Impact of Tax Bill on NYC Real Estate

If you are taking about the proposal to eliminate or reduce the state and local income tax deduction, I believe that that proposal may now be DOA. However, it not, the impact could be quite bad for NYC real estate based solely on the implication of higher carrying costs. The House will announce their tax plan tomorrow I believe.

May depend on how the tax brackets fall out.

To be released today, Thursday. I'm fairly certain no one will bother to address this:

https://www.bloomberg.com/news/features/2017-09-12/why-american-workers-pay-twice-as-much-in-taxes-as-wealthy-investors

Absolutely criminal. See my new thread.

TeamM, There are a lot of moving parts. I have a feeling that NYC residents will not get any benefit from over all tax reduction - essentially a reduction in tax rate/adjustment in tax brackets will be offset by capping of itemized deductions.

You probably already know that for incomes about $1+mm, the deductions already get reduced for Federal Taxes.

Just reading the proposal. Negative for high tax states clearly.

Deductions for state and local taxes eliminated in the proposal.

300 - the state and local deduction seems like a real concern...

300 - the elimination of that deduction seems like the most concerning element from a NY/Cali perspective. Already high taxes for high earners, and perhaps incrementally worse.

Property tax deduction capped at $10,000. Mortgage limit for interest deduction cut in half from $1,000,000 to $500,000. State and local tax deductions eliminated.

Wow. These are the tax increases the House needed in order to pay for the tax cuts. I can't imagine the Senate going for much of this but they are desperate for a win so maybe.

This is bad.

Agree it is bad. Higher standard deductions and starting point of the highest tax bracket will reduce the pain a bit. It seems that under $150-200k household income will not see much impact.

As good as I am in all things math (at least i think I am) I confess I have a serious mental block when it comes to my tax returns. I really dont know WTF is going on. But I assumed losing local tax deductions would be offset by the removal of alternative minimum tax provision, but now reading that property taxes will be capped at $10K, probably not a good tradeoff. I think a serious issue with NY overall is $300K earned here is not the same everywhere else (with the exception of CA) and not accounted for at all which is def a problem. On a partial good note, I believe existing mortgages are grandfathered and new mortgages under $500K are as well. Maybe we'll see even more ownership of homes under corporations, co-ops will be tricky though. A simpler code is most assuredly the will of the people, though I wish at least in this field, partisan politics would be somewhat set aside and have true input and votes from both sides of the aisle. Though It cant happen when states perpetually vote party no matter the candidate and were stuck in the mud with the same stale MCCains, Pelosis', and Schumers. Jesus Chuck, try and find you inner Tip O'Neill or something. Right now you legacy is Anthony Weiner's mentor and rabbi.

AMT only matters if you have deductions which mostly came in form of state, city and property taxes. If they remove the deductions, AMT would not matter. Generally bad for the coasts but they do not vote republican.

With the 10k property tax deduction limit and the 500k mtg interest deduction limit it looks like a non event for Manhattan buyers looking for property say 750k or under(not much available). Everyone else(most of Manhattan) takes a hit.

My world is the <$1M segment. The question in my mind is how much will buyers in this segment, often with limited resources, lose in the "new world" if they exceed $500K in mortgage and what that translates to in diminished ability to offer. All of this hypothetical uses the house proposal issued today.

The first year potential deduction for a 3.95% $499K mortgage plus $6K property tax is $25,600. Less the standard deduction they would otherwise now be taking (-12K), the net deduction is $13,600, or $4,760 savings at 35% bracket (proposed at 200k+ for single or 260k+ for married).

So, as soon as hypothetical buyer needs more than a $500K mortgage the monthly outlay increases $400. Before the rule change, this $400/mo could have increased the buyer's purchasing power by $105,000 at 20% down.

I don't think this magnitude of a change using an "at the limits" scenario is enough to cause a strong ripple. However, it my feed a psychological component coupled with the change of state/local income tax, which to a $200K earner costs about another $400/month.
Thoughts?

I think this tax plan is a gift to corporate America at the expense of individual taxpayers. But when we get the CBO score, we will know exactly who wins and who loses. Guaranteed to blow up the deficit so in the end, everyone loses I guess. Capital markets seem calm so far so I guess this is what they expected.

I wrote out a longer post and somehow only the last paragraph was posted. Essentially I consider that in the plan the penalty for a <$1M buyer to go over $500K in mortgage is about $400 month. For $400/month you could have about $105K more purchasing power.

