NEW YORK CITY, NY - The hot topic is the new US tax code and how it may or may not affect Manhattan (and US) real estate. Manhattan residential real estate has three distinct markets: primary residence, second home (pied-a-terre), and investment. The tax bill favors corporations, including those that purchase individual residential real estate using a LLC by lowering taxes and creating additional deductions; therefore, investors benefit (additionally, the 1031 exchange deferral was preserved which is investor-friendly). The state and local tax (SALT) deduction is now limited, applying to residents in high-income, high-property value, high-tax states (like NY); however, individuals who hit the old alternative minimum tax didn’t deduct SALT. The mortgage interest deduction has been lowered by $250,000 to $750,000, the effect of which will increase over time as mortgage rates are expected to rise. However, with the doubling of the standard deduction, this provision’s effect may be muted. The $250,000/$500,000 primary resident capital gains exclusion was preserved.
Activity in the fourth quarter jumped Y-O-Y, which may have had to do with buyers locking in the higher mortgage deduction. However, the lead up to the presidential election dampened activity in 2016, which contributed to the higher differential. Asking prices seem to be adjusting to the new world reality, buoying activity.
- Median condo ask was $2.35M, down from the historical 1Q17 high of $2.5M
- Median co-op ask was $995,000, down from the historical 2Q17 high of $1.1M
- Condo inventory increased 8% while co-op inventory decreased 6%*
For more details, please see the comprehensive Compass 2017 Fourth Quarter Market Report.
*As of 12/22/17 Please consult your tax and financial experts for all individual tax and financial advice.
About The Julia Hoadland Team
Julia Hoagland and her team bring expertise to the Manhattan marketplace through extensive data examination and thoughtful interpretation. Julia was ranked in the top 1% of nationwide agents and in the top 5% of Manhattan agents in 2017 by the Wall Street Journal/Real Trends and the Real Deal. Julia and her team ranked number one in their office each year 2013-2016. Julia and her team are recognized experts in the industry and have been featured in The New York Times, Crain’s New York Business, The Mann Report, The Real Deal and Avenue Magazine. In addition to her work with local and national clients, Julia’s international clientele take her annually to Hong Kong and Europe.
Please join Julia at the Hong Kong Mandarin Oriental next week for a presentation on 100th East 53rd. Invitation Here