Ask The Experts | “How will the tax reform affect buyers and sellers in a real estate market?”

With April right around the corner, and with the first significant tax reform passed since Reagan’s in 1986, taxes are on everyone’s mind. With good reason, as its implications could be significant, depending on your profile.

We thought we would take the time to outline the specific changes at play.  Note: this may be worth a forward to family and friends considering buying and selling real estate in 2018. Importantly, as you may imagine, none of the below will affect you when filing 2017 taxes as the new laws will be first applied in 2018 (filing in 2019).

*Please note that the opinions below are derived from our team brainstorming and analyzing together — the final outcome from these tax cuts is still under consideration and consulting a tax specialist remains the best route to take while tax planning.

So let’s take these changes one by one, and see what’s in store:

  • SALT deduction gets salty: The existing state and local tax deduction, or SALT remains in place for those among you who itemize your taxes, however with a $10,000 cap. As of this new bill, real estate taxes are now grouped together with SALT, and thereby also capped at $10,000.   Previously, you could have deducted an unlimited amount for state and local property taxes, in addition to income or sales taxes; alas, no longer (which has Albany scrambling to create fixes or legal loopholes to bypass this material added burden for coastal blue states, including classifying taxes as charitable gifts … stay tuned on this front)
  • Lower mortgage interest deduction: Those of you who already own a home, you’re in the clear and grandfathered in.  The new home buyers among you will only be able to deduct the first $750,000 of your mortgage debt, down from $1 million previously.
  • No more deducting moving expenses: You won’t be able to expense your U-Haul costs if you relocate for work (did anyone do that?) TBD on whether exceptions will be made for the military.
  • The corporate tax rate is coming down: The corporate tax rate has been slashed from 35% to 21% starting in 2019 – that’s material and has prompted many to call foul.   The alternative minimum tax for corporations has been thrown out altogether, prompting many to call a double foul.  The greatest impact will likely be on stock holders, as earnings are expected to go up as a result of these corporate goodies; lots of debate exists around how much this additional wealth will make its way to employee salaries, if at all.
  • The endangered species of the estate tax: Prior to this tax bill, a paltry number of estates were subject to the estate tax, with the first $5.49 million being exempt for individuals and a whopping $10.98 million of transferred assets exempt for married couples.  Now, those thresholds have doubled at $10.98 million for individuals and $21.96 million for married couples … so who exactly will be paying this?
  • Pass-through entities will also get a break: Pass through entities, meaning owners, partners and shareholders of S-corporations, LLCs and partnerships (who pay their share of the business’ taxes through their individual tax return) will now benefit from a 20% tax deduction.  Although the legislation includes a rule to ensure these owners don’t game the system, tax experts remain concerned about abuse of this provision.
  • AMT minimized: The Alternative Minimum Tax came about from the intention to ensure that people who receive lots of tax breaks still pay some federal income taxes; since, it’s ensnared many W2 filers, accused of taxing working income far more heavily than investment income (aka the truly wealthy).  While the AMT will remain in place for individuals, fewer people will have to worry about calculating their tax liability under the AMT moving forward, as the exemption has been raised by $70,300 for singles and $109,400 for married couples.
  • Tax bracket simplification? Not quite: Americans will continue to be placed in one of seven tax brackets based on their income, but the rates have been lowered: 10%, 12%, 22%, 24%, 32%, 35%, 37%.  While individual provisions in the new legislation technically expire by the end of 2025, many people “in the know” expect that a future Congress won’t actually let them lapse.
  • Doubled standard deduction: Lawmakers want fewer people to itemize their taxes and so they’ve doubled the standard deduction.  Single filers’ deduction has increased from $6,350 to $12,000 and joint filers’ from $12,700 to $24,000
  • Bye bye personal exemption: No longer can you claim $4,050 personal exemption for yourself, your spouse and each of your dependents to lower taxable income.
  • Bye bye alimony deduction: Alimony payments codified in divorce agreements for ex-spouses who earn less money are no longer deductible for the payer.  This provision will apply to couples who sign divorce or separation paperwork after December 31, 2018 so … hurry up and get divorced??? That feels like an off recommendation.
  • Homeowner loss deductions toughened: Losses sustained due to a fire, storm, shipwreck, or theft that aren’t covered by insurance were deductible if they exceeded 10% of your adjusted gross income.  Now through 2025, you can only claim that deduction if you’re affected by an “official national disaster” … hmmmm.  It makes you hope that if your house is destroyed by a fire, it’s by the California wildfires and not little Johnny playing with some matches.
  • Lower inflation adjustments: The new legislation uses chained CPI to measure inflation, a slower measure than previously used; over time, this will raise more money for the federal government, but deductions, credits and exemptions will be worth less.
  • Homeowners’ profits unchanged: Homeowners who sell their house for a gain will still be able to exclude up to $500,000 (or $250,000 for single filers) of capital gains.

