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Dec 20, 2017 10:56 AMPublication: The Southampton Press

Southampton Town Administrators Prepare For Federal Tax Bill Implications

The tax receiver's office has been busy this week with residents paying ahead on their 2018 taxes.
Dec 20, 2017 10:56 AM

Southampton Town officials are keeping a close eye on the federal tax bill being pushed by Republicans in Washington, D.C., as it could have far-reaching implications locally if adopted in its current form—including a significant change in the way homeowners can deduct their state and local taxes.

For New Yorkers, the most controversial part of the tax plan would significantly scale back the amount of local and state taxes that they can deduct on their federal income taxes—which is now unlimited. If the $1.5 trillion Republican-sponsored plan is adopted as expected, the deduction for both individuals and married couples would be capped at $10,000 starting in 2018—an amount that would cover local property taxes, state income tax and sales tax paid during the year.

Sitting side-by-side in an interview this week, Southampton Town Supervisor Jay Schneiderman and Town Comptroller Leonard Marchese said local homeowners who have an annual tax bill greater than $10,000 should consider paying all of next year’s property taxes before the current calendar year ends, explaining that the expected cap would not take effect until January 1, 2018.

“It’s not a tax evasion,” Mr. Schneiderman said. “You can do this legally.”

Mr. Marchese added that it would greatly benefit homeowners—namely, those who pay tens of thousands annually—to pay their 2018 taxes ahead of schedule, if possible, before the window closes later this month. “That’s a discussion people should be having with their accountant,” Mr. Marchese said.

And, apparently, many homeowners have already had that conversation, according to Theresa Kiernan, the town’s receiver of taxes. She said this week that she has seen a notable uptick in the number of homeowners paying their 2018 taxes ahead of schedule. “We’ve been very busy the last 10 days,” she explained.

It was not immediately clear exactly how many people have paid ahead so far, though multiple people around Town Hall have reported an increase in traffic at the tax receiver’s office this week. Ms. Kiernan also pointed out that town residents typically have until January 10 to pay their first six months of taxes for the following year.

The Republican bill is expected to be voted on and approved sometime this week, according to a press release issued by U.S. Representative Lee Zeldin, who said he would oppose the measure.

“I am a no on the final tax reform bill,” Mr. Zeldin said in the same release. “Getting this bill done and getting this bill done right should not have been a binary choice.

“My goal in this tax reform mission has always been to ensure that the hardworking men and women of Long Island keep more of their paycheck, reduce their cost of living, and are able to save more for retirement,” he continued. “Unfortunately, this bill is not the tax relief they were promised.”

Depending on how many people take advantage of the loophole by paying their taxes early, the town could also end up seeing a financial windfall, according to both Mr. Schneiderman and Mr. Marchese. The supervisor explained that if, for example, the town collects $50 million in property taxes before the end of the month, that money would produce roughly $350,000 in interest if placed in a savings account that earns 1.25 percent interest.

However, Mr. Marchese stressed this week that those projections are not finalized and would not be known until January at the earliest.

While pleased with the prospect of collecting taxes ahead of time, both Mr. Schneiderman and Mr. Marchese warned that there are still a lot of cons in the tax bill proposal. Both warned that the cap on future deductions could make real estate investments less appealing down the road—a situation that could cause land valuations to decrease. “It’s going to cost people more to own the property,” Mr. Marchese explained.

He added that the exact chill factor, if one ever forms, is difficult to predict as a cap on federal deductions is unchartered territory. “It’s a concern for us,” Mr. Marchese said.

Suffolk County Executive Steve Bellone echoed that sentiment in his own press release issued on Friday, explaining that he’s written to both President Donald Trump and U.S. Representative Elise Stefanik, a Republican who represents the 21st district in northeastern New York and who tweeted on Saturday that she is “leaning no” on the bill.

“This is not just a Long Island issue—this is a North Country issue as well,” Mr. Bellone said in his letter to Ms. Stefanik. “The loss of these vital deductions would harm our real estate market, lower consumer spending, reduce sales tax revenue that funds critical services, and threaten our local economy.

“On Long Island the majority of homeowners rely on these tax deductions to be able to afford to live,” he continued. “These homeowners are not wealthy—they are proud working- and middle-class residents who are police officers, nurses, construction workers, teachers and so forth. We can do better.”

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Prepare for an increase in people fleeing the island! The Carolina's should see an uptick in home values shortly.
By Mouthampton (433), Southampton on Dec 22, 17 2:44 PM
Question? New tax reform. If an individual get $12,000 a year deduction.. Does one get an additional property tax deduction or is property taxes included in the $12,000.. If self employed will one be able to deduct medical premiums? I see no advantage to pay property taxes ahead if ones taxes are in the area of $6,000 depending on when you last paid. You than may only deduct one half in Dec. 2019 unless you pay in full. This for sure will be a learning experience.

By Histerical (20), East Quogue on Dec 25, 17 6:40 AM
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