How the SALT Deduction is Affecting NJ Real Estate Market

Photo Credit: Denise Kappa

The 2017 Tax Cuts and Jobs Act took effect for taxpayers upon filing their 2018 tax returns earlier this year. One of the biggest changes felt by homeowners in New Jersey—the state with the highest property taxes in the nation—was the state and local tax (SALT) deductions which include property, income, and sales taxes.

Property tax deductions
The SALT deduction allows taxpayers in high-tax states to deduct their local tax payments on their federal tax returns. Before the 2018 tax year, no maximum limits were attached to that deduction amount. Anyone who itemizes can deduct property taxes; the other taxes are their choice.

However, the new tax law placed a cap, for those who claim deductions, of $10,000 for income and property taxes. Ouch! Especially for homeowners in high-end markets, with homes valued at $1 million-plus, that cap represents an enormous drop in the deduction from what those taxpayers were claiming just two years ago.

In northern New Jersey—particularly in highly taxed municipalities in Bergen, Essex, and Passaic counties—these deductions for taxpayers who itemize were highly valued when filing their federal tax returns.

As our friend Joseph Isabella, a loan officer at Investors Bank illustrated in a recent presentation to our Cedarcrest team, “If you are paying $25,000 in income taxes to NJ and $25,000 in property taxes to your North Jersey town, that $50,000 deduction goes down to $10,000.” This is certainly affecting wealthier taxpayers, who now pay a higher tax bill to the federal government. However, middle-class Americans who itemize (or had itemized), and who pay substantial property taxes, have also felt the pinch.

Mortgage interest and home equity/HELOC deductions
Another reason why the TCJA affects those with high-value homes is that the bill also reduces the limit on deductible mortgage debt.

  • For loans taken out after December 15, 2017, the cap is $750,000. Loans existing on December 15, 2017 of up to $1 million are not subject to the new $750,000 cap (they are grandfathered in). This figure is based on married filing jointly status; for a married filing separately or a single filer, the cap is half ($375,000).
  • If you have a loan of up to $1 million that existed on that mid-December date, you may refinance it and still deduct the interest. However, the new loan must not exceed the amount of the mortgage being refinanced.
  • Interest is still deductible on second homes, subject to the $1 million/$750,000 limits.
  • The Tax Cuts and Jobs Act of 2017 eliminates the deduction for interest paid on home equity loans and lines of credit for tax years 2018-2025 unless you use(d) those funds to purchase, renovate or substantially improve your primary or second home (any personal expenses are excluded, such as education or debt consolidation).

While high-net-worth individuals are seeing the biggest impact on their tax returns, the loss in deductions could be offset by the decrease of the top federal income tax rate, the doubling of the estate tax deduction, and the cutting of the capital gains rate.

Taking a broader view, these deduction limits may not have the negative effect many people fear. Due to their income or tax bracket, many taxpayers don’t qualify for itemization on their tax returns and/or are best served taking the (now higher) standard deduction. For taxpayers who are single or married but filing separately, the standard deduction is $12,000. For heads of households, it is $18,000 and $24,000 for the married filing jointly taxpayers.

Yes, New Jersey has high property taxes, but it also has some great places to live—with lots of town services and strong school systems supported by those local property taxes. John Sass, broker owner of CENTURY 21 Cedarcrest Realty, notes that, “Prior to buying or selling a home, consumers should consult with their tax advisors/accountants to see how the new tax laws may affect them, given their particular circumstances. This is especially true now as 2020 approaches. With lots of numbers to crunch and tax strategies to consider, it’s a great time to talk about tax matters related to real estate transactions with your trusted advisor.”

It’s also a great time to come talk to our real estate professionals at CENTURY 21 Cedarcrest Realty. Whether you’re looking for a new home or putting yours on the market, our team’s expertise in North Jersey real estate will help make the process a smooth one, every step of the way.

Agent spotlight on . . . Bob Prall & Eddie Modica

As we know, real estate is a relationship business . . . and it turns out, relationships are what brought two of our newest real estate associates to CENTURY 21 Cedarcrest Realty.

Bob Prall joined our team in the Caldwell office after completing real estate school and getting his license in July. Dennis DiSabato, our Caldwell sales manager, sold Bob and his family their current home 15 years ago.

