Trump Tax Bill Threatens Historic Preservation, Homeowner Tax Break in Brooklyn

Republican lawmakers introduced a tax reform bill in the House of Representatives last week that includes two measures that could affect real estate and development in Brooklyn. The proposed changes include eliminating the federal Historic Tax Credit and halving the cap on the mortgage interest deduction.

The Historic Tax Credit program, enacted under President Ronald Reagan in 1981, encourages the reuse of historic structures with a 20 percent income tax credit for rehabilitating income-producing properties. In Brooklyn, the credit has been used for projects such as the transformation of Dumbo’s industrial buildings into offices, turning the Brooklyn Fire Headquarters in Downtown Brooklyn into affordable housing and restoring the Williamsburgh Savings Bank in Williamsburg as an event space.

According to the National Trust for Historic Preservation, projects in the State of New York between 2002 and 2016 created 52,051 jobs (28,671 of those permanent) and generated more than $4 billion in income.

The bill also proposes capping the portion of a mortgage on which homeowners can deduct interest at $500,000 — it is currently capped at $1 million. While long criticized as a benefit only for homeowners and those in the higher income brackets, in Brooklyn, it would affect a wide swathe of properties.

The median sales price for all types of homes in Brooklyn rose to a record high of $760,000 in the second quarter of this year, according to a report from Corcoran. The average sales price clocked in at $937,000.

Slashing the cap to $500,000 could make it even more difficult for middle-income buyers to buy in Brooklyn, slightly depress prices at the high end of the market, and create less incentive for high-end luxury development that isn’t rentals.

What do you think?

Related Stories

• The Restored Romanesque Splendor of Brooklyn’s Fire Headquarters
• Guggenheim Opens Gallery in Beautifully Restored Williamsburgh Savings Bank
• Developing Consumer’s Park Brewery: The Fleeting Spice of Life

Email tips@brownstoner.com with further comments, questions or tips. Follow Brownstoner on Twitter and Instagram, and like us on Facebook.