What happens if SALT tax cap is repealed

I think most people will benefit except for may be very low end of which there are not many sales.

I'm not a tax person, but it seems to me that my clients who would most benefit from the repeal are purchasing $1.5mm-$2mm properties. Those certainly took a hit after the TCJA, so perhaps they're ripe for slight gains if there's a reversal.

ali r.
{upstairs realty}

If the SALT deduction were restored, the AMT would also bite harder since it was never indexed for inflation and is still in effect. A person making $1 million a year and paying NYC's soon-to-be highest-in-the-nation income taxes of almost 14% plus $60K of RET would not suddenly see a $200K reduction in their Federal taxable income because of the AMT.

Yes. Not sure the net taxes will change if you make more than a certain amount but the incentives to buy real estate will change slightly.

In fact, overall taxes may go up.

"Would this get Manhattan well and truly back on top of things?"

As in, prices to continue to increase faster than inflation, even though average cap rate is below reasonable? Why would that be desirable?

There's a David McKay Wilson article in the Rockland/Westchester Journal News today -- I'd link but it's behind the paywall (though I urge everyone to subscribe; it's a great paper).

Anyway, he quotes an ITEP study that if SALT is repealed, the 1.6 million people who are in the top 1% of tax filers, who earn more than $644K a year, would receive 62% of the benefits, an average $38K for each of them.

Then, the next highest 4% of filers, people who make between $263K and $644K a year, would receive 24% of the savings, an average of $3,660 for 6.3 million filers.

ali r.
{upstairs realty}

One didn't need to perform statistical analysis to figure out the SALT issue overwhelmingly affects only high earners. With the standard federal deduction raised to $25,000, one has to be fairly high on the income curve to make itemized deductions worthwhile at all. And, with the standard NY deduction at $16,000 and a NY income tax rate for people earning less than $250,000 at under 6.5%, people under that $263,000 cutoff pay fairly little NY taxes (at least income taxes, probably under $15k).

And most home buyers in Manhattan are likely $200k plus income.

SALT-Cap Repeal Gains Momentum With House Bipartisan Caucus

https://www.bloomberg.com/news/articles/2021-04-15/push-to-end-salt-cap-grows-with-new-bipartisan-house-caucus?sref=v3ILDumG

"There are more than enough Democrats who have said they would vote against any bill that doesn’t include SALT reform to stall the legislation in the House. Republicans have nearly universally said they won’t vote for Biden’s plan as constructed now. That means House Speaker Nancy Pelosi is increasingly likely going to need to come up with a compromise with the SALT-deduction advocates to forge a path forward in her chamber for Biden’s signature legislation."

Even the perma-bears have to admit this would be a positive development for NYC property values.

If they increase the salt cap, at the margin, it is clearly positive for NYC real estate. I am guessing they will settle for an increased cap of $20-30k which should benefit the entry level apartment buyer in NYC in $1-$2mm range tremendously.