He ran into Dennis a few months ago by chance and mentioned he’d been thinking about getting into real estate. “We talked about it and I saw that it would be the perfect option for me because I like to help people. With his encouragement, I decided to pursue it.” He chose CENTURY 21 Cedarcrest Realty because, “Given Dennis’ professionalism and integrity, I wanted to be at CENTURY 21, period!”

A lifelong Little Falls resident, Bob is a former volunteer fireman and a 20-year veteran of the Little Falls Police Department, he chose real estate as he looks to a future transition from assisting people as a sergeant on the streets to helping people find the home of their dreams.

“I’m a problem solver by nature and have worked with many people of all backgrounds during stressful times, helping them through their situation to see the bigger picture,” explained Bob.

He enjoys real estate investing (and owns a rental property), so he is eager to help others as Dennis had done for his family. He also appreciates the flexibility real estate allows in his schedule plus, in his words, “the help factor.” He loves meeting and talking to new people and with his personal real estate experience, he’s excited about the potential.

“I know the job is all about building relationships and helping people-and I always feel good when I’m able to do so in my police work. Real estate has become a passion of mine that I wasn’t able to tap into until now; it will be the key to opening new doors for me.”

Eddie Modica of Totowa has joined our Little Falls office full time, grateful to have left behind an unfulfilling “cubicle job.” He’d been interested in real estate for some time; a meaningful conversation with a friend (a real estate professional) and a friendly nudge from long-time pal Chris Malatesta in our Little Falls office, gave him the impetus to make the move.

“I had a conversation with my friend on a Wednesday, enrolled in real estate school the following week, got my license in July, and joined CENTURY 21 Cedarcrest Realty right away,” said Eddie. “I’ve wanted a career that involves customer service and working directly with people for a long time-and something I could really take pride in. This is it.”

Having grown up in Woodland Park, Eddie knows the Passaic County area well. Chris brought him into the Little Falls office and Eddie was very impressed with the environment-from the team to the technology.

“Visiting there made my decision a lot easier,” he said. He noticed right away-and has experienced firsthand-how friendly and helpful everyone is. “They want you to succeed and everyone is willing to lend a hand. John Sass has been great and there are so many opportunities and resources there.”

Eddie’s looking forward to developing his own book of business as well. “A career in real estate is what you make of it which is exciting to me. No more punching the clock; I can build a more fulfilling future with endless possibilities here at CENTURY 21 Cedarcrest Realty.”

He is signing up for all the classes we offer to our agents at all levels of experience and was LUXE certified (Luxury Listing Specialist) in August.

“Training and support leads to professional growth for our sales associates as well as growth for our offices,” said broker owner John Sass. “The performance-based training we offer on an ongoing basis ensures that our Cedarcrest Realty agents are always delivering great service and that they’re operating at their highest level.”

Agent spotlight on . . . Chris Malatesta

Chris has been working in real estate for over 22 years, after a successful career in home construction. So how did he go from installing siding, windows and roofing to helping people buy and sell their homes?

“My mother used to work at a real estate agency and the broker suggested I get my real estate license,” explained Chris. “I took his advice and never looked back.” Since that time, Chris has worked primarily in Passaic Valley area—Totowa, Little Falls, and Woodland Park.

Before joining CENTURY 21 Cedarcrest, Chris, who lives in Totowa, worked at several independent and national real estate offices in Passaic County, handling mostly residential transactions. When we opened CENTURY 21 Cedarcrest Realty, Little Falls, he joined our team there.

“I already knew broker owner John Sass, so I knew I’d be joining a strong outfit,” said Chris. “Plus, it was very appealing to come into a new office with Cedarcrest’s expansion in Passaic County.”

He was also attracted to the breadth of training classes CENTURY 21 Cedarcrest provides, for sales associates at all levels of experience. “They offer so much professional development there, with seminars about sales techniques and real estate technology, classes to work towards different designations . . . there’s so much available. Plus CENTURY 21 has some great online tools that make it so much easier now to manage our pipeline and transaction process,” he added.

Although Chris enjoys helping his clients realize the lifestyle they aspire to through the home buying process, he also enjoys the challenges that the real estate field brings to him as a sales associate. If a client asks about something he doesn’t typically run across, he simply gets it handled.

“I’ll research the issue and tap my network for the right pros to get the job done. After more than 20 years in real estate, I know that a key to success in this business is to never disappoint your clients, and do whatever it takes to ensure a smooth transaction.”

We certainly agree with that credo at CENTURY 21 Cedarcrest Realty!

