By Colin O'Leary
December 28th, 2018
America’s oldest veteran has passed away. Richard Overton, who served in the Army during World War II, died Thursday December 27th, 2019 in Texas at the age of 112. Overton was known for his love of God, whiskey and cigars, which he credited for his longevity. He had been hospitalized for the last week with pneumonia, according to his family.
Overton was also believed to be the oldest living American. He was born in 1906 in Bastrop County, near the city of Austin in Texas. He served in the Army during WWII with the all-black 1887th Engineer Aviation Battalion from 1942 to 1945.
May he rest in peace.
By Elliot Schubin - Guest Blogger
December 18th, 2018
On December 22, 2017, President Donald Trump signed into law a 1,097 page document called “An Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018,” also known as the ‘Tax Cut and Jobs Act of 2017,’ which will take effect for the taxable 2018 year. The next few pages attempt to summarize some the most impactful changes for those involved in the real estate industry.
For years, politicians and political action committees have tried to push forth changes to the US tax code, but to no avail. It has been argued that the current code is too difficult to understand with its voluminous provisions and rules, which seem dated as they do not to take into account our current economic culture, such as globalization.
Alas, a valiant effort was made to “unrig the tax code,” and on December 20, 2017, congressional Republicans struck a deal on tax reform and on December 22, 2017, President Donald Trump signed into law “the most drastic change to the US tax code in 30 years.”
The law, which was enacted at the impetus of the republicans in the house and senate, permanently slash corporate tax rates, offer temporary cuts for individuals, and repeal the individual mandate in Obamacare.
Many of those concerned about the new tax law are members of the Residential Real Estate community. The mortgage interest deduction is capped on a mortgage of $750,000 for loans taken out after December 14, 2017, as opposed to $1,000,000 which was the amount the law formally capped the mortgage interest deduction at; and taxpayers will not realize as great a savings as they once did. The mortgage interest and real estate tax deductions were significant components of the itemized deductions on taxpayers tax returns and therefore, at times, a contributing factor in deciding to cross the threshold and status from being a rental tenant to homeowner by purchasing a home.
The National Association of Realtors (NAR) is anticipating that this change alone will cause housing prices to drop by 10% across every state in the United States. The NAR likes to refer back to the Reagan administration, when in 1980, the income tax deductions were parred back, but home interest deductions were kept in place; primarily because of the belief that home ownership is part of the American dream and the mortgage interest and real estate tax deductions are important tools to assist with the costs of home ownership, therefore helping Americans attain the American dream. The Reagan administration was not interested in taking the chance of being blamed for ruining the American dream. President Trump seems to be a bit more brazen.
Proponents of the tax bill argue that by doubling the standard deduction, the mortgage interest deduction, and state and local property tax deductions are no longer needed.
It is extremely important to note that some of the individual changes to the tax code are temporary and will revert back to the prior law, in 2026.
The new 2017 law which will be effective for the 2018 taxable year contain some significant changes to the tax code, namely, a significant increase in the standard deduction; the curtailment of state and local income tax deductions; limiting the deductibility of mortgage interest; eliminating the itemized personal deduction for Home Equity debt; and a major overhaul of the corporate tax rates.
- Individual Tax Rates:
The new law keeps seven tax brackets for individuals, but six are at lower rates. In 2026, the current-law rates and brackets will return. The temporary tax brackets under the new law are as follows:
- Significant Increase in the standard deduction:
The standard deduction which taxpayers can opt to take has been significantly enhanced for the 2018 tax year. To put this into perspective, in 2017, the standard deductions for a single filer was $6,350, and $12,700 for joint filers. The new tax law has now raised the standard deduction for a single filer to $12,000 and $24,000 for joint filers. The standard deduction for “head of household,” an individual who is not married but has dependents, has been raised as well to $18,000. Unfortunately, you cannot have your cake and eat it too – the cost of raising the standard deduction is the removal of some itemized deductions and personal exemption.
- Removal of the Itemized Personal Deduction:
For taxpayers who have filed itemized deductions in the past, the personal exemption has been $4,050, this exemption will no longer exist until the taxable year of 2026. - Limiting the deductibility of mortgage interest:
Anyone who purchased a home on or before December 14, 2017, will not be affected by this provision of new law.
