Author Topic: Manhattan Luxury-Apartment Sales Plunge After New Transfer Tax  (Read 336 times)

Mackin USA

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Manhattan Luxury-Apartment Sales Plunge After New Transfer Tax
« on: September 03, 2019, 10:04:05 AM »
Interventionist policymakers in New York City, who are willing to change tax law to spur artificial economic activity in a sagging real estate market in Manhattan shows just how desperate officials are to reverse the housing market downturn. However, with intervention, there are always consequences, those consequences are being seen with a drastic drop in sales in July and the months ahead.

https://www.zerohedge.com/news/2019-09-02/manhattan-luxury-apartment-sales-plunge-after-new-transfer-tax
Mr. Mackin

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Re: Manhattan Luxury-Apartment Sales Plunge After New Transfer Tax
« Reply #1 on: September 03, 2019, 03:09:44 PM »
Tax policy is always social policy, whether it is the mortgage deduction, different rates for wages and capital gains, or exempting food from sales tax.

What I can't tell from the linked article or the WSJ original it is based on, is what was the goal of the tax? Was it simply to raise money? Was it to slow the rise in housing prices by capping the top end? Was it to hit the 1% with an additional tax?

Also, it turns out this is a small number of transactions (big percentages, but small effects in the overall economy).

Anyway, the articles are written as if I live in NYC and have been following this issue for months.

Interesting bits...

Quote
The slowdown in Manhattan is a combination of an exodus of foreign buyers; President Trump's income tax changes, which limited the deductions for mortgage interest to the first $750,000 borrowed and capped state and local taxes (including property taxes) to $10,000; a domestic economy that is slowing; trade war uncertainties from the Trump administration; and a global synchronized slowdown.

From the WSJ article

Quote
The median sale price of a Manhattan apartment fell to $970,000, the lowest level in four years. That was down 40% from the figure in June, which was pushed up by the many high-end sales.

At the same time, sales below $2 million, which weren’t subject to the new tax, chugged along at a steady pace. These sales were up 2.5% from June and were the largest July total since 2015. The analysis includes sales filed through Aug. 31.

Donna Olshan, a broker who tracks the luxury market, said the slowdown has continued. She said the number of contracts signed for properties listed for $4 million or more fell 17% this year through August, including a steep decline this month.

She attributed much of the slowdown to the long-term effects of another change in taxation that increased the cost of owning real estate: federal limits placed on the deductibility of state and local taxes, including on New York’s relatively high property taxes. The new limits took effect in 2018.