersey taxes

Post by Ani »

HMdocinPA wrote: Wed Aug 07, 2019 2:37 pm Doctor here that moved from NJ to PA, I left for my residency and never went back. Car insurance is half, income tax is half, live in a nice home in a great town with excellent public schools. Property taxes are very town dependent even in eastern PA so it takes some research. Doctors in general also make more in PA I believe. Worth the move for me, probably worth it for you as well.
PA has it good for doctors. Great homes, low taxes.
I actually work in PA and commute from NJ. My wife works in Morristown, So we are stuck in NJ.
exoilman
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Re: New Jersey taxes

Post by exoilman »

MikeG62 wrote: Wed Aug 07, 2019 11:51 am You could move to PA and buy PA bonds so I don’t see this closing the gap. Also, muni’s are way overbought so don’t expect much in the way of yield.

If you have no reason to live in NJ I’d seriously consider moving. FWIW, I live in NJ myself. If not for the fact that our daughters live in the state, we would likely move out of state ourselves.
+1. children and grandchildren :D
exoilman
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Re: New Jersey taxes

Post by exoilman »

RNJ wrote: Wed Aug 07, 2019 2:19 pm
Ani wrote: Wed Aug 07, 2019 1:50 pm Hello, all thank you for all these replies.

Yes , we're looking to buy a home in the 800 to 990k range and yes were are doctors.

Live where you think you can be happiest. Seriously.
+1
Grt2bOutdoors
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Location: New York

Re: New Jersey taxes

Post by Grt2bOutdoors »

Jags4186 wrote: Wed Aug 07, 2019 3:24 pm
Grt2bOutdoors wrote: Wed Aug 07, 2019 2:13 pm You have not been to Essex county, have you? Visit Montclair for instance. Try Maplewood next, the Oranges (pick one), keep going....they are there and they sell for less than 900k.
I’ve only lived in Essex County for my entire life except for the 4 years I was in college. Any cursory glance at Zillow listings would confirm what I’m saying.
Northeast corner of Essex county, the taxes are the taxes and the homes are not selling for $900k. Zillow is hardly a reputable source of home values. What Zillow says and what they sell for are two different things.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Grt2bOutdoors
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Re: New Jersey taxes

Post by Grt2bOutdoors »

Ani wrote: Wed Aug 07, 2019 4:01 pm
joe-kr wrote: Wed Aug 07, 2019 1:47 pm I live in Somerset county NJ (central Jersey). My house is about 600k and my taxes are just over 12k. I’m surprised at the 25k number from the OP, unless they are looking at houses over 1 mil. Or just a very high tax town.

For the bonds, I own VNJUX (Vanguard New Jersey Long-Term Tax-Exempt). I would rather own that then a specific NJ bond for some diversification.
I am looking at homes in denville/ mendham/randolph area- homes costing from 700-900k/1 million range anywhere between 20-25k in per annum taxes
That’s Morris county. All those towns are nice, Randolph is very nice, so is Mendham. Denville has the train station, not sure how the parking there is though. Last time I was there it had 5 spots.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
Trader Joe
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Re: New Jersey taxes

Post by Trader Joe »

Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
I would move out of NJ.
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Ani
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Re: New Jersey taxes

Post by Ani »

njinvestor2019 wrote: Wed Aug 07, 2019 1:12 pm
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).
We also have a 6 month emergency fund saved up in our checking account.
For a home down payment, we have around 260k saved in an online saving account.

The problem is we live in New Jersey where the homes we like have property taxes in the 25 to 30k range.

I see my neighbors in Pennsylvania State paying 10 to 15k for exactly similar homes(with a comparable price) :annoyed

One option is to move to Pennsylvania, but we live in NJ because of proximity to family.

Other than proximity to family, we have no other financial benefit to living in NJ, as we don't work in NYC or have a business in NJ. Our jobs would actually pay more if we moved to a less populous state.

So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.


Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
How do you buy NJ turnpike municipal bonds? I would be interested in doing that myself.


Im not sure,was hoping to get some ideas here,

But, this thread has evolved more into leave new jersey / discussion on NJ towns.

I understand that nj state absolutely sucks in terms of taxes(and might get worse in future)

I'm trying to answer the question--- how can i make living in NJ work for me. Maybe I am being unrealistic. Ill keep trying though.

I do appreciate everyone taking the time to respond to the thread :sharebeer
Golfview
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Re: New Jersey taxes

Post by Golfview »

I live in New Jersey and can think of two homes presently in the area that are priced slightly above 1million dollars each and there taxes are the reason they can't sell them ,the taxes are over 50 thousand dollars a year so who's going to pay that?I have to admit though the homes are beautiful!
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grabiner
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Re: New Jersey taxes

Post by grabiner »

While you may want to buy NJ municipal bonds, you shouldn't buy them for the purpose of offsetting the property taxes. Municipal bonds are a way of investing your money, and you should choose to invest your money to optimize the trade-off between risk and return.