A homeowner with an existing mortgage can refinance the mortgage debt up to $1 million, the same as in 2017, and still deduct the interest as long as the new loan does not exceed the old loan.
Mortgage interest on second homes purchased before December 14, 2017 can still be deducted, but is subject to the new $750,000 principal balance limit.
A home purchased after December 14, 2017, is subject to the new rule of limiting the interest deduction to mortgages of $750,000, and is only applicable to primary residences; vacation or secondary home mortgage interest will not be deductible.
There are some who suggest that to help offset the loss of the mortgage interest deduction on a secondary home; if the home is rented out, the cost associated with the home can be written off as a business deduction, which would include a portion of the mortgage interest and property taxes.
- Home equity Line of Credit:
Prior to the enactment of the new tax law, the US tax code allowed homeowners to borrow against the equity they had built up in their property and use the proceeds for whatever purposes the taxpayer chose. Taxpayers had been able to include the interest payments in their itemized deductions, with a cap of $1.1 million combined between the first mortgage and HELOC/second mortgage. The new tax law has eliminated the itemized tax deduction for home equity debt. Even if someone has an existing Home Equity Line of Credit, 2017 is the last year the interest can be written off.
But all is not lost! A carve out in the final language of the new tax law states that if the funds from the HELOC or second mortgage combined with the t first PM mortgage does not exceed $750,000, and said funds are used for renovations or other home improvements, the interest are deductible.
In the taxable year of 2026, interest payments for HELOC’s in the amount of $100,000 or less will deductible regardless of the use of the proceeds.
- Curtailment of state and local income tax breaks:
The new tax law limits the local property tax deduction (SALT) to $10,000. In states such as New York and California where property taxes are high, homeowners will feel an additional burden by not being able to subsidize and justify the payment of high real estate taxes as being worthwhile because of its inclusion as an itemized tax deduction.
This too will revert back to the old law for the 2026 tax year.
- Capital Gains Exclusion when selling a home:
Taxpayers will continue to be able to exclude up to $500,000 (for a couple) or $250,000 (for single filers) of capital gains tax when they sell their home. However, as is presently the case, the taxpayer must have lived there for 2 out of the previous 5 years.
- Corporate and Business Tax Impact:
The main component of the new tax law in regard to corporate and business taxation deals with a change to the tax structure for entities known as pass-through entities. Pass- through entities account for about 95% of US businesses. Sole proprietorships, Limited Liability Companies, Partnerships, and S Corporations are all examples of pass through entities.
The new tax law provides a 20% deduction for “qualified business income,” defined as income from a trade or business conducted within the US, by a Limited Liability Company, Partnership, S Corporation, or Sole Proprietorship. The 20% deduction will lower the amount of the business’s taxable income. The goal of this deduction is to give pass through entities some financial breathing room to allow business owners to reinvest that saved money back into the business. This deduction is allowed against business profits and does not apply to wages earned by the business owner.
However, there are caveats to this deduction. “Service-type” businesses, such as accounting and law firms, are excluded from this deduction. The lawmakers’ intent was to prevent solo law practitioners and accounting firms to benefit from the tax break because of the belief that the relief from the deduction will not in those cases be reinvested into the business. The tax deduction is meant to provide a break on a portion of the business’s income that results from capital income. Capital income are generally items from assets, as opposed to labor income, which is income generated from human labor and should therefore be left out.
Another caveat is that the deduction begins to phase out for joint return filers earning $315,000, and $157,500 for individual filers.
The information provided above is a brief synopsis and summary of some of the provisions listed in the “Tax Cut and Jobs Act of 2017.” You should not rely on this article, but rather contact your tax professional with any questions you may have. This article is intended to provide an awareness of the issues involved.
Elliot S. Schubin is an attorney with the law firm of Schubin & Isaacs, a New York law firm handling transactional, corporate, and nonprofit corporate needs.