Nevermind about that analysis in my last post---- various news articles are written saying that mortgages greater than $500K do not qualify for deductibility at all, but reading into the language of the bill it seems the interest related to the first $500K would still be deductible.

I'm sure having wealthy people in Democratic strongholds complaining about their taxes being too high is a feature of the plan, not a bug.

I think mortgages between $500,000-$1,000,000 may be grandfathered. But what does that mean? I cannot trade up or refinance for fear that I will have to pay higher taxes?

I have to agree with that. And democrats will find it hard to change the "soak the rich" removal of tax deduction. People making $150-$200k probably will not get impacted due to an increase in the standard deduction.

ximon, Believe refi (new mortgage not sure) is allowed as it is against the current home. This way if you have a mortgage already, you are not paying extra as long as you do not move.

Perhaps, coastal areas will elect more republicans to have a voice.

The proposed brackets are also much lower at the more modest income levels. For example, current brackets are 15% from $9K to $37K and 25% from $37K to $91K. The new proposal is 0% up to $24K and 12% from $24K to $90K.

300, so you think refis are also grandfathered up to $1,000,000 as long as its the same property?

Here is the entire bill which includes a search engine:

http://www.cnn.com/2017/11/02/politics/tax-plan-republicans/index.html

Hard to see how this bill will be good for NYC residents, and by extension, NYC RE. OTOH, the track record of legislative accomplishments by this Congress is not impressive.

https://www.bloomberg.com/news/articles/2017-11-02/pricey-home-markets-from-greenwich-to-l-a-seen-hit-by-tax-plan

Insightful article, KISS especially the housing industry shareholder's strong negative reaction to the tax proposal. I also did not realize that the $500,000 capital gains exclusion primary residence rule was being modified from 3 out of last 5 years to 5 out of last 8 years. What do you do if you had already qualified under the old rules and are now actively planning to sell?

Based on where we are in the cycle, anything which triggers a 10% drop in home values could in and of itself trigger a much further drop.

Yes, 30, that is my fear as well. Very dangerous strategy by Republicans who seem disparate for any victory, even a pyrrhic one.

Smaller Hong Kong style apartments will be become popular. New developments in Manhattan are screwed if the proposal becomes law. Rents may go up!!

The elongation of the capital gains exclusion for a primary residene from the current standard of 3 of 5 years to a new standard of 5 of 8 years is the worst, IMHO. I'll be interested to hear how real estate industry lobbyists react to that.

NYC will suffer , but that's because taxes go up and up anyway .

Is your quality of life better ?
Are there more homeless ?
Are the schools any better ?
Are the roads better ?
Are the subways better ?
Is crime going up ?

Tough to predict if this will go through but the market that feeds the NY apts btwn $3-5m or so is a mixture of HNWI, corporate owners, and incredibly high-paid earners ($600k+). I think most of those will do better in the new bill, the first two earn non-wage income, which will now be even more advantaged. The latter will likely be worse off in this environment.

The renting differential will change by about $500 per month. Not exactly chump change, but really talking about $100-120k difference in prices. What will really hurt is if the $1-3m market is driven by high wage earners and they now lose the state deductions, I think there is potential many of those will get increased tax rates.

Wonder if they can even pass this, many issues to resolve.

Any tax overhaul will just pick and choose different favorites (or keep same ones) as our current tax plan. The real issue is the premise of our nation's massively expanding spending, regulation and government bureaucracy.

Spending needs to go down and so do taxes, regardless of what 'favorites' are chosen by the tax code rewrite.

From today's NYTimes. Most interesting to me is the opinion that because of the grandfathering of the new rules for deductions, many home owners are more likely to stay put rather than sell. In effect, these rule changes effectively create a new tax on selling your home.

https://www.nytimes.com/2017/11/02/business/economy/tax-housing.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=a-lede-package-region&region=top-news&WT.nav=top-news&_r=0

People are certainly on the edges of their seats about this in NY... could spark a migration to CT and some other spots. I'm certainly keeping a close eye on it myself.

CT is not happening. All you save is city tax for 2 hour daily commute and have declining property values. State tax is no different. People may just rent more - effectively live in a smaller apartment. Some who do not have work in NYC may just move to Florida and other low income tax states.

There is a lot here that seems bad for most Blue States:
1) Loss of SALT
2) Low cap on Property Tax deduction
3) Cap on Interest Deduction up to $500,000--except on existing loans
4) End of deduction of interest on home equity loans and second properties
5) Tax-Free cap gain from sale of real estate phase out at income levels greater than $500k
6) Tax-Free cap gains can only be claimed if you live in place for 5 years out of 8 (was 2 out of 5) and can only be claimed every 5 years as opposed to every 2.

