LEGISLATIVE AFFAIRS: October Legislative Update
Philip Weiden | October 2019
Increases in transfer tax rates, a.k.a. mansion tax, have already affected sales and sale prices of co-ops and condos in Manhattan According to an article published in the New York Times, recent sales were down 14.2% and sales price fell 8.2%. According to the article, days on market are the longest they’ve been since 2012.
After vigorous opposition from the housing industry, a measure known by its euphemism as “just cause eviction” was abandoned by the State Legislature, but it appears that the measure will be reintroduced in next year’s session of the legislature.
The cumulative effect of all this is a weaker housing market in the years ahead. A court has also ruled that a challenge to the SALT cap as unconstitutional had no merit and was thrown out. The cap will remain in place for at least several more years until or unless a new President and a new Congress make changes to it.
It is imperative that we continue to educate our Congressional members on the importance of raising the SALT and/or reinstating it in full.
On the positive side, the National Flood Insurance Program has been extended until November, which will keep home sales in flood prone areas from stalling. Thousands of home sales stall each month when the flood insurance program expires. It is expected that rates will go up again next year, the question being how much.
The National Association of Realtors is pushing for a reauthorization of mortgage debt tax forgiveness so home owners are not taxed on the amount of forgiven debt on short sales.
Since short sales are a result of a home’s value being less than the underlying mortgage, it is unlikely that sellers have the funds to pay the taxes on the debt forgiven and their only recourse becomes foreclosure, which is ultimately a drag on the entire market.