Every week, Mansion Global poses a tax question to real estate tax attorneys. Here is this week’s question.
Q: What possible tax implications for high-end real estate buys do you foresee should Hillary Clinton become president? Would it be better to invest before the election?
A: Real estate tax experts told Mansion Global that they think a Hillary Clinton presidency would be good for the high-end residential real estate market, even though capital-gains taxes would likely increase. "While there is an expectation of higher taxes," said Edward Mermelstein, managing partner of the Manhattan law firm of Rheem, Bell & Mermelstein, "the impact will be softened by market certainty as well as continued economic expansion."
Mr. Mermelstein said he believes that many in the real estate market favor Ms. Clinton because she is "a known product" and the expectation is that there would be no major policy changes that would greatly impact luxury real estate purchases. "The financial markets, as well as the real estate market, do well during stable times. A Clinton presidency has significant certainty as to market conditions," he said.
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Neil Garfinkel, partner in charge of real estate and banking practices at the Manhattan law firm of Abrams Garfinkel Margolis Bergson, agreed: "I am anticipating that many of her policies will remain similar to the current administration." Though he said he believes there will be higher capital gains taxes, he does not anticipate a rush to close transactions. "Because there are so many factors that are considered when selling a property, and it is impossible to know if her plans will be implemented, I would certainly not decide to sell a property this year just because of the election," he said.
Eric Dorsch, a New York attorney with Kozusko Harris Duncan, noted that there may be increased reporting requirements under Ms. Clinton in addition to higher capital-gains taxes.
"However," Mr. Dorsch said, "if the capital-gains tax rate increases, the date of purchase would not make any difference."
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