analysis of tax and investment factors between new york and florida
DESCRIPTION
Analysis of tax and investment factors between New York and Florida. USA HeadquartersAntenna in RussiaAntenna in Luxembourg IBC GROUPIBC GROUPIBC GROUP MiamiTowerLyteiny pr. 60 2-8 Ave. Charles de Gaulle - PowerPoint PPT PresentationTRANSCRIPT
USA Headquarters Antenna in Russia Antenna in Luxembourg IBC GROUP IBC GROUP IBC GROUPMiamiTower Lyteiny pr. 60 2-8 Ave. Charles de Gaulle100 S.E. 2nd Street, Suite 2222 A St.Petersburg, 191125 Luxembourg, L-1653Miami, FL, 33131 USA RussiaTel: +1 (305) 358-4441 Tel: +7 (911) 215-8027 Tel: +352 27-0012 Fax: +1 (305) 358-1144 Fax: +7 (812) 272 5667 Fax: +352 27-0012-205 [email protected] [email protected] [email protected]
WWW.IBC-INTERNATONAL.COM
IBC’s Executive Summary
26 years of experience in secure investments
185 consultants in wide range of jurisdictions, including tax havens
Specializes in supporting clients to successfully acquire, manage and
sell secure investments (real estate and gold) while minimizing taxes.
Very low tax rates (Constitution prohibits personal income tax) State government budget is almost balancedContinuing vigorous population growth (2-3% per year)Tourism:84,000,000 visitors annuallyHealthy Business Climate: few regulations, little bureaucracy & “right to work” law (few unions). Very pro-international climate, dynamic economyAgriculture: 1st citrus state, 2nd cattle stateBanking and finance: 3rd largest US CenterMining: $1.92 Bln/year industrial mineral production, fifth in the USATrade: 5 deep water ports & 40+ free trade zonesHigh profile and well-educated population; many Europeans, wealthier classesMain real estate trend: immigration of wealthy investorsNow – highly discounted prices (substantial capital gain opportunities)
FLORIDA
NEW YORKVery high tax rates in New York State and New York CityNYS & NYC budgets suffering severe deficits ($40 bln. & 25 bln.) Population is steadily decliningStrained business climate (tough bureaucracy, many regulations
& strong unions)Older industries declining (“rust belt”, textile & small
manufacturers) Still № 1 in banking and finances, but hemorrhaging Tourism is growing industry but still lukewarm (approx. 60 mm) International trade (still active but declining; only 20± trade
zones)Population composition problems (high poverty rates, large
welfare classes, emigration of wealthier classes)Main real estate trends: lower growth and out migrationLower potential for real estate gains
Growth & price statisticsFL - NY Population
15
17
19
21
23
25
27
29
31
2000
2003
2006
2009
2012
2015
2018
2021
2024
2027
2030
Mil
lio
ns
Florida
NewYork
Single Home price index
Source: US Bureau of Economic Analysis, Standard & Poor's Case-Shiller Home Price Indices
FL +81%
US Home Prices (Seasonally Adjusted Jan. 1987 - Jun. 2010)
0
50
100
150
200
250
300
Date
Se
llin
g P
ric
e
CA-San Francisco SFXR-SA
FL-Miami MIXR-SA
NY-New York NYXR-SA
Composite-10 CSXR-SA
NY + 2%2000-2030:
Example № 1: Russian purchase of condominium in the USA
Mr. Ivanov, a Russian citizen and tax resident. Mr. Ivanov purchases a condominium for $250,000 and
spends a further $50,000 to renovate the property.Mr. Ivanov rents out his condominium at the normal rate
of 12% a year, equal to $36,000 gross income per year. Mr. Ivanov takes no property tax exemptions and
purchased the condominium unit with fee simple title in his own name. He derives no other income from the US.
What are the tax consequences in New York and Florida?
Comparison of Rental Taxes - New York City vs. Florida New York,
New York Miami, Florida
Purchase Price + Improvements
300,000 300,000
Gross rent income (est.) $3,000 per month
36,000 36,000
Renting commissions (8.334%) (3,000) (3,000)
Less – Maintenance ($1,000/mo)
(12,000) (12,000)
Less – Depreciation (3.39%) (10,170) (10,170)
Net rent income subject to taxes.
$10,830 $10,830
NY State Income Tax (4,5%) $487 ZERO
NY City Income tax (2,9%) $302 ZERO
Federal tax (15%) $1,625 $1,625 - Housing in Miami is on average 66% cheaper than a comparable sq. ft sized property in NYC. - Profits from rents in NYC are subject to federal , state that the and city income tax at local rates. - For the same purchase price the Miami condo would be substantially larger. - Depreciation is a notional amount for tax purposes .
Example № 2. Sale of United States Condominium by Russian owner.
Now assume that Mr. Ivanov, after holding his apartment, for five years, finds a buyer. The real estate market has recovered and he is able to sell the property (seller’s closing costs included) for $500,000.
What are the comparative tax consequences to Mr. Ivanov in New York City and Miami ?
Sale of Property – Approximate Tax Consequences New York City vs. Miami, Florida
New York, New York Miami, Florida
Basis on Purchase 250,000 250,000
Improvements 50,000 50,000
Depreciation Recapture (50,850) (50,850)
Total Adjusted Basis 249,150 249,150
Sale Price 500,000 500.000
Selling Commissions (6%) (30,000) (30,000)
Closing Costs (est. 1.5%) (7,500) (7,500)
Net gain on Sale 213,350 213,350
US federal tax on Gain (20%) (42,670) (42,670)
NY city income tax (3,648%) (7,783) ZERO
NY State income tax (6,85%) (14,614) ZERO
New York City Transfer Tax (1.425% of sale price)
(7,125) ZERO
New York State Transfer Tax ($4/1,000 sale price)
(2,000) ZERO
TOTAL TAX ON SALE 66,409 42,670