Connecticut Estate Tax Forms: Fill & Download for Free

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The question will have different answer depending on the time and place, personal values, individual financial skills. For example different countries, different USA states have different property taxes as percentage of the real estate value(e.g. NY avg 3 .01% vs Al avg 0.4%), In many Eastern European countries those taxes are less than 0.2%. Aslo things important to consider:-construction type of the real estate(wood, steel, concrete, brick, etc),-location(transport hubs, big facilities(infrastructure), hospitals, universities, trade centers, tourist destination, etc),-ethnical homogeneity, crime rate, uniform educational system (e.g. Hawaii vs AL).I will take for example average family in IL which would accommodate in relatively modest apartment, or condo in Chicago area(third largest metropolitan area in the USA). IL has relatively average percentages for real estate taxes, maintenance, viable locations, etc. E.g. -" New York (3.01 percent), Texas (2.18 percent), Illinois (2.15 percent), Connecticut (2.11 percent) and New Jersey (2.01 percent)."Current(2015) average apartment(condo) price in Chicago area a little bit under $200k to around $190k. HOA range $2.5-$4K/yearly that makes average HOA- 1.7%/yearly,average long term real estate tax(as percentage of property value) for the area-2.15%. Maintenance and upgrades- long term maintenance is usually 1%-2% depending on the type of building wooden and steel buildings have higher maintenance since most of the residential building is blend of steel and wood. HOA takes big part of the maintenance. However the apartment itself is responsibility of the owner(kitchen, bath, floor, tiles, ceiling, walls, painting, etc). I will take the government allowance for depreciation of residential building in the area which is 60 years(39 yrs for commercial,2.52%) that makes 1/60 of property value approximately 1.7%. Also this does not include upgrades, i will assume an average time of keeping the property, and paying for it around 20 years, with upgrades before sale around 8-10 % of its value. This will make an average of 9%/20=0.45% for upgrades. ThenMaintenance&upgrades average 1,7+0.45=2.15%. Insurance(inside the condo only) 0.5%, Usually water&garbage are included in HOA. This is often not the case with utility like gas which will be around$1k/year i.e. 0.5%. Transaction buy /sell cost 1-2% buy, 7-8% sell; 10/20 yrs=0.5%. Other(pest control, door fixings, etc) 0.2%. So far we have fixed long term average yearly cost as percentage of the property value: 2.15(tax)+1.7(HOA)+2.15(main&upgrds)+0.5(ins)+0.5(utility)+0.5(transaction cost)+0.2(other, e/g. pest control)= 7.7%These are fixed expenses assuming one pay all in cash for the property(by the way with relatively historicaly low mortgage interest and well performing stock market one has no interest of paying upfront for property unless offered big property discount for cash payment). The usual situation is the min 20% down-payment, we take in account the opportunity cost loss(here i will take the average long term(10yrs&up) yield ofS&P 500 for the last 25 years. with dividend reinvestment which is 9.81%. S&P 500 Index ,current average interest on mortgages around 4.25%(note this is historic low comparing with average last 15 yrs of around 6%)). Then we have down payment opportunity cost loss: 0.2x9.81%= 1.96%, interest+opportunity cost on the principal loss: 0.8x(4.25%+9.81%)/2= 5.63%, Total opportunity cost loss: 7.6%(note if property was paid upfront cash then the opportunity loss will jump equal to the S&P 500 performance of 9.81%)I will take a Zillow average home price growth for Chicago area of 3.7%.Then, we have income tax incentives as deductible from the income tax assuming 25% tax bracket and one third(1/3=0.33) of the house expenses recognized(mortgage expenses above the standard deduction) under schd. A itemized deduction then 1/4x1/3=1/12; 1/12x (7.7+7.6-3.7)=0.97% apprx 1%. This calculations bring thetotal compound cost of owning average real estate here around 7.7+7.6-3.7-1=10.6%.Average rent per sq ft according zillow is around $1.29 that makes around $16k/ year for rent on $195k property value that makes around 8.1%. including most utility but electricity and internet/cabel. Here we received our result comparing owning vs renting: -10.6 vs -8.1%. It seems that the average buyer in the area losses money on his/hers investment with average long term return of minus 2.5%( -2.5% ) . In our case, property value of $195k, means $400 monthly loss.This brings the question how the landlords make money if the average retail owner actually losses money and why they do invest in rel estate, instead the stock market for ex?The answer is economy of scale.Similar to utility where most of us don't have interest to get our own water, heat, electricity, intranet, etc. At least for most of us doesn't make sense to deal with these things. it gets times cheaper when these things are done in the numbers of million than single units. The same here, landlords with thousands of managed apartments get half of the total of compound price(around 6-7%) of a retail individual investor.they save from to name just few: property taxes, interest, maintenance, etc because of the