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The Impact of the New Tax Law on New York Homeowners

Real Estate Legality, Real Property

In light of the Tax Cuts and Jobs Act , New York Governor, Andrew Cuomo, issued an emergency executive order No. 172 authorizing localities to issue warrants to collect early tax payments from homeowners in an effort to alleviate the “devastating impact”[1] of the new Act. Homeowners had the option of paying, in full or in part, their property taxes until the end of 2017 in order to claim higher deductibles for their federal taxes.

The new law caps state and local tax deductibles at $10,000, which has a significant impact on property taxes for New York homeowners. Governor Cuomo explained that “New York has made unprecedented progress reducing the burden of taxes on our middle-class families, and we will not allow this attack to roll back all we have achieved.” On average, residents in Manhattan “take the highest average deduction for state and local deductions, known as SALT, on their federal tax returns.”[2] The average SALT deduction in New York County is $60,400, whereas in Westchester it is $34,300. The Tax Foundation published the median property taxes paid across the U.S., the highest amounts being in New York State.[3]

The IRS announced that taxpayers could receive the deductible if they not only made the payment in 2017, but if the taxes were also assessed before the end of the year.[4] Although this executive order permitted homeowners to pay their property taxes early, in some localities this was not feasible. Homeowners is Westchester, who pay significant property taxes, were unable to pay their taxes for 2018 in 2017. The county executive, Rob Astorino, explained that “[i]t is just not possible for the county to issue its 2018 tax warrants to localities within the next four days for a whole host of legal, operational and practical reasons”.[5]

Homeowners in New York who were eligible but did not pay their property taxes early will now have to abide by the new tax code, which means capping state and local deductions at $10,000. What will be the future for New York residents? Governor Cuomo proposed for New York to restructure its tax code in order to “get out of the federal trap”.[6] This new tax code will  compel local governments to preserve the interests of its residents.


[1] New York State. (Dec. 22,2017) “Governor Cuomo Takes Emergency Executive Action to Deliver Property Tax Deductibility for New Yorkers.” New York State. Available at: https://www.governor.ny.gov/news/governor-cuomo-takes-emergency-executive-action-deliver-property-tax-deductibility-new-yorkers. Accessed on Dec. 28, 2017.

[2]Casselman, B. and McGeehan, P. (Dec. 4, 2017) “How New Yorkers Would Lose Under the Republican Tax Bill.” New York Times. Available at: https://www.nytimes.com/2017/12/04/business/economy/tax-bill-new-york.html?_r=0. Accessed on Dec. 28, 2017.

[3] Scarboro, M. (May 18, 2017) “Which Places Pay the Most in Property Taxes?” Tax Foundation. Available at: https://taxfoundation.org/median-property-taxes-county-2011-2015/. Accessed on Dec. 28, 2017.

[4] IRS. (Dec. 27, 2017) “IRS Advisory: Prepaid Real Property Taxes May be Deductible in 2017 if Assessed and Paid in 2017.” IRS. Available at: https://www.irs.gov/newsroom/irs-advisory-prepaid-real-property-taxes-may-be-deductible-in-2017-if-assessed-and-paid-in-2017. Accessed on Jan. 2, 2018.

[5] The Real Deal. (Dec. 27, 2017) “Why Westchester homeowners won’t be able to pre-pay their 2018 taxes.” The Real Deal. Available at: https://therealdeal.com/2017/12/27/why-westchester-homeowners-wont-be-able-to-pre-pay-their-2018-taxes/. Accessed on Jan. 2, 2018.

[6] The Real Deal. (Jan. 2, 2018) “Democrats in New York and California are fighting the tax overhaul. Here’s how.” The Real Deal. Available at: https://therealdeal.com/2018/01/02/democrats-in-new-york-and-california-are-fighting-the-tax-overhaul-heres-how/. Accessed on Jan. 2, 2018.

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