New York real estate is already feeling the impact of the proposed Republican tax bill.
Congressional Republicans recently agreed on the framework for overhauling the country’s tax system, and it includes reductions to several popular New York tax breaks, including cutbacks on deductions for mortgage interest, state taxes and local taxes, according to the Wall Street Journal. A Moody’s analysis has found that limiting state and local deductions in particular could cause Manhattan’s home prices to fall by up to 9.5 percent, and sales in the borough have started slowing down in recent months.
Partnership for New York City CEO Kathryn Wylde said the changes could cost New Yorkers up to $30 billion per year in higher taxes, and while local business leaders are not that worried about families leaving New York solely because of the bill, there is more concern about younger workers taking a closer look at smaller and more affordable cities.
But the news might not be all bad for New York. The top marginal tax rates on the wealthiest residents would drop from 39.6 to 37 percent under the plan, for instance, and local businesses could see a boost from lowering the corporate tax rate from 35 to 21 percent. Commercial real estate owners who own properties through pass-through companies should also do well under the plan.
Arel Capital managing partner Richard Leibovitch told the Journal he is skeptical about New York seeing an exodus of residents under the new tax plan.
“I could move my company to Florida, but there’s not enough reason to do that,” he said. “Most people are unlikely to move unless they’re already on the fence about it.” [WSJ] – Eddie Small