Tax changes - impact on prices

What happens to NYC sales prices if the tax rate on capital gains rises, or if the estate tax is revived, or if the mortgage interest deduction subsidy is repealed or eroded away by inflation and the AMT? Or when the real estate tax waivers on new construction ends? Currently, it seems that the value of all these subsidies & tax breaks are capitalized into the price, so the benefit goes to the... [more]

What happens to NYC sales prices if the tax rate on capital gains rises, or if the estate tax is revived, or if the mortgage interest deduction subsidy is repealed or eroded away by inflation and the AMT? Or when the real estate tax waivers on new construction ends? Currently, it seems that the value of all these subsidies & tax breaks are capitalized into the price, so the benefit goes to the seller. Thus, it seems likely that if the subsidies shrink, prices will drop by the same amount, so that the cost of repeal will be borne by sellers as well. I'd assume the same story would apply to higher interest rates, if the Fed decides to limit its giveaway to the banks. Prices went up as interest rates dropped, so higher interest rates should cause prices to drop by a roughly equivalent amount (except in the highest reaches of the cash-only market) This isn't a logical necessity, though. Anyone have an alternative story? [less]