I am not an economist, but I think #3 and #6 are brakes on mobility. People are taxed for selling their houses and, in a sense, for having to move too soon. I feel like that has the potential to distort the market.

The other factors all work against affordability of housing and living in Blue States, as far as I can see.

Even if you don't make above $500K, if you have lived in your apartment or home long enough, you may hope to sell to someone who does. So you probably do not want them disincentivized to buy.

The part of the plan that is mentioned in passing but not explained in a way I can understand is the surcharge on the first $90K of earnings for earners making over $450K. It has the ring of a backdoor AMT designed to recapture the money lost by allowing the meaty part of the Upper Middle Class curve out of the 39% bracket. It would likely be a bigger deal to those earnign$450 to $600, potentially erasing whatever they gain from the lowering of some the brackets. But this is just me guessing.

If I owned in a high property tax town like Glen Ridge, I think I would be hyperventilating over this, because even if it doesn't kill me next year the standard deduction will not rise and local taxes will not fall without cuts to services. I might need to breathe into paperbag just from empathy anxiety.

Residents of large coastal cities and suburbs are clearly being punished. At lower income level, increase in standard deduction and reduction in tax rates is likely to offset the cap or disallowance of deductions.

Finally, if you are planning to pay for most of these cuts with economic growth, I'm not sure why you'd concentrate all the potential downside (and curbs on growth) in the most vibrant economic areas. California, New York and NJ are 25% of the GDP. So any plan that ultimately (short term or long) targets those states as losers in the tax equation and makes them less desirable is working against the stated goal of making up for losses in tax revenue through economic growth. You're not going to make that difference up growing the economy of Wyoming.

I could understand if the goal was tax code simplification but this does not really appear to be the case. So, yes, familyguy, market distortion is quite possible and may, in fact, have already started. I wonder how many refi applications are being filled out as we speak. And if you were on the fence about trading up, there might now be a rush to do so before this bill become effective.

Any mortgage brokers out there care to comment?

I think the mortgage deduction is locked at $500K effective the day the plan was released or something like that. If the bill passes, any mortgage signed after Nov 2, 2017 is subject to the new rule.

And I guess if you are planning on buying a studio or 1 bed or just bought one, you better not be planning to get married or have kids in next 5 years if you want to get your cap gains tax-free.

Ok. WSJ corrected their story on the 12% phase out. It starts at 1 million in income. At least that makes more sense.

familyguy, I understand about the Nov. 2 effective date but isn't that just a placeholder meant to keep people from gaming the rules? If this legislation is amended or delayed, would the Nov. 2 date still hold?

Good explainer and analysis of all the rates and the relevant income brackets, including the interest deduction from MarketWatch:

https://www.marketwatch.com/story/how-the-gop-tax-bill-will-impact-middle-class-and-wealthy-taxpayers-2017-11-03

"For principal residence mortgage loans taken out after 11/2/17, you could only deduct interest on up to $500,000 of mortgage debt (versus up to $1 million plus another $100,000 of home equity debt allowed under the current rules). The GOP bill would eliminate the current-law provision that allows you to deduct interest on up to $100,000 of home equity debt."

"However, if you refinance a loan taken out before 11/3/17, the higher loan limits allowed under the current rules would continue to apply. Also, starting in 2018, you could only deduct mortgage interest on one qualified residence (versus two under the current rules). So no more deductions for interest on vacation home mortgages."

I am old enough to remember the Tax Reform Act of 1986. The purpose of the Act was simplify the income tax code, broaden the tax base and eliminate many tax shelters. I do not think many people predicted the huge negative impact this law would have on residential property in our region. This proposed bill is described as a tax cut bill but its legacy may be more similar to 1986.

Someone's going to come up with a "split" mortgage where they give you a $500K first mortgage at 8% and a $500k second at 0.5%.

Very funny, 30. Just one way people will try to game these new rules.

300 - I wouldn't be so sure that CT won't be on the table. Obviously it is enticing to many people already, and this is an additional incremental push. I am talking to a bunch of people toying with that idea, as well as folks considering more extreme moves. I wouldn't be surprised if the states consider changes at the state level as well, which will obviously impact the overall balance.

If the elimination of the SALT deduction remains in the bill, I think it will have a meaningful impact on folks, and on the ability of NY to recruit talent in the future.