Happy 10th Anniversary to Us! Century 21 Cedarcrest Realty Celebrates Ten Years of Consistent Growth and Superior Service

In June 2009, John Sass became broker/owner of CENTURY 21 Cedarcrest Realty, Inc. at its Caldwell office. John and the team are celebrating the agency’s tenth anniversary this month, marking the milestone with pride, a shelf full of regional and national real estate industry awards, and a second office in Little Falls to better serve home buyers and sellers as well as commercial clients throughout North Jersey.

Prior to taking ownership of Cedarcrest Realty, John had worked in other CENTURY 21 offices in recruiting and training—a major driver in the agency’s professional development program for real estate agents at all experience levels. All agents receive training in sales and customer care, the transaction process, contracts, and using the digital marketing tools provided by CENTURY 21 Real Estate most effectively to their clients’ advantage.

The company, which started with six people in 2009, has grown 15-fold to over 80 real estate agents today—some among the region’s highest producers—plus a director of career development and two sales managers. Here’s a look at some of our achievements over the past decade:

Ten years of growth and recognition

  • Grew sales volume by 500%, from $20 million in 2009 to $110 million today
  • Multiple awards for sales volume, gross closed commissions and customer service:
    • CENTURY 21 Quality Service Pinnacle Award every year since 2010, based on a high level of customer satisfaction
    • CENTURY 21 Gold Medallion Office Award for production, 2012-2017
    • CENTURY 21 CENTURION® Award for superior production, 2018
    • CENTURY 21 President’s Award, 2018 – the most prestigious award given by the system to producers, teams and offices that achieve both CENTURION® level production and the Quality Service Pinnacle Award in the same year
    • Gold medal as “Best Realtor” in the Suburban Essex magazine’s Best of Essex Readers’ Choice Awards, 2015-2018
    • Numerous New Jersey REALTORS® Circle of Excellence awards for sales
  • Added Fine Homes & Estates division in 2015
  • Designated by CENTURY 21 Real Estate as a certified commercial specialist in 2018
  • Opened second office at 44 Main Street in Little Falls in March 2019
  • Top donation site for 10 years in a row for the U.S. Marines Toys for Tots holiday gift program in addition to supporting Easter Seals, NJ Special Olympics and area charities that aid the local community

“I’ve always cultivated a family feeling that values teamwork, which translates into better customer service out in the field,” said John as he looks toward the future. “We are well-positioned to continue our forward trajectory as we strive to always deliver—in the words of CENTURY 21 Real Estate—relentless service and commitment, and a superior experience for everyone involved.”

Working with Millennial First-Time Home Buyers

With most first-time home buyers falling within the millennial age range (those born between 1981 and 1996, ages 23 to 38 this year), real estate professionals might be interested in findings revealed in a recent Chase Home Lending survey. The survey was done among 1000 millennials about home ownership.

It turns out that they making smart financial decisions and saving money to make home ownership a reality. In fact, responses point to millennials being hyper-focused on the home buying journey. More than two-thirds of respondents said they want to talk about the process and about real estate topics, such as affordability and neighborhoods, with their friends.

Some other key findings include:

  • Seventy percent say they are willing to cut back on weekend activities in order to buy a home within the next 12 months – they are curtailing their shopping, dining out, movie-going and spa visits among their expense reduction tactics
  • Women are slightly more open to this idea than men
  • Fifty-two percent of first-time home buyers feel financially ready now
  • Many are optimistic about the home buying process
  • Seventy-one percent of women are willing to discuss real estate topics with friends while over 50 percent of men are comfortable talking about these on social media

Our takeaways at Century 21 Cedarcrest

1 – Real estate agents who provide an excellent transaction process with millennial homebuyers are likely to receive more referrals. After all, if these buyers are talking to their peers about the home buying journey, they are more likely to refer those agents with whom they are having a positive experience. This group values peer opinions; make sure you’re part of that.
2 – Members of this demographic are serious about positioning themselves for home ownership; and they want to learn more about becoming home owners. Whatever information or guidance you can provide will be a positive part of the transaction and help position you, as their real estate agent, as a trusted resource worth their referrals.
3 – If improving their credit score is an issue they are working on, or if they want to better understand home mortgages, look at your network to see who you can refer to help these home buyers make their dream of ownership a reality.
4 – With more than half of millennial first-time home buyers stating they feel financially ready to purchase a home, help them keep up the anticipation and excitement with relentlessly excellent service.

