Will rents increase if SALT eliminated? (real estate, apartments, rentals)

[Shet]

If the State And Local Tax (SALT) deduction is eliminated, will rents increase ? Will landlords pass on the increase to the tenants especially in high-rises or complexes where all the apartments or dwellings are rentals?

[nybbler]

Probably not, because they'll still be deductible as a business expense.

[j0nx]

But what about the higher demand for larger and more luxurious apartments that home owners will desire to stop getting double taxed?

[GiantRutgersfan]

Originally Posted by j0nx

But what about the higher demand for larger and more luxurious apartments that home owners will desire to stop getting double taxed?

Presumably home prices would adjust to reflect the changes in the law over time.

I don’t think we will see significant changes though.

[nybbler]

Originally Posted by j0nx

But what about the higher demand for larger and more luxurious apartments that home owners will desire to stop getting double taxed?

Not significant. Under the current tax regime, such high income owners are already unable to deduct state and local taxes due to AMT.

[Marc Paolella]

Originally Posted by Shet

If the State And Local Tax (SALT) deduction is eliminated, will rents increase ? Will landlords pass on the increase to the tenants especially in high-rises or complexes where all the apartments or dwellings are rentals?

For the apartments in 2-4 family dwellings, which are quite numerous, there will most likely be upward price pressure on rents by the removal of this deduction. Many owners of properties like these do not expense property taxes, they are accounted for on Schedule A of a personal return. They will be raped by the elimination of the SALT deduction. I would expect them to try to recoup some of this loss by charging more for rent.

[BPP1999]

Originally Posted by Marc Paolella

For the apartments in 2-4 family dwellings, which are quite numerous, there will most likely be upward price pressure on rents by the removal of this deduction. Many owners of properties like these do not expense property taxes, they are accounted for on Schedule A of a personal return. They will be raped by the elimination of the SALT deduction. I would expect them to try to recoup some of this loss by charging more for rent.

This is false. You are a realtor, I am a CPA. Anyone who owns a rental property deducts the real estate taxes paid on that property directly against the rental income generated by the property. The potential removal of the state and local tax deduction as an itemized deduction on Schedule A has no effect on this.

I think the whole idea of eliminating this deduction is Derr Trumppff’s way of trying to stick it to the high tax blue states that voted against him.

[GoHuskies]

Originally Posted by BPP1999

This is false. You are a realtor, I am a CPA. Anyone who owns a rental property deducts the real estate taxes paid on that property directly against the rental income generated by the property. The potential removal of the state and local tax deduction as an itemized deduction on Schedule A has no effect on this.

I think the whole idea of eliminating this deduction is Derr Trumppff’s way of trying to stick it to the high tax blue states that voted against him.

Removing SALT hurts more than just blue states. Any urban area with continuously improving property values will feel the squeeze. Middle class income earners who bought many years ago or those who received financial help from family will most feel the pain.

I agree this move feels targeted at Democratic voters but more at the city level. Even in red states the cities generally vote blue and the long term GOP fear is growth in liberal cities like Austin will eventually overpower the suburbs and swing states at the national election level. SALT changes might kill the explosive small city growth and lead liberal voters to flee for the suburbs and thus ensure red states stay red.

[Marc Paolella]

Originally Posted by BPP1999

This is false. You are a realtor, I am a CPA. Anyone who owns a rental property deducts the real estate taxes paid on that property directly against the rental income generated by the property. The potential removal of the state and local tax deduction as an itemized deduction on Schedule A has no effect on this.

I think the whole idea of eliminating this deduction is Derr Trumppff’s way of trying to stick it to the high tax blue states that voted against him.

Is this true for owner occupied 2-4 family dwellings also? I didn't think taxes could be expensed as you are saying. But if I am wrong, I will defer to your expertise.

[NJBoy3]

I wound't worry so much about SALT as I would Murphy with his more taxes and fees. And I am not saying that to scare anyone, just how I see it. NJ is going to turn into IL and CA. Too expensive for the working middle class..