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How new tax bill will impact real estate market in South Florida
believes the new law will have a minimal or no impact on the sale of luxury properties and real estate will continue to appreciate at a high single digit rate. Without a broad-based income tax, Florida, Nevada, Alaska, South Dakota, Tennessee, Texas ...
MIAMI - The most wide-ranging reform of the United States' tax laws in more than three decades marginalizes homeownership incentives, but experts say it favors South Florida's real estate market.
The new $10,000 cap on property tax deductions was concerning some homeowners who anticipated bigger tax bills even before President Donald Trump cheered the massive overhaul Wednesday.
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This week there was a wave of homeowners attempting to pre-pay taxes at the tax collector's office in Broward, according to Broward County Property Appraiser Marty KiarBut none of them were able to do so.
"Tax bills will not be issued and open for collection until Nov1, 2018 – any attempt to prepay a 2018 tax bill must be rejected and returned to the sender," said Abbey Ajayi, who works at the tax collector's office in Fort Lauderdale.
Congressional Republicans put some tax exemptions on the chopping block to help pay for their new tax breaks, and some experts believe the ones related to real estate will affect those who own, sell and build residential and commercial real estate in South Florida.
Kislak Organization president and CEO Thomas Bartelmo focuses on the ownership, management and brokerage of multifamily and commercial real estate in Florida, Maine, New Jersey, Texas, Oklahoma and Nevada.
"All of these changes apply to single-family homes and generally relate to a fairly high price point," Bartelmo said.
The reform still allows the sellers' capital gains exemption, which excludes the first $500,000 in profits for couples and the first $250,000 for single filers when they have lived at the home for at least two years.
The new law makes changes to mortgage interest deductions, which allows homeowners to subtract the interest on their loans on first and second homesInterest paid on home-equity loans won't be deductibleThe deduction will remain at $1 million for first homes purchased before Dec15, but the cap was lowered to $750,000, and it will no longer include second homes.
"Basically $250,000 of mortgage will not be deductible to those who have mortgages or combined mortgages of over $750,000, where they did have it up to $1 million," said Miami real estate broker Anthony Askowitz, owner of RE/MAX Advance Realty. "Investors and homeowners lose tax breaksThis is not a tax break."
The Congressional Research Service reported Florida was among the 10 least likely states where tax returns claimed the mortgage interest deductionThis cap will likely affect Monroe County where about 11 percent of the mortgages were above $500,000 due to resort destinations, according to The National Low Income Housing Coalition
Mike Pappas, president and CEO of The Keyes Company, believes the new law will have a minimal or no impact on the sale of luxury properties and real estate will continue to appreciate at a high single digit rateWithout a broad-based income tax, Florida, Nevada, Alaska, South Dakota, Tennessee, Texas, Washington, New Hampshire and Wyoming could be at an advantage.
"The cap on tax deductions should accelerate the demographic shift from the northern states with high income taxes to Florida that does not have a state tax," Pappas said.
Opponents of the bill feared the new legislation was going to harm low-and-middle income minorities being forced to spend a high percentage of their income on rent. Affordable housing experts view the affordability crisis as a societal problem that is perpetuating a cycle of poverty because renters do not accumulate wealth.
In areas like Miami's Brickell and Museum Park, foreign pre-construction flippers buy with cash and put so much pressure on residential real estate values that they have priced out local buyersMiami has a higher percent of cash sales for condos due to lack of financing approvals for buildings, according to the Miami Association of Realtors.
This is why the National Association of Home Builders celebrated the bill's retention of the private activity bonds that enable the federal Low-Income Housing Tax Credit program and in a statement released on Saturday said that in doing so legislators protected more than 788,000 affordable rental units over the next decade.
"The tax reform will have a strong, positive effect in Florida real estate," Pappas said. "The corporate tax cuts should improve the economy and increase employment and wages, which fuels real estate."
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