Tax freedom day comes a lot later each year for most Long Island property owners, than for the rest of the country. In fact, many Long Islanders are barely one third of the way toward earning enough just to pay their taxes this year. So how can the number of days of working just to pay the tax man be slashed?
If you don’t want to have to work well into the summer just to pay taxes, before really generating any positive income for the year, consider the following…
Avoid Capital Gains Taxes
Substantial capital gains taxes can be avoided by more wisely timing and structuring property sales. Waiting until you have lived in a home as a residence for at least 2 out of the last 5 years can dramatically reduce taxes owed, or even ensure complete exemption. Those considering short sales may also find wiser moves in order to avoid any mortgage debt forgiveness being considered income for tax purposes.
Make Sure You Are Claiming All Your Tax Breaks
There can be a dozen or more tax deductions, write-offs, and tax breaks just for owning real estate. While there are many DIY options for filing taxes today, there is also sense in securing a great accountant or tax preparer that can help ensure you aren’t overpaying on your state and federal income taxes.
Many see the only options to cut the obscenely high tax penalties of living in NY as moving and establishing residency elsewhere. This might be a smart move, and doesn’t necessarily have to mean turning in your passport. Puerto Rico, Florida, and even nearby Delaware can offer lower taxes for residents, and you can still hold onto your property on Long Island if you like.
File and Pay Income Taxes Sooner
While it can be tempting to put off filing taxes, and rely on extensions when taxes may be owed, there are also potential savings to be found in filing and paying taxes sooner, and avoiding extreme financial penalties and interest.
Reduce Property Taxes
Property taxes can be one of the biggest tax related expenses for Long Islanders. You might get a refund on your federal income taxes, but not the taxes on your home. Talk to a local property tax adjuster, and you may find that you can substantially reduce your annual property tax bills, and end up working many weeks less to pay the tax man. You can take that time off, without a hit to your lifestyle, or put the difference in the bank.