Page 14 - Boca Club News - November '19
P. 14
Page 14, Boca Club News
Legal
The Housing Effect of the 2017 Tax Cut
higher, on average, nationwide.
By Michael J Posner, a partner Prior to the tax cut, this buyer, with a blended tax rate of This tax cut effect also varies with interest rates, as the
in Ward Damon a mid-sized real 28%, had an annual tax deduction of $22,571.64. Now, under higher the interest rate, the larger the tax loss due to the
estate and business-oriented law the current tax code after the 2017 tax cut, the tax savings is reduction in deductibility. For example, at four percent, the
firm serving all of South Florida, $13,229.52, or an annual loss of $9,342.12. Over a ten-year annual deduction lost is $2,800, while at six percent the tax
with offices in Palm Beach County. term of home ownership that is nearly $100,000 in lost tax loss jumps to $4,200.
He serves as the HUD Foreclosure deductions. Mark Zandi, the chief economist of Moody’s Analytics,
Commissioner for the state of Florida. While many would argue that this is a rich person, small compiled statistics based on the effect of the tax cut as
They can be reached at (561) 594- scale problem, recent studies of this issue have shown that outlined above. Allan Sloan of ProPublica reported on this
1452 or by e-mail at mjposner@ these changes may have harmed millions of homeowners, phenomenon and analyzed Zandi’s data. His conclusion was
warddamon.com including many middle-class owners who live in states that “…Zandi isn’t saying that house prices have fallen by
The 2017 Tax Cut provided financial benefits to many with high property taxes (like New York and New Jersey). an average of 4%. That hasn’t happened. What he’s saying is
people, but as a condition of the cuts certain tax benefits However, this effect has the greatest impact on individuals that on average, house prices are about 4% lower than they’d
were also removed. Two were directly related to real estate whose household income exceeds $200,000 and purchase otherwise be.”
as follows: homes worth in excess of one million dollars. Zandi’s list of loss of value shows the greatest effect on
1. The previously unlimited real property tax deduction One suggested premise is that buyers frequently calculate property in the northeast of the United States. Four counties
was capped at $10,000 per year; and the monthly cost of a home purchase by factoring in the tax in New York and New Jersey show a loss of over 10%
2. The mortgage interest deduction cap was reduced from savings from available deduction. Using the same scenario (Essex, Westchester, Union and New York). Florida is not
$1,000,000 to $750,000. above, pre-tax cut the buyer would have an effective monthly immune to this issue. Martin County is number 195 on the
This reduction has had a substantial real-world effect on payment with tax savings of $9,287.93. With the cuts, that list at a 3.5% decline. Palm Beach County is next on the list
buyers of larger homes, especially in states with high real same home costs $10,066.44 a month or eight percent more. at number 220, with a loss of value at 3.3%. Broward and
property taxes. As an example, a house in Palm Beach Isles In order to have similar monthly costs, our buyer would have Miami-Dade County property loss is 2.5%. (The full list is
that recently sold for $2,000,000 that was financed with 20% to purchase a home between 1.85 and 1.9 million to get an available at tinyurl.com/y2p4aj9x).
down (a 1.6 million mortgage) would result in a substantially equivalent after-tax payment. This reduction in purchasing The silver lining to this is that the loss of deductibility has
greater after-tax cost than prior to the tax changes. The first- power drives prices of homes lower, in the same manner as driven many in the highest tax states to look for new places
year monthly cost of principal, interest (at 5%) and taxes on higher mortgage interest rates. to live. Florida’s lack of income tax has always been an
this home would have been $11,168.90 and the annual cost This loss of deductibility has, according to experts, attraction, so now, with the cost of high-end homeownership
$134,026.80. reduced the real value of homes by four percent. The Federal increasing, many in the highest hit tax states may immigrate
Prior to Tax Cut After Tax Cut Reserve Board, as of May 2019, valued residential real estate to Florida, if they can sell their present homes.
Total Interest 6,621.99 6,621.99 at 33 trillion dollars. That makes the loss due to the tax cut
Deductible Interest 4,138.00 3,104.05 in excess of 1.3 trillion dollars. Therefore, but for the tax
Total Taxes 2,579.75 2,579.75 cut, average home prices could be as much as four percent
Deductible Taxes 2,579.75 833.33
Deductible Savings 1,880.97 1,102.46
Grape Expectations from page 13 mouth-feel. Louis Jadot, Guy Breton and Duboeuf all bring
to the market excellent examples of Morgon at affordable
Brouilly is the largest Cru in Beaujolais. Many of the better prices.
producers make wines with a bouquet of violets, a gorgeous Moulin-a-Vent – Can produce the most full-bodied and
palate of sweet fruit and a terrific balanced finish. Some of powerful of all the Cru Beaujolais. They are often slightly
these Brouilly can rival the great red Burgundies made a few oaked and more structured. They can age for up to 20 years.
miles away at a fraction of the cost. Seek out: Joseph Drouhin, The great Negociants-- i.e.; Drouhin, Jadot and Duboeuf
Domaine Rochette and, of course, Duboeuf. always produce the most reliable examples of each Cru.
These wines may be a bit more expensive ($20-$40) but are
While Fleurie, Brouilly and Saint-Amour are made in a
MEDICARE more Burgundian style, with medium body, velvety texture certainly more cost-effective than red Burgundies.
Julienas and Chenas - These Crus are smaller in size and
and a fruity finish that should be consumed within four years
OPEN ENROLLMENT of harvest, the following three Crus are bigger wines. stature, but nonetheless produce fine examples of Beaujolais
at affordable prices.
Morgon – These wines are probably the richest and
In brief, when someone scoffs at Beaujolais as being
earthiest of all Beaujolais. After at least five years they take on
the silky texture of great Burgundy. They are heavier, deeper some light, insignificant wine not suited for “real”
10/15 - 12/7 FOR 2020 PLANS in color and in no ways resemble the Nouveau style. These drinking, have them try one of the Cru Beaujolais. It’s my
best recommendation for that “turkey wine” you should
wines often surprise the palates of even the most discerning
wine snobs. Recent vintages like 2016 will need three years bring to friends for Thanksgiving dinner. And tell them I
REVIEW YOUR PLAN or more before the tannins soften and provide that velvety recommended it!
FOR CHANGES
AND VERIFY Archive GAlleries
ALL BENEFITS
YOU ARE ENTITLED TO
Pays higher Prices for fine art - antiques - Jewelry
PETER GRATZON
• Oil Paintings • sterling silver • antique jewelry
TOP INDEPENDENT • Oriental rugs • Objects OF art • MOdern jewelry
MEDICARE AGENT • Fine Furniture • sculPtures • watches
561-361-7173 • POrcelain • clOcks • cOstuMe jewelry
C: 561-289-9396
we also Purchase anything decorative or collectible
TIME FOR A SUPPLEMENTAL PLAN? • servicing • in FlOrida
CHOOSE ANY • snOwbirds • new yOrk
DOCTOR/HOSPITAL/NO REFERRALS • new jersey
ANYWHERE IN THE COUNTRY
APPOINTED WITH MAJOR INSURANCE CARRIERS call now for a free consultation, no obligation
NO OBLIGATION/
NO FEES/ cash courteous
NO COMMISSION Payments in home
CALL FOR IN-HOME APPOINTMENT uPon request mr. JosePh 561-498-7536 service