Page 9 - New York Cooperator February 2020

COOPERATOR.COM THE COOPERATOR — FEBRUARY 2020 9 Cesarano & Khan, PC Certified Public Accountants PROVIDING PROFESSIONAL SERVICES TO THE COOPERATIVE AND CONDOMINIUM COMMUNITY Reporting on Financial Statements • Tax Services Budgeting & Consulting • Election Tabulation Services For additional information, contact Carl M. Cesarano, CPA 199 JERICHO TURNPIKE, SUITE 400 • FLORAL PARK, NY 11001 (516) 437-8200 and 718-478-7400 • info@ck-cpas.com cesarano &khan1_8 use this_:cesarano &khan 4 7/22/15 4:59 PM Page 1 of the market, since buyers at that level were less concerned about and dependent on the tax benefits of ownership than mid- dle-class buyers. According to a fair num- ber of market pundits, the very wealthy had different needs and considerations in making their purchasing decisions; it now appears that those market-watchers were dead wrong. Market experts surveyed by The Co- operator indicate that contrary to those earlier opinions, the savings from SALT deductions on their units were in fact important to luxury purchasers. With SALT deductions now capped at $10,000 per unit, tax savings are capped as well. Consider a tax bill of $1,500 per month, equal to $18,000 per year; at the low end of the spectrum for a luxury condomini- um in Manhattan, the owner loses $8,000 per year in deductible expenses, equat- ing to at least $3,600 per year. And keep in mind, this calculation doesn’t take into account whatever state and local income LUXURY... continued from page 1 60 Cutter Mill Road, Suite 303 Great Neck, NY 11021 Phone: (516) 466-3100 www.MajesticPropertyMGT.com Specializing in: • Quality Management Services • In-House Expertise in Cooperative/Condo: › Budgeting/Financial Planning, Taxes, Insurance • Cooperative/Condo Sales • “24/7” Emergency Answering Service • General Contracting and Supervision of Capital Improvement Projects M ajestic PROPERTY MANAGEMENT CORP. A Leader in Property Management for 30 Years of achieving that is a commitment to listen and take others’ concerns seriously. Davidson shares a similar approach. “Identify solutions to each conflict,” he says. “Create rules for decision making. Then survey the board members. How do they rank the suggested solutions, ranging from ‘strongly agree’ to ‘strongly disagree’? Produce a summary of the results.” David- son points out that in his experience, there is often nearly 100% agreement among board members, because solutions are usu- ally pretty simple. “If there are disagree- ments,” he says, “hold a discussion. And importantly, acknowledge areas of conflict to work toward a common solution. Once you have rules of the road, you can manage conflict.” Freedland concurs, summing up with the assertion that “Dissention shouldn’t permeate every issue. Work it out and get on with it.” n A J Sidransky is a staff writer/reporter for The Cooperator, and a published novelist. tax deductions the owner has lost as well as a result of this change. The resulting tax savings has fallen in most cases by tens of thousands of dollars. One fascinating side effect of this change is that increasing numbers of own- ers in New York are choosing to sell their units and move to lower-tax states like Florida to take greater advantage of the new tax provisions. Terence Tener, found- ing partner of Manhattan-based KTR Real Estate Advisors, suggests that we are expe- riencing the beginning of a flight of capital from New York to other markets by those high-income individuals able to make the move. Additionally, the new tax law limits mortgage interest deductions on loans up to $750,000; the limit was previously set at $1,000,000. The conventional wisdom among the same pundits who believed SALT deductions weren’t a consideration for luxury buyers also held that those same buyers purchased their units with cash or nearly all cash, and therefore wouldn’t be deterred by limits on mortgage interest deductibility. Apparently, this opinion was unsubstantiated as well. Luxury buyers do encumber real estate purchases with debt, and they have reacted to the loss of some portion of this tax benefit by reconsider- ing purchases that previously would have provided them with substantially more tax savings. New Rent Laws and the Mansion Tax While a revision of New York State’s rent regulations was long overdue, the in- tention of the law wasn’t to affect the co- op and condo markets—yet it has done just that. While a legislative fix may be on its way at some point in the future, at present, new limits imposed on things like security deposits, late fees, and credit and background checks have dampened purchasers’ enthusiasm for luxury condo units. In simple terms, investors at this level don’t want to contend with addition- al rules and regulations for the leasing of a single condominium unit. They don’t want to be considered landlords. Until recently, “About 25% of the high-end condo market units were purchased by investors,” says continued on page 10