Tax Plan’s Cap on Property Deduction: “Loss of American Dream,” says Wollman
Causing consternation among home owners, the GOP tax plan’s new cap on property taxes effects coops and condos. Starting in 2018, the restrictions of the tax plan will be felt in states with high real estate values and multimillion dollar homes, such as New York and California. It doesn’t have the same effect on homes in, for example, Wyoming.
The bill allows a total deduction of up to $10,000 for state and local property taxes, income and sales taxes. Previously the full amount of property taxes, in addition to income and sales taxes, were individually deductible. The $10,000 cap of the new GOP tax plan makes this moot.
New York’s coop and condo owners will need to abide by the tax plan restrictions from 2018 through 2025.
Rues Daniel Wollman, chief executive officer, Gumley Haft, a property management company with several client buildings on Park Avenue, “The great American dream is to own real estate. That may change.”
According to a report from the National Association of Realtors®:
“…Congress has greatly reduced the value of the mortgage interest and property tax deductions as tax incentives for home ownership. Congressional estimates indicate that only 5-8% of filers will now be eligible to claim these deductions by itemizing, meaning there will be no tax differential between renting and owning for more than 90% of tax payers.”
In response, Wollman continues, “This could help the sales market but may deflate prices. More people will likely consider renting as opposed to buying.”
Alternatively, he adds, “If you rent out your apartment, and it is no longer your primary residence, you would be operating a business,” he explains. “As a business, you could continue to take the full amount of property taxes as a deduction.”
While Wollman cautions renting or subletting in a condominium is less restrictive than in a cooperative building, in either case, he states, “The property cap imposed by the new tax plan is an expensive loss in high end properties.”
About Gumley Haft:
Gumley Haft provides the kind of specialized, customized attention to residents and board management that differentiates the company from larger firms. https://gumleyhaft.com/why-gumley-haft/
For 28 years, Gumley Haft has managed apartment buildings throughout the New York metropolitan area. Some of New York’s most desirable cooperative and condominium boards depend on the knowledge of Gumley Haft to manage their properties. From high rise buildings with over 300 units, to smaller, prestigious cooperative and condominiums with over 100, Gumley provides the same level of excellence to about 65 buildings with approximately 7,000 units.
As experts in the rules, regulations, policies and procedures of New York regarding cooperatives and condominiums, Gumley guides boards to become decision makers. With a CEO who is a CPA, Gumley Haft emphasizes sound financial management as key to a well-run building. Our property managers become partners with board members on a huge range of projects confronted by New York buildings every day.
We take a proactive approach in preventive maintenance to extend the life of equipment, and have experience in construction management from restoration of facades to installation of elevator systems.
With an experienced team of account executives, assistants, financial experts, back office staff and the latest technology, we serve buildings in New York neighborhoods from downtown in the Financial District to the Upper West Side. Daniel Wollman is on the board of the New York Association of Realty Managers (NYARM), and the Realty Advisory Board (RAB) Committee on Labor Relations. https://gumleyhaft.com/daniel-j-wollman/