Schubin & Isaacs
Attorneys and Counselors at Law
1262 E. 38th Street, Brooklyn, NY 11210
70 Bowery Street, New York, New York 10013
Connect with Elliot on LinkedIN
By Colin O'Leary
December 15th, 2018
Before the Dodgers moved to sunny Los Angeles, they played at Ebbets Field in Brooklyn from 1913-1957. After the Dodgers left Brooklyn in 1957, Ebbets Field was torn down and a large housing project was constructed, erasing all signs of the historic baseball stadium.
The cultural influence the Dodgers and Ebbets Field had on Brooklyn and America can not be understated. The team had deep roots in Brooklyn even before Ebbets Field opened. Before the team moved to Ebbets Field, which is on the modern day border of Crown Heights and Prospect Lefferts Garden, they played in Brownsville section of Brooklyn starting in 1883.
The team was first known as the Brooklyn Grays, before they officially changed the name to the Brooklyn Dodgers around 1913. The name Dodgers was originally a nickname for the team, referring to pedestrians who had to dodge the above ground trolley carts on the streets which were prevalent at the time in Brooklyn.
Charles Ebbets, the Brooklyn Dodgers owner at the time, first started buying up lots in 1908 in his quest to build the stadium, which eventually opened in 1913. The neighborhood and land surrounding Ebbets Field was nicknamed Pigtown at the time, because of the several pig farms in the area.
The Brooklyn Dodgers lone World Series victory came in 1955 against the Yankees, two years before the team would leave for California. Ebbets Field is also notable because it was home to Jackie Robinson, the first African American to play in Major League Baseball. Jackie Robinson played for the Brooklyn Dodgers from 1947-1956.
Here some historical photos of Ebbets Field in Brooklyn
By Colin O'Leary
December 13th, 2018
A penthouse apartment at 70 Vestry Street in TriBeCa has just sold for $55 million, the NY Post reports. The brokers involved in the record breaking sale were REAL New York’s Binyamin Weinstein, Louis Adler, & Robert Rahmanian.
70 Vestry Street is a new luxury development situated on the Hudson River in TriBeCa. It was built with a classic limestone facade. The NFL's Tom Brady is one of the new buildings most notable residents. Related is the developer who constructed the property. It was designed by the architects at Robert A.M. Stern Architects. The brand new building offers residents amazing views of the Hudson River and Statue of Liberty. The building has 46 apartments total over 14 stories.
The new luxury penthouse was first listed at $65 million. The 7,808-square-foot penthouse was designed by interior architect Daniel Romualdez. The record breaking penthouse boasts a total of five bedrooms, 6½ bathrooms, multiple kitchens, a solarium, and a library. Not to mention, it has an additional 3,687 square feet of private outdoor space with amazing views of NY Harbor.
By Seth Feinman - Guest blogger
December 12th, 2018
Purchasing a home can be one of the biggest financial decisions of your life. Educating yourself before you begin the home buying process can help you save time and money down the road. It can also help you avoid costly mistakes. I've put together a list of the top 10 things you need to remember when obtaining a purchase mortgage.
1) OPTIONS, OPTIONS, OPTIONS – As a mortgage broker, part of our job is to provide clients with options. Options they might not have ever heard of, or options they didn’t realize they qualified for. Once a buyer realizes what their true buying capacity is, they can then make an educated decision on what they are comfortable with paying. So early on in the process it is key to work with someone who has many options.
2) TRUST – You must trust the person you are working with. Whether they are your realtor, attorney or mortgage professional, do your research on them first. Take a few minutes to do a Google search, you might be surprised what you find (both positive and negative).
3) DOCUMENTATION – Be prepared when speaking with your mortgage professional. You should have your last two years of tax returns (personal and business), last two years of W2s, 1099s or K-1s, last 2 months of bank statements as well as pay stubs. This is just the normal documentation needed. Some scenarios require less, some require more. But either way be prepared so you can act fast.
4) Time Horizon – When deciding on a mortgage product, one of the most important factors is your time horizon for that home. If you know for sure, or at least are somewhat positive that you will not be in the home for more than 10 years, than maybe a 30 year fixed mortgage isn’t for you. That is just one example of how the product you choose matters based on your time frame in the home.