Single family prices in New Canaan and Darien are down considerably this year. I think it has something to do with GE Capital being sold and operations relocated.

https://www.elliman.com/pdf/464a61c69fd46dcf9a20f753fbe8dd3d52a7a0c0

TeamM, What are the main reasons for people to want to move to CT besides prices in CT coming down significantly in >$2mm segment and how does the current tax bill impact it?

300 - it's the incremental improvement in the state/city taxes (along with property taxes), which is even more acute when considering the changes in the tax code around deductibility from federal taxes.

It is my understanding that CT has serious fincl issues. Hard to see how local taxes will not ultimately need to go up in that state.

Familyguy, It is a valid point. However, CT luxury prices in $2-3mm range are down appx 10-25% with >$5mm down up to 50% from the pre-recession peak. In the meantime, NYC is up 15-20% from pre-recession peak. At some point of time, it is just much cheaper in CT and some people may do the commute. Demographics in CT are bad due to hedge funds doing poorly, UBS moving back to the city, and GE disappearing.

I live in New Canaan and worked in Bridgeport for four years back in the mid-late 1990's. Later, I bought a lake-side cottage in Litchfield County. Fairfield County was absolutely crushed by the S&L crash while I lived there. It took 5-6 years, maybe more for the market to fully recover. Part of the reason for the recovery was the movement of major financial firms to Stamford, etc. Now the corporate trend is going the other way so towns will not have the tax bases they once did which will cause property taxes to rise closer to comparable towns in Westchester and Nassau. Also, Fairfield County never received much investment from overseas buyers for some reason. But it has a much more pastoral country setting than e.g. Nassau and Westchester while still offering pretty easy commutes, so I can see a lot of jaded Manhattanites making the move.

can assumption of seller's mortgage work to avoid the 500K limit?

Highly unlikely as if the bill is passed, the deduction depends on the tax payer’s purchase date.

https://therealdeal.com/2017/11/08/ny-home-prices-could-fall-10-if-house-gops-mortgage-plans-pass-moodys-economist/

So, I wonder who's got the balls to be buying in this market now?

Yes, KISS. These are the kind of problems that arise when legislation is not properly proposed and debated. It seems clear that this bill was rushed and poorly analyzed. It seems like Republicans decided to add everything they could to this bill to benefit their re-election campaigns next year. Also, bill sponsors wanted to get a plan out and voted on before special interest groups had time to rally support for their causes. Fair enough I guess but so naïve. Didn't they learn from the health care debacle?

Seems like our political leaders have painted themselves in a corner and now face a "damned if you do, damned if you don't" quandary. Republicans and Trump promised Wall Street and pretty much everyone else a big tax cut and then realized that there isn't enough money in the budget to pay for it. So they are looking for additional revenues from individual taxpayers in states least likely to support them in 2018 and 2022. Good luck with that strategy and the stock market/housing crash likely to follow.

I just think local taxes are cost of doing business / cost of making high $ amounts. While I have no issue with lowering the corporate taxes, screwing the high cost of living coastal areas is not the place to find money. They could have easily adjusted the corporate taxes to 22.5% rather than 20%. Or tax the investment gains count as regular income on > say $2mm investment income (call it billionaire tax). This would address carried interest as well partially.

Seems like it would be good for the stock market. Where else are you going to park your 25%+ down payment if you aren't buying an apartment?

Stock market will freak if their promised tax breaks don't materialize and/or our budget deficit explodes. Congress should not promise what it can't deliver.

Tax reform wont' have a measurable impact on NYC real estate prices. If US buyers have less demand bc they are taxed more, foreign buyers will take full advantage of decreased PPSF in NYC for prime real estate. It's one of the best inflation proof global assets with upside available!

Not as easy as before with the anti-money laundering rules in NYC now. Also, this administration is not exactly publicly supportive of foreign investments in NYC (although seem to be doing the opposite on the back-end). Wondering how many wealthy overseas investors really want to park their assets at low yields in a place where the administration seems schizophrenic week to week. The spread between perceived safety in the US vs foreign countries has dropped.

I think there's also an element to the analysis that's challenging to predict regarding whether the city will be as appealing to live in if its tax base drops and it gets into financial trouble. De Blasio and Cuomo are both noting their view of the adverse impact this will have on NY/NYC.

I know a fair number of people assessing their options to leave NY if this tax bill passes, and I imagine that is fairly widespread on both the personal and corporate level.

