#Tal Rappleyea - Real Estate Law

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New York Tax Law Change

There have been a series of changes that have taken place with taxes in the state of New York, and the majority of these changes have had influence by the governor of New York State, Andrew Cuomo, along with with other fellow NY legislators. In March of last year, the two parties reached an agreement on the budget for the 2018/2019 year, and this was implemented on March 30th. Here are some of the key changes.

Employer Compensation Expense Tax

This bill in the budget is going to create a new ECET, or employer compensation expense tax. If any employers choose to opt in this tax, they will pay a 5% tax on their annual payroll for employees that make more than $40,000 per year. This is set to be phased at a range of over three years at progressive rates of 1.5%, 3%, and 5%. This began on January 1st and the first election date for employers who wanted to opt-in was December 1, 2018.

Charitable Gifts Trust Fund

This particular budget bill will create a new CGTF, or Charitable Gifts Trust Fund that will allow taxpayers to give towards the state’s provision of education and healthcare. These charitable trusts will qualify under section 501(c)(3) of the Internal Revenue Code, which will also allow taxpayers to make a charitable deduction for contributed amounts. In terms of why this was initiated, it’s an effort for taxpayers in the state of New York to pay their personal income tax without being a victim of the $10,000 of SALT deductions. Now, contributions can be made to Health Research Inc., the Research Foundation of the City University of New York and the State University of New York Impact Foundation.

Property Taxes

Starting on December 21, 2018, the bill will provide taxpayers with a way to pay real property taxes while avoiding the $10,000 cap. School districts will have the ability to receive monetary donations from those funds and New York City counties can establish a Reserve Fund to receive monetary donations. To claim the credit, property owners must present it to the collecting officer before the last day taxes are paid without penalty. Taxpayers who had made charitable contributions can take deductions in personal income tax.

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Top Real Estate Trends for 2019

Last year’s real estate housing market started out with sky-high home prices with historically low mortgage rates, which was an advantage for sellers. While the year started out on top, it quickly dwindled halfway through with home price growth decreasing and rates at an all-time high. Will 2019 see the same results? Here’s what you can expect to happen in the 2019 real estate market:

Increased Mortgage Rates

Mortgage rates have been increasing over the last couple of years; however, that will change in 2019 as the 30-year fixed mortgage rate projects to increase 5%, which is something we haven’t seen since 2008 when the rates were spiraling downwards due to the housing crisis.

The Rise of Millennial Home Buyers

Millennials are getting older, finding stable careers and eager to become homeowners. Not only are their household incomes increasing, but they also are looking to purchase homes in the middle to upper-middle class neighborhoods. Despite rising rates and an increase in prices, millennials will continue buying homes. According to experts, millennials will account for 45% of the housing market in 2019.

Home Prices Rise with Less Offers

Home prices have made a serious jump over the last couple of years and they are only expected to continue to rise. Along with increased mortgage rates, the combination of the two is likely to discourage those buyers who are on the fence about buying a home.

A Shift to the Suburbs

Millennial homebuyers are looking to part ways from higher urban rent and instead of looking at suburban areas. Majority of millennials are at the age where they’re ready to settle down, get married and start a family so they are looking at more single-family homes in already established neighborhoods.

The Rise of Technology

Tech startups are already incorporating AI into their market analysis. Machine learning is currently being used for building management, organization, and design. Technological innovations are already growing rapidly and advancing in the real estate industry which is a major trend to look out for in 2019.

National Rents Will Rise

With higher rates limiting the number of homes for potential buyers, rent rates are expected to rise. Potential buyers will be too financially stretched to buy, so their only option is to continue to rent.

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For many people, owning a home is a major component of the American dream. It was long thought to be one of the best financial decisions a person could make. Recently, financial experts have begun to question if that is still true. Whether renting or buying makes more sense depends on many different variables. 

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For those with a passion for real estate and an interest in the law, a career in real estate law is most ideal. Many of the legal issues they deal with are sales, leasing, and other transfers of real estate and property.

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