In a high tax bracket, you probably want to hold municipal bonds for your bond holdings, but holding too much in one state adds to the risk that something will happen in that state. My usual recommendation for NJ investors with Vanguard is to hold half your bonds in Vanguard Limited-Term Tax-Exempt, and half in NJ Long-Term Tax-Exempt. This gives you an overall intermediate-term duration, with only half your bonds in NJ, but more than half your bond income exempt from NJ tax.

Another alternative for avoiding NJ tax is I-Bonds; these are tax-exempt in all states, and the federal tax is deferred until you cash them in. However, the amount you can buy is limited.
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retiringwhen
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Re: New Jersey taxes

Post by retiringwhen »

Ani wrote: Wed Aug 07, 2019 5:59 pm I'm trying to answer the question--- how can i make living in NJ work for me. Maybe I am being unrealistic. Ill keep trying though.
First off, grabiner's advice about your Muni idea is spot on. Muni's only make sense when compared to like investments, not property taxes.

Next: In 1989, my future wife and I were looking at a situation that was similar (but not yet nearly as bad tax-wise). Our decision was to move West. We bought a home in Somerset County (Branchburg) and later moved to Hunterdon County (Readington). We have owned beautiful homes that would be unaffordable in Essex/Passaic. If you want to stay and work in NJ, look for a western suburb that is commutable.

These days, very nice houses can be purchased in Readington for far less than $700K and under $20K property taxes.

We love the more country feel and activities, room to stretch, quieter environment, etc.

We also loved the fact we bought a nice home that was less than 20 years old for the price of an unimproved Cape Cod with knob and tube wiring in Chatham. (this was true in 1989, we seriously considered bidding on a house that still was completely wired with knob and tube! we came to our senses when we found we could get central air for about 5% less out west :shock: )

It is a faustian bargain though, on a dollar for dollar basis, property tax rates are possibly even higher out here (as a percent of value). Also, housing prices have stagnated for the past 15 years here and you will likely not come out ahead from an investment perspective.

Of course, PA is only another 25-30 miles west. You can cut your housing price (and overall taxes even more) in about 1/3 again if you want (We are likely going to do that within the next 3 years as we look for a house and community to transition to retirement)
bearcub
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Re: New Jersey taxes

Post by bearcub »

I pay 10 grand property tax while living in a Bergen County town. Only thing keeping me here is my 90 yr.old MIL. Not mad though cause I actually really love + get along well with her. Joke is that she will outlive me. LOL. I hold TIPS in IRAs. In taxable account I hold CDs,cash, + a few widow stocks that my wife refuses to part with. Best wishes.
austin757
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Re: New Jersey taxes

Post by austin757 »

We pay close to $12k in property taxes in Monmouth County. I am also looking hard at PA. Most likely up in the Pocono area or thereabouts. I will really miss being so close to the beach and I like NJ for the most part, but the cost is hard to justify. I work in Philly but prefer living way outside of the city. Much cheaper options overall in PA vs. NJ.
WJW
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Re: New Jersey taxes

Post by WJW »

Having lived in highly taxed Northern NJ my whole life, DW and I justify it by owning businesses and rental properties. NJ gets a bad rep but we appreciate the diversity of the culture and being able to pop into NYC with a 30 minute train ride. As well as get to farms, beaches and "mountains" all within an hours drive. I prefer the climate to most other areas of the US and actually enjoy a good snow storm.
Last edited by WJW on Thu Aug 08, 2019 8:37 am, edited 1 time in total.
MikeG62
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Re: New Jersey taxes

Post by MikeG62 »

Ani wrote: Wed Aug 07, 2019 5:59 pm
njinvestor2019 wrote: Wed Aug 07, 2019 1:12 pm
Ani wrote: Wed Aug 07, 2019 11:37 am Hello all,

My wife and I are in our mid 30s. I've been reading this forum and have around 200k invested in vanguard funds(total stock/bond funds in iras/401k/taxable brokerage).

...So, I've been thinking, if I can find a way to generate at least 10 to 15k from New Jersey state , I would be able to offset at least half of the property taxes per annum.

The way I could think of to do this is to buy NJ turnpike municipal bonds. Low risk of default.
Won't pay taxes on interest because I live in NJ.

Is there any problem with this line of thinking?
Comments , criticisms everything is appreciated.

Thanks!
How do you buy NJ turnpike municipal bonds? I would be interested in doing that myself.

Im not sure, was hoping to get some ideas here,
I tried to comment on buying muni's above when I said they are way overbought these days (have been for the last 12 months). So yields are quite low.

FWIW, I own 38 individual muni bonds purchased over many years, one by one in the secondary market. Four of those bonds are Turnpike Authority bonds. Many others are from other issuers in the state of NJ. So you could buy any bond from a NJ issuer. The problem is current yields are not all that attractive. FWIW, I use a full service broker to source my muni bonds and he has not presented me with a single muni bond to consider in over a year now. Every time I talk with him all I hear is about how overbought the muni market is. A few articles in the WSJ in the last few weeks saying the same thing.