Good point. Clearly a possibility that people will move to low tax states if they are not working in nyc. David Tepper left NJ to live in Florida - if I remember correctly.

I know NYC is not typically thought of as a second home market, but I'm guessing there would be effects for NYC as well . . .

https://www.bloomberg.com/news/articles/2017-11-10/hamptons-homebuyers-already-figured-out-how-to-game-the-tax-plan

Interesting KISS although I wonder how many 2nd home owners are willing to become landlords. Many simply don't need the income or the hassle. Could certainly result in many owners putting their vacation homes on the market which would lower prices. I will be looking out for deals.

Certainly could be affects for NYC pied-a-terre market. This market is not well surveyed but is probably bigger than many think.

Hello all,

I am looking to buy a 2 bed co-op which indicates that 60% of the maintainence is tax deductible. How will this change with the new bill? My understanding is that this deduction is composed of a property tax and mortgage interest. If the 500k mortgage cap and 10k prop tax deduction limit applies to the building , will the maintenance no longer be deductible ?

Interesting analysis of the tax impact on a prospective home buyer assuming both the House plan and the Senate plan from a Triplemint broker. Most interesting to me is the comparative tax impact on purchasers with annual income of $250,000 vs. $300,000.

https://therealdeal.com/2017/11/12/how-a-1-25m-new-york-apartment-buy-will-fare-under-house-and-senate-tax-plans/

Is Susan Collins going to rescue the coasts? She is in favor of Corporate tax cut only to 22 percent with the money not spent going to state and local taxes deductions. Sounds good to me but I get the feeling that salt deductions will be mostly eliminated.

I think we need to hope for a complete block. The changes that Collins asking for don't get to the heart of the issues for NYC. AZ and TN could prove NYC's savior.

From Crain's:

So much attention has been devoted to the Republicans' attempt to restrict or eliminate SALT—the state and local tax deduction—that other provisions of their plan that would also have enormous consequences for New York have gotten too little attention.

Start with high-end housing. Three provisions of the House plan would substantially change the economics of owning a home in Manhattan and the New York suburbs. It would allow mortgage interest to be deducted only on the first $500,000 borrowed, down from $1 million today. It would limit the property-tax deduction to $10,000, though suburban homeowners close to the city typically pay twice as much and often more. The combined effect would almost certainly cause a significant decline in home prices.

The House bill eliminates mortgage-interest deductions for second homes. While a Bloomberg story suggested forming a limited liability company as a workaround, that would be an option only for the most expensive Hamptons palaces. Demand for second homes would be reduced.

The Republican plan delivers a body blow to Mayor Bill de Blasio's affordable-housing program by eliminating the use of tax-exempt bonds to finance it. New York state has an allocation of $4.5 billion. The city uses all of its amount on affordable units. One-third of the apartments to be produced by the de Blasio plan are to be funded by tax-exempt bonds. Having already doubled the city's financial commitment to his program, the mayor has no ability to make up the gap.

Data point
SECOND-HOME mortgage interest deductible in GOP tax plan is $0
The Republicans want to eliminate deductions for student loans, which would make college less affordable and reduce the number of people able to get the degree so vital in today's economy. This could be especially problematic for private colleges, which last week cited Gov. Andrew Cuomo's free tuition program for state schools in explaining a decline in enrollment.

Colleges and universities face a series of hits. The wealthiest would pay a 1.4% tax on their endowments' income. Tax-exempt-bond financing would be eliminated, raising costs and crimping those who lack access to the taxable market.

Company reimbursement for education expenses such as M.B.A. programs would become taxable income. No one uses this money more than employees adding a business degree to help them move up the corporate ladder. The impact here would be far-reaching.

If the wealthy move away because of the increase in their taxes, the impact on city and state budgets would be devastating. Few governments in the U.S. shoulder as much debt as New York state and New York City. A recent report from Standard & Poor's Global Ratings outlined all the ways that the tax plans will raise the cost of borrowing for governments. It is already going up because of rising interest rates and, for the city, because of its enormous capital spending. The added expense from Washington, D.C.'s tax reform will cut into both budgets.

Finally, a mea culpa. My last column, written too quickly after the release of the plan, underestimated the impact of limiting or ending SALT. It is true the burden will fall most heavily on the wealthiest New Yorkers. But the top 1% alone provide 40% of state income tax revenues and three-quarters of the city income tax. If they move to another state because of the increase in their taxes, the budget impact would be devastating.

