New Yorkers Now Top Spenders For Miami Homes

 

Written by Samantha Joseph

New Yorkers now top spenders for Miami homes

New Yorkers are emerging as the darlings of local real estate. Accustomed to expensive property and wanting to escape state taxes, they’re outspending other buyers to set up a local home base.

“They’re now competing with the South Americans, and in a lot of the cases the New Yorkers are willing to pay more,” said Helen Jeanne Nicastri, the previews international specialist at Coldwell Banker who this year sold actress Rosie O’Donnell’s $16.5 million Star Island house to a New Yorker.

“That’s how they’re getting into the market. Previously it was the South Americans who were willing to pay more than the locals,” she said. “The prices we are offering here are substantially lower than what they are used to paying in New York and other cities.”

Local property values have been a major draw to American homebuyers in the past three years, said Ron Shuffield, president and CEO of Esslinger-Wooten-Maxwell Realtors.

“When you compare with other world centers we are a fraction of the cost. You can literally buy three or four of our Brickell Avenue condos for the price of one in New York,” he said.

That’s why New York has become the area’s leading feeder market, accounting for about 15% of luxury real estate sales this year – up five percentage points in the past 12 months, said Jeff Morr, CEO and founder of Majestic Properties, and chairman of the Master Brokers Forum, a group whose members have reached $5 million in annual sales.

“They’re coming from a more expensive market, so they can deal with the prices better than someone from a low-value area of the country,” he said.

They’re dealing better too than buyers from other countries.

Howard Lorber says brokerage Douglas Elliman had initially geared its luxury oceanfront Miami Beach condominium sales to international buyers. But the $2.5 million to $50 million price tag for condos at Faena House made him think the project would be better suited to a different market.

“I was right. When you look at all the people who have bought, they are all New Yorkers,” he said last week at the Urban Land Institute’s Miami Condo Market Symposium.

With deep pockets and low sensitivity to high real estate prices, these Americans are outspending their Latin counterparts.

“Who else but a New Yorker would think $3,000 per square foot is cheap?” said Mr. Lorber, CEO of Vector Group Ltd. and chairman of Douglas Elliman.

“A lot has been made about the importance of the international buyer, but the phenomenon now is redefining the relationship between Miami and New York,” said Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm. “In some ways, Miami competes with The Hamptons.”

Part of the willingness to spend comes from a desire to avoid rising state income taxes that have top earners parting with huge chunks of their earnings.

“If you earned $1 million in New York and paid 12% combined state and city income taxes, that’s $120,000,” said Mr. Morr. “If you’re able to homestead in Miami and not pay those taxes, that would buy you a $1.5 million house.”

How? The cost of finance a $1.5 million house with taxes, insurance and mortgages is about $10,000 per month or $120,000 a year.

“You’d have a free house,” he said. “With the money you’d save by living in Florida, you could live in a $1.5 million house.”

Some states are looking to rein in citizens looking to avoid income tax, but Florida has long been an attractive haven for such dollars.

And with a thriving urban art scene that includes ballet, new museums and cultural festivals, marketers say Miami-Dade is in sync with “the New York state of mind.”

“These buyers are following in the footsteps of their grandparents who also came here, but now it’s different,” Ms. Nicastri said. “The earlier group came to retire, but this crowd is coming to play.”

The market’s not only attracting native New Yorkers, it’s also drawing wealthy part-time residents of the northeastern metropolitan area.

“They’re adopting the same lifestyle,” Ms. Nicastri said. “They’re adding Miami to New York. And Brazilians who come here also adding New York [real estate], so it’s going both ways. New York has become a very important market for us.”

But with brokers reporting a 25% spike in purchases from New Yorkers, Mr. Shuffield said, “The big story is the return of the American buyer to Miami.”

 

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Is There a 3.8% House Sales Tax in the Health Care Bill?

 

There has been a lot of talk about the new Health Care Bill and how it would affect you when you sell your South Florida home or condo. I’ve provided some information for you but just a note I am not an accountant and give you this information just as a simple answer to the misconception. Understand that, when it comes to IRS regulations, you should check with your accountant for the most accurate and up-to-date information.

