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December 1, 2014

How Can I Avoid Paying Taxes?

John A. Viterittiby John A. Viteritti
in Real Estate
Home Real Estate

Human nature being what it is, nobody likes to pay taxes. Certainly, no more than they have to. Real estate does offer some opportunities along those lines.

The tax benefits that most primary home owners are familiar with are the deductibility of real estate taxes and mortgage interest on their primary residences up to certain limits. Points, which represent pre-paid interest, are also deductible. Each point is equal to one percent of the loan. When the property is sold, the seller may also deduct certain closing costs incurred when the property was purchased. An owner of a second or vacation property may deduct property taxes and interest up to certain limits. They may lease their vacation homes in any given tax year for a period of less than fifteen days without income reporting requirements. If the owner leases the property for a period greater than fourteen days, the vacation home is considered an income producing property and taxed accordingly.

The change in the Tax Law in 1997 was significant with respect to profit on the sale of a home occupied as a primary residence for two of any of the five years prior to the sale. It allows for the deduction of a gain up to $250,000 for a single filer, and up to $500,000 for a married couple filing a joint return. Where there is more than one single filer, each may deduct up to $250,000 not to exceed $500,000 over all. With respect to the married couple filing jointly, only one spouse must own the property to be eligible for the $500,000 marital deduction. Same-sex married couples are eligible for the marital deduction as a result of the Supreme Court decision regarding the Defense of Marriage Act. The exclusion may be taken every two years. It is also possible to qualify for a proportionate deduction if the home has to be sold before the two year occupancy requirement. The eligibility is allowed under hardship conditions delineated in the Tax Code.

In addition to the exclusions from capital gains, the cost of capital improvements made to the home while occupied as a primary residence may be added to the adjusted cost basis along with certain closing costs incurred when the property was purchased, including the 1% New York State “Mansion Tax” on the purchase price of one million dollars or more for one, two, or three unit building, including residential condominiums and cooperatives. The payment of the 2% Community Preservation Fund Tax, (Peconic Tax), may also be added to the adjusted cost basis. Qualified first-time homebuyers in Southampton, Shelter Island, East Hampton and Southold are exempt from paying the tax upon making application to the Towns.

New York State STaR Program, (School Tax Relief), allows a reduction from the school tax portion of the property’s real estate taxes on a primary residence. In order to be eligible, the household income may not exceed $500,000. The Enhanced STaR exemption is available if at least one owner is at least sixty-five years of age and the adjusted household income does not exceed $81,900. This amount is scheduled to increase in 2015 to $83,300.

For investment properties, Section 1031 of the Federal Tax Code allows for the deferment of taxes due on the exchange of investment properties. The properties must be of “like kind” meaning investment properties including unimproved properties intended for commercial development, income producing residential properties, and other qualified properties identified in the Tax Code. These exchanges have to be conducted through a qualified intermediary. The replacement properties must be identified within forty-five days and the exchange conducted within one hundred and eighty days. Where the value of the properties are not equal, the owner of the lesser valued property must pay “boot” – personal property to even out the exchange.

Each of these tax issues is more complex than articulated in this article, and a tax lawyer or accountant should be consulted before attempting to utilize any of these tax benefits.

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LOCAL EVENTS

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October 9 @ 05:00 PM - October 9 @ 08:00 PM
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Emilio Moro Wine Dinner at R.AIRE

October 9 @ 06:30 PM - October 9 @ 08:30 PM
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R.AIRE Wine Dinner with Emilio Moro

October 9 @ 06:30 PM - October 9 @ 09:30 PM
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“The First Science from the Vera Rubin Observatory” (A Free, Virtual Lecture)

October 9 @ 07:00 PM - October 9 @ 08:00 PM
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Billy Joel’s Beachfront Sagaponack Estate Closes For $19M: This Week’s Top Hamptons Real Estate Transfer

Billy Joel's Beachfront Sagaponack Estate Closes For $19M: This Week's Top Hamptons Real Estate Transfer

  • The 33rd Hamptons International Film Festival kicked off last Friday with the U.S. premiere of A24’s Eternity starring Elizabeth Olsen, Miles Teller, and Callum Turner.⁠
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Elizabeth Olsen attended the premiere on Friday, and on Saturday sat down with IndieWire’s Editorial Director Kate Erbland at the Sag Harbor Cinema as a part of the festival’s “A Conversation With” series. Later that day, the second “A Conversation With” took place as Ethan Hawke and moderator Alison Stewart talked about Blue Moon, as well as Hawke’s filmography. ⁠
⁠
Sydney Sweeney received the festival’s Achievement in Acting Award following the U.S. premiere of her film Christy in East Hampton. ⁠
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Notable Guests included: Alessandro Nivola, Alec Baldwin, Amanda Peet, Tonatiuh, Miriam Shor, Lois Smith, Tim Blake Nelson, Mareille Enos, Bob Balaban, E. Jean Carroll, Roberta Kaplan, Ellen Barkin, Bernie Telsie, Bill Condon.⁠
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📸: Jess Dalene⁠
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Check out the full gallery at Hamptons.com (Link in Bio)⁠
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#hiff #hamptonsinternationalfilmfestival #film #elizabetholsen #sydneysweeney #hamptons #hamptonsfilm⁠
  • When: Fri, Oct 3rd – Sun, Oct 5th, 2025
8am – 5pm

Where: Levain Bakery, 354 Montauk Hwy, Wainscott, NY

Levain Bakery is introducing a new cookie for a limited time: Peanut Butter Dark Chocolate Chip – a decadent mix of creamy and chunky peanut butter with rich dark chocolate chunks. Originally created to celebrate the opening of Levain’s Beverly Hills Bakery, this indulgent new flavor will now be available for just three days only, October 3–5, at all retail bakery locations.

