Tax Cuts and Jobs Act of 2018 Impact on NY

[showtime]

I've read many conflicting things in the media on the impact of tax reform on New York. There are some media outlets predicting 10% declines in NYC property values and saying it's the end of the world. I've also heard accountants and lawyers tell me that the impact will be quite muted for most people.

For example, one very good lawyer I trust says that the people who will be most hurt by tax reform will be personal accountants. For these guys, their services are no longer tax deductible for filers, and tax filings will arguably be simpler now for most people. If you're an accountant for corporations or businesses, it shouldn't matter as businesses can always deduct accounting services as a legitimate expense.

So what are people complaining about?

[aslan]

It's just the mainstream media making a big hype and not bothering the read the fine print. As people do taxes now in April and talk to their accountants, they'll realize that the Tax Cuts and Jobs Act of 2018 will have a mostly neutral impact on most New Yorkers.

Especially home buyers purchasing your average $2 million home in NYC will not be affected because the AMT threshold was raised significantly to $1 million per married couple. As a result, they can actually deduct some SALT now, even if it's only $10,000. Previously under the much lower AMT thresholds, these high earners were getting hit by AMT and being restricted from deducting SALT in the first place!

I heard a lot of home buyers and sellers whining about tax reform and the uncertainty during the winter, but that has mostly ceased now. Activity is picking up again and clearly the prediction for a 10% fall in NYC real estate prices has not come about.