size of the deals they do-economy of scale. They often get leveraged positions(30%) with huge low interest loans where they get 2% difference with leverage of 3-5 times this gives them relatively secure yield of 6-10%/yr. which is lucrative in turmoil in other markets(e.g. stock, commodity, treasury notes, etc).So at least, in the case of Chicago area(and probably most other areas in the USA since the difference of -2.5% couldn't be compensated with even the lowest property tax in Alabama) the average home owner is losing money. Here, I didn't even included significant long term risks as potential cost, cost as:Neighborhood change over time(e.g. crime rate change, school change, shopping places change), job relocation, real tax increase, natural disasters, etc. and many complications that could follow from that. For ex job relocation leads to long commute times and indirectly makes the owner to use convenience stores for grocery shopping where most products are more expensive. This indirect cost is in addition to the increase travel cost as gas, car repair, etc.However, for many buying a home still makes sense if they lack financial discipline, their home acts like forced long term commitment saving account with negative rate. In our case 20 years and (-2.5% yield). They don't get good value of their "investment" but at least they have something saved.Many people are tempted to spend all they have for food, ,restaurants, drugs, cars, trips, furniture, entertainment, electronics, etc. All these don't keep their value in a long run.However, this is arguable depending on the point of view/ individual value system. Memories could be the most valuable thing, though the same goes for the sense of community, and personalized own home place.Is it ultimately better to rent or own a home?Stanislav Stanchev's answer to Is it ultimately better to rent or own a home?

If you move from one state to another state, do you need to pay taxes to the previous state? Ex: If I move from California to Washington do I have to pay taxes to California for the remainder of the year?Here is my treatise on “tax residency”John Richardson - lawyer for "U.S. persons" abroad on TwitterI am going to answer the first part of the question, which asks generally, how a move to new state, impacts tax liability in the previous state.The answer is as follows:What is tax residency?Every state is (subject to narrow constitutional prohibitions) entitled to define the rules for “tax residency” in the state. Generally, those who are “tax residents” of the state will pay tax on their income, from whatever source, as long as they are tax residents in the state.The problem is that different states use different rules to define tax residency. Some states will use “domicile” (an intention to live in the state). Some have a statutory/objective test (how much physical presence did you have in the state, etc. So, the first step is to determine the specific rules for tax residency in that state. Remember if tax resident then taxable on all income sources.For those who are NOT tax residents in the state, many states have rules that will tax you on income sourced in that state. Let me give you an interesting example. A law professor who lived in Connecticut taught at a law school in New York. New York taxed his salary because it was earned in New York. Connecticut taxed his salary because he lived in Connecticut. Shockingly, Connecticut would not allow credit for the taxes paid to New York - resulting in double taxation.Bottom line: Tax residency is very serious business.Severing Tax ResidencyParticularly after the 2017 TCJA (which changed the rules for deductability of property taxes for Federal Income Tax purposes), it became clear that certain states (I am thinking of New York, California and New Jersey - and there are others) simply became too expensive to live in. So, (surprise, surprise) many people have made the rational decision to move to states that are less tax predatory. When moving it’s important to sever tax residency with the state you are moving from. For example, you can no longer be domiciled in that state. All ties must be severed. Having a second home in Florida or Texas probably won’t be enough.There are numerous examples of New York chasing people down - arguing that they had NOT really severed tax residency with New York. I predict that states will become more and more aggressive in arguing that people really have not severed tax residency but are just pretending to. I also predict that individual states may try to impose exit/departure taxes on people who move from the state (similar to the Federal Section 877A Exit Tax[1]).This is a very very serious issue that also has estate tax implications (for example New York has an estate tax …)Here is a real shocker: For those who believe they can just move from the United StatesI am aware of one individual who moved from the United States to France (he is a dual citizen). Ten years later the state he grew up in, claimed that he was still a tax resident of the state.My closing message:In the 21st Century, the most important thing about a person is his “tax residency”.Footnotes[1] Renouncing US citizenship? How the S. 877A "Exit Tax" may apply to your Canadian assets - 25 Parts - U.S. Citizens and Green Card Holders Residing in Canada and Abroad