5) Payment Shock – Many first time home buyers go from living with their family for free or paying rent, to now having a mortgage payment that might be a few times the size of their rent. Make sure to speak with your mortgage professional about what payment you are comfortable with. This way you don’t get to the closing table and realize you have overstretched yourself. Or even worse, close on the home and realize it down the road when you can no longer afford the home.
6) Closing Date on your Contract – This date has a different meaning depending on what state you live in. For example, in New York State, the closing date on contract is actually an “on or about date”. This gives both parties (Buyer and Seller) 30 days from that date. So, be sure to know in advance what the law is in your State, and then make sure to properly plan for the worst case scenario.
7) Keep Every Email – You will receive a lot of emails throughout the process. From your mortgage professional, attorney, lender and others. Save them all! There might be a time you need to resort back to an old email to clarify something or prove your point. Ask for every quote and every option to be emailed to you, even if you have already gone over it on the phone. Again, be prepared for the worst case scenario and you will be properly protected.
8) Cash to Close – This is always a popular question, “what is my cash to close going to be”? The answer is different for everyone. But, if you plan to escrow for your taxes and insurance, make sure to account for the setting up of that escrow account in your cash to close calculation. As well as any possible taxes that might be due on the property when you close. So it is not just your “closing costs” that determine your cash to close, but other factors that require you to have this conversation up-front with your mortgage professional.
9) Mortgage Contingency Period – When you go to contract (again, depends on the State you live in) there will be a clause in the contract regarding a mortgage contingency period. I advise all my clients (no matter how qualified they might be) to have a 30-45 day mortgage contingency period. This period protects the buyer’s down payment just in case something goes wrong in the beginning. A good mortgage professional will know if there are issues pretty early on in the process, but without this clause you could be at jeopardy of losing your down payment.
10) Rate Lock Period – The standard rate lock periods are 30, 45 and 60 days. Many lenders have longer and shorter periods available, but each scenario requires its own analysis. Remember as mentioned above, depending on your State, you might need a longer period of time just in case the seller exercises their rights to extra time. This is why it is key to work with a mortgage professional who works with many lenders so that they can have access to all rate lock options.
This article was written by guest blogger Seth Feinman of Silver Fin Capital. Contact Seth if you have any questions related to the home buying process.
Silver Fin Capital Group LLC
185 Great Neck Road, Suite 304
Great Neck, NY 11021
NMLS No. 41133
Silver Fin Capital NMLS No. 12147
Registered Mortgage Broker - NY
Licensed Mortgage Broker – CT, FL, NJ
By Colin O'Leary
December 10th, 2018
Shanghai has plenty of luxury hotels, but there's nothing we've seen like this before. A new 336-room hotel with a lake for water sports activities has been built around an abandoned quarry mine. The InterContinental Shanghai Wonderland Hotel officially opened to the public in November.
The cost of the quarry hotel is $288 million, according to the South China Morning Post. The project’s developer is the Shimao Group. Martin Jochman is the project’s chief architect. The idea was first envisioned back in 2006. Construction began in 2009.
The developers had to overcome many technical and logistical difficulties that came with building on the unique landscape. The property stands 290 ft tall. Visitors will have great views of the surrounding quarry and lake from their luxury suites. The rooms are currently going for around $500.00 USD per night.
By Colin O'Leary
December 5th, 2018
The city has approved a controversially development project to build a trio of large-scale residential towers on the Lower East Side waterfront on Wednesday, according to The Real Deal. After a long and bitter review process, the City Planning Commission voted 10-3 in favor of the new towers, which was filed jointly by four separate developers. The three new high-rise residential towers will join recently built One Manhattan Square, adding an additional 3,000 new housing units to the area also known as Two Bridges.
JDS Development Group will build a 1,000-unit rental tower at 247 Cherry Street. L+M Development and CIM Group will build a 798-foot tower at 260 South Street. The Starrett Corporation will build a 730-foot building at 259 Clinton Street. The projects represent a combined $4.5 billion worth of investment in the neighborhood.