The Real Deal New York

Estate tax proposal could slam NYC’s wealthy

Rising property values, diminishing tax credit would leave some heirs paying onerous rate
April 07, 2014 01:08PM

Although recent changes to estate law boosted the amount most New Yorkers can leave their heirs tax-free, some wealthy residents could be charged substantially more than their property is worth.

The state legislature initially provided a tax exemption to estates worth less than $1 million.

Governor Andrew Cuomo — aware that property values could easily push homeowners in New York City and elsewhere over the limit — last week proposed gradually increasing the threshold. The exemption is slated to jump to the Federal level of $5.8 million in 2019, Crain’s reported.

But Kevin Matz,  an attorney and certified public accountant based in White Plains, points out the proposal also phases out a tax credit used by the wealthy to reduce the taxable portion of their estate. What’s more, a welter of changes to the tax code in the proposed bill means heirs to estates that exceed the exemption threshold by a mere 5 percent will be forced to pay a steep tax on the overage.

“It creates a problem where if you’re just a little bit above the exemption, you could pay $1.64 in taxes for every dollar you go over,” Matz told Crains. “If it’s not a mistake, it’s somewhat laughable.”

The law comes as tax assessments on properties are set to rise 8 percent in July, the largest jump since June of 2008, as previously reported[Crain’s]Angela Hunt

  • ozdragon

    And we will see more wealthy New Yorkers making their official residence in Florida. Then NY State will receive no estate tax from the wealthy and a greater burden will need to be shouldered by the middle class.

    • BS politician

      Your right!

  • Michael678

    “Estate tax and the founding fathers, You can’t take it with you”
    The Economist Magazine, 10/14/2010

    With Thomas Jefferson taking the lead in the Virginia legislature in
    1777, every Revolutionary state government abolished the laws of
    primogeniture and entail that had served to perpetuate the concentration
    of inherited property. Jefferson cited Adam Smith, the hero of free
    market capitalists everywhere, as the source of his conviction that (as
    Smith wrote, and Jefferson closely echoed in his own words), “A power to
    dispose of estates for ever is manifestly absurd. The earth and the
    fulness of it belongs to every generation, and the preceding one can
    have no right to bind it up from posterity. Such extension of property
    is quite unnatural.” Smith said: “There is no point more difficult to
    account for than the right we conceive men to have to dispose of their
    goods after death.”