Elimination of SALT deductions could be a reason to move: Redfin

Elimination of SALT deductions could be a reason to move: Redfin

Reforms that could put an end to state and local tax deductions in high-tax states could cause large numbers of homeowners there to consider relocating, a recent Redfin survey shows.

Almost 33% of 900 respondents would consider a move if the SALT deductions were not available. The rest either would not move, would not be affected by the change or aren’t sure how it would affect them.

The loss of the deductions could be particularly costly for residents in places like California, New York, New Jersey, Maryland, Massachusetts and Illinois. Respondents from California were slightly more inclined to consider a move.

In California, slightly less than 6% of borrowers would definitely move, and nationally, 5.5% would definitely move. Nationally, 7.4% are unaffected by the tax change, whereas only 5.4% of respondents in California would not be affected.

More than 42% of respondents nationally and almost 39% in California wouldn’t move. More than 17% nationally and more than 18% in California aren’t sure if they’d move.

Proposed tax reforms also could encourage would-be sellers to stay put longer, as residency requirements necessary for single and married borrowers to qualify for certain deductions increase, according to a report Monday by Redfin Chief Economist Nela Richardson.

In order for single homeowners to exclude as much as $250,000 of sale proceeds from capital gains tax, and married homeowners to exclude as much as $500,000, the residency requirement could be increased to five out of the past eight years. It’s currently two out of the past five years.

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