To make the weekend even sweeter, guests who purchase a cookie will receive a Levain Bakery mini tote (while supplies last), a fan-favorite collectible sure to go quickly.

#levain #levainbakery #cookie #minitote #tote #hamptons
  • From world premieres at the Hamptons International Film Festival to SouthamptonFest! ⁠
⁠
Check out the Top Hamptons Events This Weekend!⁠
⁠
🎬 33rd Hamptons International Film Festival⁠
📅 Oct 3 – 13, 2025 | 9AM – 10PM⁠
📍 Various Locations⁠
A global lineup of films, shorts & documentaries.⁠
⁠
🍪 Levain Bakery⁠
📅 Oct 3 – 5, 2025 | 8AM – 5PM⁠
📍 354 Montauk Hwy, Wainscott⁠
Try the Peanut Butter Dark Chocolate Chip cookie + snag a mini tote (while supplies last).⁠
⁠
🎉 13th Annual SouthamptonFest⁠
📅 Oct 3 – 5, 2025 | 10AM – 7PM⁠
📍 Southampton Village⁠
Arts, culture, food & family fun all weekend long!⁠
⁠
🎶 SpringsFest⁠
📅 Oct 4, 2025⁠
📍 1 Parsons Pl, East Hampton⁠
Live music, raffles, crafts, blacksmith demos & more.⁠
⁠
💃 Salsa Social @ The Clubhouse Hamptons⁠
📅 Oct 4, 2025 | 9PM – 11:30PM⁠
📍 East Hampton⁠
Dance the night away w/ DJ Chile & more!⁠
⁠
🐚 34th Annual Largest Clam Contest⁠
📅 Oct 5, 2025 | 12PM – 3PM⁠
📍 Amagansett Life Saving Station⁠
Taste clam chowder, clam pies & cheer on the winners!⁠
⁠
🎷 East Meets West Jazz Jam Session⁠
📅 Oct 5, 2025 | 2PM – 5PM⁠
📍 Southampton Cultural Center⁠
Free community jazz jam – all are welcome.⁠
⁠
🌕 Full Hunter’s Super Moon Hike⁠
📅 Oct 6, 2025 | 6:30PM – 7:30PM⁠
📍 SOFO Museum Parking Lot⁠
Guided evening hike under the moonlight.⁠
⁠
✨ Which event are you most excited for?⁠
⁠
Check out more events at Hamptons.com (Link in Bio)⁠
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#hamptons #hamptonsinternationalfilfestival #hiff #jazz #fullmoon #hike #film #levainbakery #community
  • So many fun fall activities in the Hamptons 🎃

@fairviewfarmatmecox 
@corwithsfarmstand 
@milkpailfarmorchard 

Check out our fall guide at Hamptons.com (Link in Bio)

#hamptons #fall #applepicking🍎 #pumpkin #maze #pettingfarm
  • As summer winds down and the cool breezes of fall approach, jewelry enthusiasts and fashion lovers alike are looking for the latest seasonal trends. Yael Fraynd, founder and president of Yaya Publicity, offers an insider’s perspective on what to expect this fall — especially for those embracing the chic lifestyle of the Hamptons.⁠
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Looking ahead to fall, Fraynd described the evolving styles with enthusiasm. For fall, expect to see bold statement pieces, rich gemstone colors like orange and a playful mix of metals. ⁠
⁠
She also noted the influence of pop culture on jewelry trends, including celebrities like Taylor Swift, who is recently engaged, saying, “It could also be just, you know, with Taylor Swift, who has such a big effect on what people like.”⁠
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On the seamless transition from summer to fall styles, she observed, “In the summer, you see a bit of Western-inspired pieces, and I think that they really do kind of transition into fall really nicely. ⁠
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@yayapublicity⁠
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Read the full article at Hamptons.com (Link in Bio) ⁠
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#fall #falltrend #falljewelry #hamptons⁠
  • Apollo in the Hamptons returned with a celebratory evening at the EHP Resort & Marina (Si Si Restaurant) in East Hampton. The annual fundraiser supported Apollo’s year-round artistic and educational programs and its first full-scale renovation and restoration. ⁠
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📸: Danté Crichlow for The Apollo⁠
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Check out the full gallery at Hamptons.com (Link in Bio)⁠
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#apollo #apollotheater #hamptons #easthampton #benefit #fundraiser
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