Phew!  Quite a list.  We hope this is a helpful compilation of the new tax legislation for you and those dear to you.  We’ll keep you updated on any updates to these changes or related information as it all unfolds.

Monthly Gem | 40 Bleecker

Noho’s new 12-story condo at 40 Bleecker Street is our pick for February’s Gem. Broad Street Development brought on Ryan Korban as the interior design master, who Architectural Digest just named on its AD100 list yet again.

While Korban is predominantly known for his work with celebrities like James Franco, Kanye West, and Alexander Wang, along with top fashion labels, the interiors at 40 Bleecker mark his first full condo building. The overall design team on the project is rounded out by Rawlings Architects and Hollander Design, the latter of which will work on landscape at the project. When complete, this 12-story building will bring 61 one- to three-bedroom apartments to the in-demand neighborhood.

The photo the developers shared in the hyperlink above is a mock-up of the building’s lobby that’s currently located at the sales gallery for the project, which is nearing completion. Sales of the condo are expected to be underway early next year.

This is Jeff’s new development obsession for 2018, and rightfully so. It’s a must-see!

Apple Bites | Loring Place

This month’s culinary attraction is none other than Chef Dan Kluger’s Loring Place, located at 21 W. 8th Street in the heart of Greenwich Village. The restaurant represents the culmination of a lifelong dream for the chef who has cooked in some of New York’s most beloved restaurants for the city’s very best.  Chef Kluger is best known for leading the teams at ABC Kitchen and ABC Cocina as their Executive Chef, the latter of which was famously named Best New Restaurant 2011 by the James Beard Foundation.  No small feat.

Chef Kluger’s skill for creating delicious market-driven dishes marked by unusual flavor combinations has a new home and is on full display at Loring Place via its menu.  Comprised of small and large plates, alike, the dishes feature farms and farmers whom Kluger has gotten to know intimately over his two decades frequenting the Union Square Greenmarket.

The restaurant’s name was inspired by the street that Kluger’s father grew up on in the Bronx.  This beautiful homage to Arthur Kluger is just one of the many ways in which the spirit of the city is so deeply rooted in the restaurant, itself:  from the energy of passersby seeping through its front windows, to the original beams of the late 1800’s building reincarnated as the restaurant’s refurbished tables.  The style of warm, effusive hospitality that’s a centerpiece at Danny Meyer’s establishments, Kluger’s original introduction to the industry, is palpable, as is the culinary craft of years’ worth of experience passed down to the current generation.

Loring Place, simply put, is a celebration of New York and all things local.

Date Your City | Hockney Exhibit at the MET

Hockney at the MET. Need we say more?

For nearly 60 years, David Hockney (British, born 1937) has pursued a singular career with a love for painting and its intrinsic challenges. This major retrospective is the exhibition’s only North American venue, so don’t miss it unless you plan to travel abroad.  In it, the artist is honored in his 80th year by presenting his most iconic works and key moments of his career from 1960-current day.

Working in an impressive range of media, thoroughly seasoned by his wit and intelligence, Hockney has taken a deep dive in capturing the perceived world of movement, space, and time … yet in two dimensions. The exhibition offers a superb overview of Hockney’s achievements across his chosen media, including painting, drawing, photography, and video. Go marvel at early experiments with modernist abstraction and mid-career experiments with illusion and realism … and take in the jewel-toned landscapes of his most recent work to partake in his exploration of the nature of perception and representation.

The last day to see this exhibit is February 25th!

Ask The Experts | “What is Happening With StreetEasy?”

Question: I am seeing all of this talk about brokerages and StreetEasy… “What is happening with StreetEasy?”

Answer: For years now, brokers have had a love/hate relationship with StreetEasy.

The pros until now have included:

  • For Buyers: Helping to engage the client in the search for their new home, by creating a real-time communication channel with their broker in terms of what they’re seeing and what they like. The site also helped to set clear expectations of what buyers could expect to pay for a certain level of quality, amenities or neighborhood.
  • For Sellers: Helping to level-set pricing expectations by having a real sense of competitor pricing, availability and a sense of comparison to one’s own listing.
  • For Renters: Helping to see in one quick view a majority of rentals available in the market at any point in time, along with setting pricing expectations of what one should assume to pay.

The cons have included:

  • For Buyers: Constantly chasing the next best thing, waiting with bated breath for that alert to arrive in their in-boxes, with the hope that the next listing will do the trick.
  • For Sellers: Giving them the false sense that they could list on their own and that StreetEasy could somehow be a substitute for brokerage services.
  • For Renters: Stale listings used to bait renters into calling the listing agent, or feeling overwhelmed by the sheer number of listings, not knowing which are real.

