Real Estate Group Fears Tax Plan Could Lead To Housing Crisis On Long Island
ROSLYN, N.Y. (CBSNewYork) – How will local homeowners be impacted by federal tax reform?
Now that both the House and Senate have unveiled their plans, which slash or eliminate several deductions, including those for property taxes, many want to know what the proposals mean for them.
As CBS2's Carolyn Gusoff reported, the Tri-State Area may already be feeling the impact in its real estate market.
New homes are being built in affluent Roslyn, but who will buy them if high property taxes are no longer deductible and mortgage deductions vanish, too?
"A lot of incentives to buy a home it looks like will be taken away," realtor Maria Babaev told Gusoff.
She said it appears the rush is on to close deals before tax reform deal is done.
"A lot more transactions, a lot more activity – offers that are being accepted," she said.
Realtors say the plan, as is, would hit luxury homes in high taxed suburbs the hardest. For example, one $2.5 million home has a $40,000 property tax bill, which would not be deductible.
It's not just luxury homes. Average property taxes in Nassau County are close to $20,000.
Kathy Cali, of Plainview, fears her tax burden will rise as her home value falls.
"Very scary, very. We rely on our deductions," she said. "If I can't deduct, it's like paying twice as much in our taxes."
"It will be a dramatic change. People will feel it literately double," Laureen Harris, president of the Association for a Better Long Island, said.
She predicts a geographic housing recession – the inability to sell, a reluctance to buy, and lost equity.
"Your house is going to be worth less. It's going to result in an immediate housing crisis," said Harris. "It is decimating. It is very, very serious and it's going to be overnight."
Don't look for lower local and school taxes. They're already stretched to the limit, Gusoff reported.
"People are right now are fleeing because of the high property taxes," Sean Acosta, president of Property Tax Reduction Consultants, said. "This is even going to make them flee even quicker, because the municipalities here still have to have money in their budgets, and the tax rates are still going to be the same."
The suburbs were built on the assumption of deductible property taxes.
Now, concern is mixed with hope the plan will ultimately be modified.
It's a bipartisan concern, with few, if any, elected official in the region are calling the tax plan a win. The question is: How to convince the rest of the country to care.