The Real Deal New York

Florida resi brokers, developers chase New York buyers affected by new tax law

But is the millionaire "migration" really happening?
January 11, 2019 10:30AM

The new federal tax law, which came into effect on January 1, limits deductions for state and local taxes, including property taxes, to $10,000. (Credit: iStock)

Sunshine and low taxes.

That’s what residential brokers and condominium developers in Florida are offering homebuyers looking to escape high-property-tax states like New York, New Jersey and Connecticut.

The new federal tax law, which came into effect on January 1, limits deductions for state and local taxes, including property taxes, to $10,000.

A report by Bloomberg found that under the new law, a New Yorker with $10 million in ordinary income and a $10 million home could have saved about $1.2 million in total taxes by moving to Florida at the start of last year.

As The Real Deal reported last year, Florida resi brokers have been using tax incentives to try to woo wealthy homebuyers away from the Northeast.

Daniel de la Vega, president of ONE Sotheby’s International Realty in Miami, told Bloomberg he held an event in Long Island in October that included a presentation on the tax advantages of moving to Florida.

Condo developers haven’t been shy in their courtships, either. Vladislav Doronin, who is converting the top floors of the Crown Building in Manhattan into luxury apartments and a hotel, has been inviting tax advisers to his events around the country, according to Bloomberg. He also hosted a tax reform panel at his Miami sales offices last year.

But there’s no consensus on whether the new tax law will actually prompt the “migration” of millionaires brokers and developers are hoping for.

Economists at the conservative Heritage Foundation predicted New York and California alone could lose 800,000 residents to tax-related migration over three years, according to Bloomberg. But Cristobal Young, a sociologist and author of “The Myth of Millionaire Tax Flight: How Place Still Matters to the Rich,” found that modest tax changes have “very small effects” on millionaires’ decisions to relocate. [Bloomberg] — Decca Muldowney