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.”