If you want to buy NJ paper, call Fidelity (or whomever your broker is) and ask them to present you with a few bonds to consider. PM me and let me know how you make out. If you are in or near the top Federal and NJ state income tax brackets, then they could possibly make sense for you. Or buy shares in an intermediate term NJ muni fund.

For example, you can buy FNJXX (Fidelity's NJ intermediate term muni fund). Average duration is 6 years. Current 30-day SEC yield is whopping 1.58%. If your combined marginal rate is 40%, this translates to taxable equivalent yield of 2.6%. Could make sense for you.
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LK2012
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Re: New Jersey taxes

Post by LK2012 »

Creeping up to $7000 on a house appraised at less than $150,000. In a good school district, but wow. Over the years it really adds up.

As to the OP's question, I would listen to the wise man, grabiner.

As to the larger question of how hard do you work/plan just to stay in this very high-tax state, it is a personal, often family-oriented decision. The garden state has great advantages, and its own distinct character and disadvantages.

But the bottom line is that - even if you are both doctors with good incomes - it definitely is a very expensive place to live, and the tax changes that affect property taxes have not helped NJ residents.
sschoe2
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Re: New Jersey taxes

Post by sschoe2 »

Have similar problems in Illinois.

I'd put everything on the scale. I'd pick the place with the highest salary/COL ratio that has an acceptable quality of life, buy the minimum house that meets your needs.

I am very frustrated with Illinois (tough to be specific without violating board rules on politics and swearing) but getting a good job in my field (Chemistry) is extraordinarily difficult and as a result I have no appetite to take any risks with my employment. It took me 3 years to find a job that even had benefits as most companies won't even hire chemists except as contractors. Therefore the only option I felt I had was to live here in the least amount of house I could tolerate with the option to possibly rent a room in the future, shelter some of my money by maxing out my t401k, keep an eye on things here and be active, and get the heck out when I retire.
Thegame14
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Re: New Jersey taxes

Post by Thegame14 »

arf30 wrote: Wed Aug 07, 2019 11:45 am Those must be mansions, because everyone I know in NJ is paying 6-10k per year in property taxes, myself included.
my house is worth around $475K, and we pay $12K, my parents house is around $550K and they pay $15K, no one in north jersey is under 10K unless you have a condo
jb1
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Re: New Jersey taxes

Post by jb1 »

Off topic but I moved from NJ to NC and couldn’t be happier. I’m 28, purchased a house where property taxes are $1200 a year, and I’m making 50k a year living next to the beach. Life is good.
rexhat
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Re: New Jersey taxes

Post by rexhat »

Def depends on county. Morris tends to be lower so its good you are looking there. I know someone with a house near $2M paying 30k in taxes there so for $1M might be able to find a house in the $15k tax range.
JackoC
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Re: New Jersey taxes

Post by JackoC »

Ged wrote: Wed Aug 07, 2019 2:34 pm
joe-kr wrote: Wed Aug 07, 2019 1:47 pm I live in Somerset county NJ (central Jersey). My house is about 600k and my taxes are just over 12k. I’m surprised at the 25k number from the OP, unless they are looking at houses over 1 mil. Or just a very high tax town.

For the bonds, I own VNJUX (Vanguard New Jersey Long-Term Tax-Exempt). I would rather own that then a specific NJ bond for some diversification.
I live in Monmouth County. My house is valued at about $450K and I pay about $8K/yr in RE tax. I'm retired here and currently pay no state income tax because NJ exempts SS income and my other income total is below $100,000/yr.

I can live with that.

However I would not own NJ state bonds.

I agree with TomatoTomahto about the schools in Massachusetts though. Simply the best in the US, and by a lot.
I agree, the way to deal with NJ taxes is just pay them, or move elsewhere. Getting yourself further caught up in the long run slow motion train wreck of NJ finances by buying NJ bonds is not the solution. :happy Seriously, I used to own VNJUX, but not anymore.

I'm from NY (city) originally and live like a mile away from the west shore of Manhattan in NJ, but have for a long time so I guess I'm 'from' NJ. I live in this area because it's home, two grown kids live within blocks, another a couple of hours drive and if we moved it would be someplace much farther. Our prop taxes are around 1% of market value, but market values are quite high here, and it's a lot of money. If we moved to say comparable RE price place in Brooklyn we'd pay less prop tax probably, but 3.87% (is it? something like that) City income tax on top of NYS tax which is similar to NJ so we would not come out ahead. Looking around various other places in NJ, now that I no longer work in the City it's not necessary to be as close as we are, I've never found the cost difference to be compelling enough to overcome inertia. I do sometimes run numbers of how much we'd save in zero income tax states with reasonable prop taxes though, and it's tempting, but those places are far away.
FootballFan5548
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Re: New Jersey taxes

Post by FootballFan5548 »

I currently live in Monmouth County, very nice town, good schools, close to the coast. Our home was purchased for roughly $1M 3 years ago and our taxes are roughly $18k.

I grew up in Essex County. The taxes up there were asinine and considerably more than Monmouth County. I love NJ. I love the coast, I work in NYC, I love the schools and have family close by. I married a jersey girl so realistically will never leave.... but boy do the taxes stink.
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