Fact Check.org explains it this way:

The truth is that only a tiny percentage of home sellers will pay the tax. First of all, only those with incomes over $200,000 a year ($250,000 for married couples filing jointly) will be subject to it. And even for those who have such high incomes, the tax still won’t apply to the first $250,000 on profits from the sale of a personal residence — or to the first $500,000 in the case of a married couple selling their home.

We can understand how this misconception got started. The law itself is couched in highly technical language that only a qualified tax expert can fully grasp. (This provision begins on page 33 of the reconciliation bill that was passed and signed into law.) And it does say the tax falls on “net gain … attributable to the disposition of property.” That would include the sale of a home. But the bill also says the tax falls only on that portion of any gain that is “taken into account in computing taxable income” under the existing tax code. And the fact is, the first $250,000 in profit on the sale of a primary residence (or $500,000 in the case of a married couple) is excluded from taxable income already. (That exclusion doesn’t apply to vacation homes or rental properties.)
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Owning a Home, The BEST Investment Out There

 

“[R]enters have only a fraction of the net wealth of owners. Near the peak of the housing bubble in 2007, the median net wealth of homeowners was $234,600—about 46 times the $5,100 median for renters. Even if homeowner wealth fell back to 1995 levels, it would still be 27.5 times the median for renters.”

After reading this article I had to share with you and reiterate that you future financial security LONG TERM is in Real Estate!

Thanks Steve Harney of Keep Current Matters

We recently posted Real Estate: Today’s Golden Opportunity comparing the current housing market to the market for gold about a decade ago. Some commented on the fact that you can’t compare gold to real estate as an investment as gold is a very liquid asset and it would take more time and effort to sell a house. We were not trying to make the case for real estate vs. gold as an investment in our blog. We were just showing that all investments go through cycles and that the best time to buy any investment may be when everyone is saying not to.
However, since the subject of comparing real estate to other investments has come up, let’s take a closer look. There are two major advantages to investing in a home of your own rather than another option:

  • You Can’t Live in Your IRA

    When you buy your own home you are not taking available dollars away from another investment. You are replacing one housing expense (rent) which has no potential for a return on investment with another (mortgage payment) that does give you an opportunity for a return. We realize that there has been research showing that over the last 30 years renting has been less expensive than owning. That research also says that if you invested the entire difference between the rent payment and mortgage payment you may have done better financially. There are two challenges with this conclusion:

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Deducting a loss on a real estate sale

 

 

As the end of the year is only a few days away I wanted to share some information with you that some other agents and I were discussing that our clients were dealing with here down in South Florida. So I asked one of my Tax experts to share some information with you about deducting losses on a Real Estate sale.

Due to the weak real estate market, many homeowners are forced to sell at a loss, if they are able to sell at all. But does this dark financial cloud have a silver lining? Can a homeowner deduct a loss from income taxes?

Unfortunately, the answer to that question is no, as a loss incurred on the sale of a personal asset such as a personal residence is not deductible.

But there is a way to deduct a loss on the sale of a home: You can convert it to a rental before you sell.

This requires you to rent out the home to someone who is not related to you for a reasonable market rent. Moreover, you’ll have to report the rental income you receive to the Internal Revenue Service — but you may have little or no taxable rental profits due to depreciation and other deductions for rental expenses.

When you convert your residence into a rental, you convert it from a personal asset to an investment asset. Losses on the sale of investment assets are tax-deductible.
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Mortgage interest tax deduction: safe until after 2012 election?

 


Congress’ supercommittee met for the first time last Thursday. They took preliminary peeks at alternative combinations of spending reductions and revenue increases. Severe cutbacks or elimination of longtime tax preferences as the mortgage interest deduction and local real estate write-offs were on some of the menus that floated into the staff. So what does this mean for homeowners?

Here’s what Tara-Nicholle Nelson author of “The Savvy Woman’s Homebuying Handbook” and “Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions.”

Q: I recently purchased my first property. My concern is: Will the home mortgage interest deduction (MID) still be available for use? –Roberto

A: As you know, homeowners are currently able to deduct the interest they pay on their mortgages, by and large — the tax code also authorizes homeowners to deduct their property taxes.

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