You see, the name of the game hasn’t been about access or hoarding of knowledge for years. Over the last decade, the brokerage model (for successful players that is) has been defined by a trusted advisor relationship, where the real work happens in the process of getting the deal done. This means strategically preparing the buyer to put their very best foot forward; effectively advising the seller on the right pricing strategy, vetting buyers who are most qualified and would have the highest chance of having the deal materialize. For both buyers and sellers, a broker partner will manage all of the numerous parties involved in a deal (think lawyer, other party, other broker, bank, appraiser, inspector, board, you name it) to ensure no one drops the ball and that the deal actually comes to fruition.

And now, recent platform changes on StreetEasy only serve to highlight the very important role that intelligent, proven and strategic brokers play. These changes are making it difficult to find proper agents online. Furthermore, many brokerages have pulled down their listings altogether which now make searching for a property online woefully incomplete. This doesn’t even touch on the fact that total rental inventory dropped to a fraction of its previous size literally overnight.

Don’t get us wrong: this is not a disparaging post towards StreetEasy. It is a “must-know” reach-out to our readers to highlight the always and ever-present importance of a real partner in the world of NYC real estate. And now, based on these changes, that partnership is even more important to ensure you have access to all of the inventory that’s actually on the market as a buyer, and access to professional marketing support as a seller.

Now, more than ever, your very first search should be focused on finding a real estate broker who can maneuver through the various platforms, in either buying a home or selling it, and manage all the moving pieces to make it happen in your best interest!

Monthly Gem | 135 W. 79th Street, #12C

We often feature shiny new developments as our monthly gems, but they’re not the only kind of real estate that inspires us.  This month, we want to highlight a listing of ours that has truly caught our attention:  apartment 12C at 135 W 79th Street.

There are many reasons why we’re enamored with this 1-bedroom gem.  First is the combination of 10-foot ceilings and abundance of natural sunlight that floods the apartment.  Second are the custom beams and dark hardwood floors which create a wonderful blend of elegance and pre-war charm, augmented by exposed brick walls and custom beamed millwork. (Those looking for modern touches will be pleased by its windowed kitchen featuring dark granite countertops, a Viking four-burner stove-top and a Sub-Zero refrigerator, among other updated features) Third is the location of the Lyons, which is on one of the most desirable blocks on the Upper West, moments away from Central Park. Last, but most definitely not least, is the flexible co-op policy that allows both pied-a-terres and pets.

The combination of these features have created a special place in our heart for this listing, that we’re certain will create incredible memories for the next owner to live here!

Apple Bites | Becky’s Bites

Some people love bacon, others adore ice cream, and others still can’t get enough of cream cheese, one of the main NYC food groups.

If you are one of these cream cheese lovers, we’re about to make your day: Becky’s Bites has just opened in the East Village to much fanfare. A friend of our team is responsible for bringing her love of cream cheese to the masses via her cream cheese bakery, featuring Beckaroos (think dunkaroos but even more addictive), various mini bagels and scrumptious cream cheese flavors (we recommend the bacon, egg & cheese cream cheese) as well as tiny tarts too . And that’s not all: the venue offers a spread of sweet and savory treats, alike.  If this doesn’t excite you, Becky’s Bites can also be found on Seamless – a sweet bite of perfection from your couch.

Her vision is making NYC as famous for its cream cheese as it is for its bagels. Let’s help make her vision a reality … ‘Meet you there!

Team Spotlight | 319 E. 51st Street

As you’ve seen by now, and if you’ve known us for a while, you’ve noticed that we’re light on tooting our own horn. That’s not so say we don’t share moments of pride or particular accomplishments, but we steer clear of more traditional, persistent horn tooting.

We prefer to let our clients tell our story, which is how we’ve built our business over the years – from referrals of clients who have trusted us and, in turn, trust our team with their friends and family to ensure the best experience and the optimal outcome for them.

To that end, we wanted to share a client relationship story that reflects the above, based on a recently signed contract for the townhouse at 319 East 51st Street. We initially sold this property to our dear clients; after renovating it with meticulous attention to detail (and brilliantly, we might add), they entrusted us with their real estate needs, again. After successfully listing the property for them, culminating into a signed contract, we are now helping them find their new home.

To us, a client is more than just one singular transaction and this story is proof that we are committed beyond the transaction. We are committed to you and our relationship over the years, through different market cycles, and frankly through different life cycles as your needs change. We are honored and blessed to fill this role, and we never take it for granted.

Thank you for your long-term support and trust!


Date Your City | Rooftop Reds

In case you haven’t heard, rooftops are the thing, the getaway, the perfect place to rise above it all and breathe. Either for a relaxing night out with your friends or a romantic date night, time is ticking to get your rooftop fix in, and no place is better than at the only rooftop vineyard in NYC. Roofs and wine, what is there to regret? Rooftop Reds is making waves in the media and is the “it” thing to go to this summer.  So naturally (because we are hip) we had to highlight this! Rooftop Reds is located at the Brooklyn Navy Yard and has stunning views, pizza, wine, and movie nights (among other events – think ribs and rosé). So don’t let summer pass you by without visiting this only-in-New-York venue!