2018: Global Luxury Real Estate to Feel Tax Impact From New York to Sydney, major cities will feel effects of federal regulations, stamp duties and tax system overhauls
Concerns over tax changes and government regulation will buffet luxury housing markets around the world, as punitive stamp duties in places like London and Sydney and the biggest overhaul to the U.S. tax code in decades play out in 2018.
For foreign investors, second-home buyers and flexible workers, it will be a race to dodge rising taxes. In the U.S., multi-million dollar homeowners will prepare to feel the squeeze as Congress limits tax deductions for property taxes and interest on mortgages. The removal of tax deductions for state and local income tax may cause a minor shuffle as wealthy self-employed workers, empty nesters and others look to ditch high-tax states like New York and Connecticut for homes in places like Florida, where there are no state income taxes, experts say.
Outside of the United States, double-digit stamp duty—or tax on real estate transactions—in places like Sydney and London will continue to cool luxury markets there, particularly among foreign investors and second-home buyers.
Ken Jacobs, a Sydney-based luxury broker with Christie’s International Real Estate, said he’s already seen several eight-digit deals fall through since stamp duty on foreign buyers doubled in July in Australia.
Meanwhile in the U.K., an 18-month-old hike in stamp duty will continue to dog the British luxury market, where prices are predicted to flatline next year.
The Big Apple saw luxury sales increase over the course of 2017, as sellers chopped down asking prices to attract buyers—a trend likely to continue into 2018.
Those discounts caused luxury sales to increase 7% last year and average sales price to decline by the end of the third quarter, according to the most recent report by appraisal firm Miller Samuel. The city’s median sales price was down 6% to $6.42 million in the third quarter, according to the firm, which defines luxury as the top 10% of the market.
Greater sales and bigger discounts look poised to carry into 2018, according to data from Olshan Realty. The firm, which publishes weekly statistics on pending luxury sales, has reported a rebound in activity this fall after a sluggish summer, and price cuts remain a staple feature of the market, particularly at the highest end.
Luxury hunters once headed for Miami are steering north to Fort Lauderdale, where luxury condo development is booming.
Take Hallandale, about halfway between Miami and Fort Lauderdale, where developer Shahab Karmely is building a 64-unit luxury condominium, 2000 Ocean, comprised of half- and full-floor apartments on the beach with prices starting at $2.5 million.
While coastal Miami has seen its luxury prices and sales dip over the past year, Fort Lauderdale’s luxury market is moving faster as it draws snowbirds from the Northeast, Canada and Brazil. Fort Lauderdale ranked No. 6 for real estate investment in PricewaterhouseCoopers’s 2018 “Emerging Trends in Real Estate” report, the largest upward movement of any city ranked in the report.
Miami and its submarket, Fort Lauderdale, have risen to the top of PwC’s list as primary luxury markets like New York and Los Angeles become prohibitively expensive.
South Florida, which already benefits from buyers fleeing high-tax states like New York, Connecticut and Illinois, is likely to see an uptick in interest thanks to the U.S. tax overhaul, Mr. Karmely said. The law caps a federal deduction for state and local income and property taxes at $10,000, giving people more incentive to look for tax homes in places like Florida or Texas where there is no income tax.
“I’m a believer in Miami, in the continued growth of Miami as a city and as an international hub in the long term,” Mr. Karmely said.
The race for buyers in South Florida has developers offering better and more exclusive amenities and lifestyles, said Oscar Rodriguez, principal at ROVR Development. ROVR is in the middle of building a boutique condo development in the lush residential area of Coconut Grove, which will open in summer 2019.
“They don’t want to live with 400 other people,” said Mr. Rodriguez, adding that Miami’s luxury buyers are much more cognizant of the finishes, from kitchen cabinets to amenity spaces than they once were. “It has driven the development industry to produce a much more premium product.”
Read the complete article here at Mansion Global Global Real Estate to Feel Tax impact
For more information go to https://www.redfin.com/blog/2018/03/market-tracker-february-2018.html
New York footage: © NYC & Company