A version of this article appears in the November 20, 2017, print issue of Crain's New York Business as "Tax-plan losers in New York too many to count—but I'll try".

So my conclusion is Manhattan low end <1M will see relatively no demand impact. Low end condos should see a positive demand impact(discussed earlier). Now the High End. Do you guys actually think that those with money are not going to purchase trophy homes because of some deduction limitations? The only way for the rich to really show off their money and let others really see how wealthy they are is by having them over to their palace. Otherwise people would never truly know how rich they are! What is the point of even getting rich if you cant shove your wealth into other people faces! So initially some people will create a big fuss but high end property will always be bought and strong demand will always be there regardless.....

I am thinking the low end market could be affected also, since more than $1M condos may become less expensive putting downward pressure on the low end condos.

Steve, Unfortunately, there are a lot of people in the middle. Call it $1mm-$4mm 2-4 bedroom family sized apartment priced around $1500 per sq ft. While from the price point of view, it is luxury but from a need point of view for some one with 2-3 children (future tax payers!!), it is not. Very high-end priced $3000+ per sq ft is coming down and may come down faster. It would not matter. It is all bubble.

https://www.vanityfair.com/news/2017/11/wall-street-fears-trumps-deranged-tax-plan-could-kick-off-economic-euthanasia

Interesting article. If true that home prices could decline by 10-17%, recent home buyers will be getting the rug pulled out from under them. How can Congress pass a law that could almost single handedly wipe out most or all of the equity that many recent buyers put into their new home purchases? What are the political consequences for politicians who would support such a scenario?

I don't see this ending well no matter which way it goes as the damage may have already been done.

Only for homes >$1mm Ximon as $500k mortgage is still allowed and elimination of SALT deduction will be offset by higher standard deduction and lower federal tax rate for buyers below this price range. Coops are likely to suffer the least as the taxes per sq ft are still lower than condos and the supply is limited. Funny thing is the Republican administration and Trump is well aware of this issue. Hopefully they will not have enough votes in the senate and democrats will not agree to elimination of SALT deduction.

Funny and sad.

I agree with your specific points, 300, but I was talking about the impact of a 10-17% decline in home values generally. Or do you think only homes priced at $1mm or higher will be negatively affected?

As a contrariness opinion I will state that homes under $1M may end up being affected the most because when the market starts to correct historically the bottom 20% are the group of buyers who start running for the exits the fastest because they are the ones who are the most averse to putting 100% of their net worth into what all of a sudden in perceived as a risky investment.

Only homes greater than 1mm will be impacted in my opinion. Lower tier may actually go up due to tax cuts for less than most $200k income households regardless of where they live.

Not sure which market segment gets hurt the most but I think all segments will eventually get painted with the same brush if the market takes any kind of hit. Even if you personally benefit from a tax cut, you may still be facing a declining property market and will think twice about diving in head first. But this will just cause another cycle that will offer buying opportunities eventually. Just not sure where or when so maybe best to keep powder dry for now.

Btwn $500k-$1m, are mainly W2 earners. The $300k-400k W2 group will not do well in this tax plan and they are usually the young couple starting out and most likely to get squeezed. At least as you go up the chain in price, people are less likely to be hurt as a lot of that income is corp income, cap gains, etc.

This is no doubt, Trump's FU to the city that has always hated him.

Seems it is too early to opine on the new tax plan as the bill will go and come back from the house to the senate multiple times

https://www.bloomberg.com/news/articles/2017-11-27/in-greenwich-and-manhattan-tax-hike-fears-fuel-talk-of-exodus

Interesting, you guys think those ultra lux properties over $3k ppsf will get hit by this? What about all the new construction that's coming online next year? Safe?

Ultra luxury will get his with or without tax changes. Tax changes will have little effect on that as many buyers are not residents of nyc and most have non w2 income.

Ultra luxury will get hit with or without tax changes. Tax changes will have little effect on that as many buyers are not residents of nyc and most have non w2 income.

https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html

https://www.bloomberg.com/news/articles/2017-12-06/taxed-in-scarsdale-gop-plan-daunts-metro-new-york-real-estate

Looking through the new tax plan impact on a rich W2 NYC resident making $1mm with a $1mm mortgage and $25k property taxes. I think net tax is appx 2% higher. Higher incomes are similar effect. The effect is smaller for lower incomes and will disappear the less you make.

Not so bad!!

Many non W2 income NYC residents stand to benefit due to pass-through income benefits. Probably will end up being a wash overall. Impact on real estate is less clear.