Friday, March 29, 2019
The Tax Cut and Jobs Act (TCJA) of 2017 lowered taxes for many Americans, but for those that live in high-income-tax, high-property-tax areas such as New Jersey and New York City, the results of the Act are more confusing.
The implication is due to the new limit of state and local taxes, which will apply to about 11 million taxpayers across the country according to a February estimate from the U.S. Treasury Inspector General for Tax Administration. The states that had a high number of citizens affected attempted to pass workarounds for the cap, but the Internal Revenue Services shot these attempts down. The April 15th deadline is looming large for many of these taxpayers as those with more money and thus more complicated tax returns tend to wait until the deadline is near to file.
Now real estate professional are stepping in to try to benefit from the situation. South Florida developers have set up sales offices in Manhattan, angling to lure tax-weary finance workers with the promise of sunshine and no state income tax. Local realtors are highlighting the tax benefits of changing towns as they hope to compete. There is even a neighborhood in New Jersey that is advertising that they have lower municipal tax because of a lack of sidewalks, professional firefighters and a public high school.
For those who do not want to move, the obvious solution is to complain -- ideally to a tax court.
See Patrick Clark, Trump Tax Reform Causing Freak-Outs in Rich New York Area Towns, Financial Advisor, March 21, 2019.
Special thanks to Joel C. Dobris (Professor of Law, UC Davis School of Law) for bringing this article to my attention.