Higher Taxes

A hypothetical $3 million home in Larchmont carrying $70,000 in yearly property taxes could mean an additional $22,000 hit on the owners’ federal return, assuming they are subject to the new top income-tax rate of 37 percent, Meyers said.

The law’s consequences will be greater for the move-up market, as people consider whether upgrading to a larger home is worth the added costs, according to Meyers. Demand for lower-priced properties, which have drawn buyers seeking refuge from lofty New York City prices, is likely to stay strong, assuming there’s enough inventory, he said. Last quarter, there was a 24 percent decline from a year earlier in listings under $499,000, which resulted in almost 14 percent fewer pending sales in that price range, according to Houlihan’s report.

“The reasons people buy homes, at the end of the day, are rarely driven by tax considerations,” Meyers said. “A change like this on the margins is not likely to discourage people from making what are fundamentally lifestyle decisions, rather than tax decisions.”

Lara Casano might agree. The commercial real estate executive and her husband decided to upgrade to a bigger place in New Rochelle last year, and even gambled on a quick sale of their existing home.

Trading Up

After agreeing to buy a 4,350-square-foot (404-square-meter) house, the couple discovered getting a mortgage was contingent on them selling their old one. They didn’t want to lose the deal, Casano said, so they offered the seller a $50,000 deposit, with $20,000 of that non-refundable if they couldn’t find a buyer within a month.

The strategy worked: Douglas Elliman broker Owen Berkowitz listed their 1,962-square-foot house for $629,000, and it got multiple bids before selling for $636,500 after just three weeks on the market.

The sale was completed in November and Casano, managing partner of New York-based Raem Capital, closed on her new home two weeks later. The couple will pay $24,000 a year in property taxes, up from $13,000 on their previous house, she said.

“I think we can just live with it,” Casano said. “People still need a place to live, and they’re going to chalk up tax reform as a cost of living.”