GOP Tax Proposal a Nightmare for Co-ops and Condos

Republican lawmakers released a $1.51 trillion tax plan on Thursday that slashes corporate taxes, gives more modest tax relief to the middle class – and, as written, will hurt most owners of co-op and condo apartments in New York City. 

Legislators from high-tax states such as New York and New Jersey have already expressed strong objections to the tax package. So has the National Association of Realtors. Michael Esposito, a CPA at the New York accounting firm Kleiman & Weinshank, produced an Excel spreadsheet that shows 2016 property tax bills for select co-op buildings, along with the number of units in those buildings. While shareholders receive a 1098 form each year that details the proportionate deduction for each shareholder, Esposito’s Excel sheet gives co-op boards and shareholders a fair approximation of how these tax changes might affect our community. Condo owners receive their own tax bills, so they can see exactly what the effect might be. Many owners will suffer from the proposed cap on the property tax deduction. 

Two of the biggest flash points in the the sweeping tax package, according to the New York Times, will be: the proposal to change the popular mortgage interest deduction, allowing existing homeowners to keep the deduction, but capping future purchases at $500,000, down from $1 million; and the proposal and to limit state and local tax deductions to only to the property tax deduction, which would be capped at $10,000.