Sunny Florida is calling to a couple of New Yorkers who are wondering whether to sell their NYC properties and just rent in both places.

Question: My sister and I own two adjacent condos in Manhattan, where we want to spend part of our retirement — maybe a week a month and holidays. We are looking to become residents of Florida for the rest of the year, where we plan to rent. Presently, we are thinking of selling the two-bedroom, which we think is worth about $1.3 million, and keeping the one-bedroom (worth about $1 million) vacant for our use. Fortunately, we don’t really need the sale proceeds to fund our retirements, but we are wondering if we would be better off selling both apartments to take out significant appreciation and renting in both locations.

— Settling Down on a Sunny Beach

Dear Settling Down:

There’s a lot of this sort of thing going on. New Yorkers have been retiring to Florida for decades. But ever since the new federal tax law severely restricted the deductibility of state and local taxes, there have been numerous reports of well-to-do New Yorkers saying, “So long, Broadway, Hello, Collins Avenue.”

There’s nothing wrong with your plan. Sell both condos in a strong New York real estate market and enjoy your new lifestyles. Invested in a super-secure tax-free fund, the proceeds of your sales could generate as much as $70,000 a year. Riskier “leveraged funds” — though still quite safe — could generate nearly twice as much income. With that kind of cash, you could land some swanky digs in Brickell, Bal Harbour or any place else in the Sunshine State and still have plenty to spend for a few days a month in some ritzy Manhattan apartments.

You will have some tax issues, however. Assuming you and your sister share the 2-bedroom as your primary residences and have lived in it for at least two of the last five years, you will each get the usual $250,000 home owner’s tax exclusion on your federal income taxes. But you will have to pay New York real estate transfer taxes, including the “mansion tax” on sales over $1 million. (New taxes on more expensive properties go into effect on July 1.)

When you sell the rental condo, you will have to pay back 25% of the amount you depreciated over the term of the rental and pay capital-gain tax on your profit. You can defer your capital-gain tax, however, if you acquire another rental property in a so-called “1031 exchange.”

Finally, I agree with your idea to hold on to one of the apartments. But I’d keep the two-bedroom for a while. You never know, maybe all of that Florida sun won’t suit you, and you’ll need a place in New York again. You have three more years that it will qualify for the home owner’s federal tax exclusion so there’s plenty of time to change your minds if you need to.

In the meantime, have a great retirement in Florida. We’ll miss you, but it will be good to see you when you’re in town.

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David Crook is a veteran journalist and author of The Complete Wall Street Journal Real-Estate Investing and Homeowner’s Guidebooks. Do you have a question about anything real estate-related in NYC? Write him at For verification purposes, please include your name and a phone number; neither will be published. Note: Nothing in this column should be considered professional legal advice. If you have a legal issue, consult an attorney.

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