The passing of the GOP tax bill has caused concern for Rockland’s property owners. This is because of changes to the state and local tax (SALT) deduction which has had the largest impact where property taxes are highest, such as in the state of New York. For property investors, the new tax bill could eat into their profits. Fortunately, towns in the Rockland area are allowing citizens to take advantage of tax deductions, by paying their taxes early.
What Does the GOP Tax Bill Mean For Investors?
Property investors have until now been able to deduct their local and state property taxes from their federal taxes under the SALT provision. While Trump’s tax plan for 2018 completely eliminates the deduction of sales and income taxes, he has compromised on property taxes.
Investors in real estate will now only be able to deduct a maximum of $10,000 from their federal taxes. This would mean residents of New York receive the biggest tax increase of over $2,500 on average. With many property investors claiming deductions of up to $100,000, this cap could make buying property in New York inaffordable. It is speculated that investors may move out of the area in favor of states with lower property taxes. This could negatively affect Rockland’s economy as a whole.
How to Avoid Tax Hikes
County taxpayers in Rockland have been allowed to prepay their taxes before the end of 2017 in order to avoid these changes. The GOP tax plan will become law on January 1st 2018, giving residents a chance to file their taxes early. This means that property investors will still be able to claim an uncapped deduction and keep more of their profits.
When the next tax payments are due, however, property investors in the Rockland area may see their profits squeezed. It is therefore recommended that property owners diversify their investments, for instance by purchasing gold eagle coins or bitcoins. Unlike property, gold keeps its value even if there is a stock market crash. While less stable, bitcoin’s value has increased substantially this year, making some people very rich, very fast.
The GOP tax bill has been met with much criticism from residents and representatives of New York. With some of the highest property taxes, the changes to SALT will affect property investors the most. Fortunately, investors are able to prepay and avoid the tax hikes, but in future should diversify their investments to maintain a healthy turnover.