The Real Deal Miami

Fed tax overhaul drove more homebuyers to low-tax states like Florida in 2018

In states like NY and NJ, sales fell; More California residents left the OC
December 28, 2018 01:30PM

President Donald Trump and a penthouse for sale at the Oceana Key Biscayne in Miami (Credit: Getty Images)

A lot happened in 2018, but sticking to residential real estate, more people moved to Florida as a direct consequence of the federal tax plan.

President Trump signed the Tax Cuts and Jobs Act of 2017 at the end of the year, and after 12 months, there are clear winners and losers. The winners are states with low taxes and the losers are those with the opposite, according to Mansion Global.

Florida, where there’s no property tax, has seen an influx of high-net-worth buyers from high-tax states like New York and New Jersey. Multimillion-dollar home sales are up more than 20 percent in a half-dozen Florida counties, according to Mansion Global.

High-net-worth individuals are also buying in Tennessee, Texas and Washington, according to the report, because of limits the tax overhaul imposed on state and local income tax (SALT) deductions. Previously, individuals could write off all SALT deductions on their federal taxes, saving tens of thousands of dollars. The new law imposed a $10,000 cap.

The exodus began.

Over the last year, home sales above $1 million shot up in one county north of Dallas by 47.2 percent.

Conversely, the reforms have exacerbated a residential slowdown in some states with previously high SALT deductions, like New York. Manhattan saw a dip of 12.5 percent in home sales and Brooklyn recorded a drop of 8.6 percent. Mortgage rate hikes have also contributed to the slowdown.

Some California counties felt the heat, too. Wealthy individuals are changing their primary residences out of Orange County to avoid higher taxes there. [MG] — Dennis Lynch