For many New Yorkers the new tax bill may not just mean higher income taxes in the next few months, and every year after that. There could be a lot more at stake for those who own homes in the Empire State.
Tax Debates Continue to Rage
Even though no one in New York wants to be paying more in property taxes, debates continue to be waged as residents try to find ways to maintain services and education. Many are split on how to find a balance. In the last few weeks Port Jefferson residents knocked down a $29M plan to raise a new school bond, which would have increased local property taxes. Yet, North Babylon school district taxpayers voted to approve a similar $69M bond, despite the increase to property taxes. Despite the seemingly unstoppable tax reform bill, the National Association of Realtors (NAR) is still calling on its formidable number of members to speak up and work to back track the changes which could hurt housing affordability, and the market.
How Much Will the Tax Bill Cost You?
According to a state by state breakdown of the new tax bill by NAR, New Yorkers could lose thousands of dollars per year due to the loss or trimming of key real estate related tax breaks and deductions. NAR projects the new bill will deflate NY house values by 10% to 15%. That would cost the average owner between $22,000 to over $33,000 in home equity and wealth. That could be enough to put some homeowners back underwater with their mortgages again. To make matters worse, the bill’s provision to change capital gains tax laws, will mean that owners will have to stay in their houses at least 5 years in order to qualify for the up to $500,000 in exemptions, which they used to be eligible for after just 2 years. NAR says around 10% of New Yorkers have owned their homes for 2-4 years. This means a substantial number of residents may either need to sell and close before January 1st, 2018, or have to hold on for up to four more years in order to avoid the capital gains tax. All while their property may be devaluing under their feet. Those who are stuck or choose to stay will find it even more urgent than ever to appeal annual property tax bills in order to try and offset these other hikes and losses.