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Tuesday, June 19 Business

Report favors Greenwich over Westchester on taxes

If it comes down to taxes, the numbers speak for themselves — and they speak loudly in favor of Greenwich over its cross-border counterparts.

Yearly property tax bills differ by nearly $30,000 between comparable homes in Greenwich and the Westchester County, N.Y., communities of Rye and Scarsdale, per an analysis published by Greenwich’s Centric Property Group, and the new federal tax law is highlighting the difference.

“Prior to tax reform, buyers could justify living in Westchester because of the tax write-offs,” said Centric’s Jeffrey Jackson. “Now, if you’re thinking completely mathematically, it makes sense to come here.”

By the end of January, Centric was averaging four or five calls weekly from Westchester residents considering moving to Greenwich, Jackson said.

Under the Tax Cuts and Jobs Act, the annual state and local tax deduction, known as SALT, is capped at $10,000, leaving homeowners to pay property taxes above that threshold. The bill also limited or eliminated many itemized deductions previously allowed, such as for mortgage interest.

That won’t make a difference for everyone, Realtors say, but could prompt some who are more price-sensitive to opt for a less expensive house.

“You know taxes won’t go down. It’s pretty much guaranteed that they’ll go only one way,” Centric’s Susan Kaupie said. “Greenwich could have the biggest advantage because of our low mill rate.”

To determine the size of the tax differential between Greenwich and comparable towns in Westchester, Kaupie looked for active listings priced between $2 million and $2.75 million. She chose that range because “these homeowners are typically more financially sensitive to the tax consequences.”

Excluding newly built homes without tax records, Kaupie found the average tax difference totaled between $28,000 and $29,000 per year.

At the time of Centric’s accounting, there were 19 active listings between Rye and Scarsdale with an average tax bill of $46,000. That compared to average tax bills of $17,000 for the 44 listings located in Greenwich’s central and eastern middle markets. In Greenwich’s Western Middle market, which includes many large backcountry lots, the average tax bill is $18,000 per year.

The homes in each market are of roughly similar size.

“Tax savings of $28,000 to $29,000 per year translates into about $500,000 in buying power at current mortgage rates,” according to the Centric report.

That tax difference hasn’t changed recently, but homeowners’ ability to use it as a deduction has. Realtors, though, are mixed as to whether it will affect home-buying decisions.

Some Greenwich agents say they think the town’s housing market will benefit, while many acknowledge few buyers ask specifically for property tax comparisons while browsing homes. But that was before the new tax plan put a spotlight on the issue.

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“Before now, not a lot of people asked about the tax difference,” Jackson said, “but now that it’s highlighted, everyone is bringing it up. I took one client who wanted to look in Westchester to a showing there, and after doing the tax comparison on one house he said there was no need to go back,” he said.

Others, such as William Raveis co-president Ryan Raveis, believes the issue has been overhyped. “I can’t help but think how people actually make their decisions around buying a home,” Raveis said in a January interview. “People don’t make home-ownership decisions based on the tax code; they’re more driven by the place they want to live and school system.”

Contact the writer at mbennett@greenwichtime.com; Twitter @Macaela_

Macaela J. Bennett|Business Reporter

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