At Century 21 Cedarcrest Realty, we pride ourselves on making the process as smooth as possible for first-time home buyers. We understand you’ll have lots of questions and our team has the answers—and the listings that meet your criteria, from neighborhoods to school systems to town services and more. Whether it’s a condominium, townhouse, or single-family home, contact Century 21 Cedarcrest about what you’re looking for.

Going into a Commercial Space? Follow These Five Steps.

CENTURY 21 Cedarcrest - Commercial Space TipsCENTURY 21 Cedarcrest is expanding and—if all goes well—we hope to move into a second office in the Township of Little Falls, in Passaic County. The last couple of months have been hectic, to say the least, with choosing a location and then dealing with all the aspects of the build out in our new space.

John Sass, broker owner of Cedarcrest Realty, shares these tips for companies that are moving into a new commercial space, and are undergoing renovation.

  1. Have a plan. Know in advance exactly how you envision the space, from its design to how it will be used and by whom. Plan down to the smallest details, with the help of your design and construction team. It might sound crazy but even the number and placement of electrical outlets and Wi-Fi connections will make a difference for your staff—so think about your number of employees, their jobs, where customers will be greeted or wait for service.
    1. For example, if it’s a retail location, your selling space is key; your back office, less so. Are you opening a restaurant? There is so much that goes into planning your back of the house as well as front of the house.
    2. Make sure, as part of your plan, that you hire professionals with experience in your type of commercial space or who have worked with the municipality before (always a good idea when dealing with a building department) or with your landlord.
    3. Also plan for delays that you cannot control (whether it’s a scheduling issue, equipment that has not arrived when expected, weather-related delays, etc.). No matter how well prepared you are, your project will take three times longer than anticipated (and probably cost twice as much!).
  2. Check with the town for all requirement and permitted uses for the property. Find out exactly which permits you’ll be required to take out, how you may use the property (is it retail only or can you put an office in that storefront?), and what will trigger a variance hearing with the zoning board. Ask the building department what it requires in terms of drawings or anything else that could catch you off guard during construction (and hold up the project).
  3. Get contractor estimates in writing. Make sure your general contractor (or any trades you hire) put their estimates in writing and commit to them. Get their timelines for getting your work down as well (do they have other jobs that will make it difficult for them to get to your project?)
    1. Be sure they are all licensed and insured and that those numbers are readily available to you.
    2. Before you sign, check references, their ratings, and see if there are any complaints against them at the NJ Division of Consumer Affairs.
  4. Maintain good communication with all parties. Keep an open line of communication with your architect, interior designer or space planner, the contractor, and the landlord. When everyone knows what’s going on, things will progress more smoothly, problems will be solved more efficiently, and you’ll avoid nasty surprises.
  5. Understand your landlord’s expectations. Bottom line—it’s the landlord’s building, not yours. The landlord expects the renovation work or installations to be completed in a timely fashion, and performed in accordance with the property. You cannot alter something that does not belong to you without the landlord signing off on the plan. Check your lease for any build out requirements or restrictions for both interior and, if applicable, exterior work. This includes awnings and signage.

Above all else, stay calm and remain flexible. Moving into a new commercial space is exciting but a lot will happen between finding the right location, signing the lease, and move-in day—even when there is little work to be done (perhaps just a coat of fresh paint or new flooring in an office). Even as a certified commercial specialist, we are tackling the challenges of building out a new office every day!

Agent Spotlight on … our Newest Real Estate Team Members

CENTURY 21 Cedarcrest Realty has been growing significantly this year, with three new agents joining our team in the last two months.

Krystle Delgado - Century 21 CedarcrestKRYSTLE DELGADO is new to real estate but her dream of working in real estate dates back to her high school graduation! After some other endeavors and dealing with a serious health issue, Krystle examined her life and made her career goal a priority. During her recovery, she took the real estate course and passed the exam.

She was looking for schedule flexibility and was talking to several agencies but none felt right. A conversation with a family friend led to her contacting Susan Mazzetta, CENTURY 21 Cedarcrest’s director of training and development.

“Susan made me feel very comfortable and at ease, and right away, I knew that Cedarcrest Realty was a good fit for me.” Krystle, who lives in Bloomfield, joined our agency in early October.

As to “why real estate,” she has a strong sales background and values independence and self-sufficiency. “I like the idea of being in charge of my own business; if I’m not successful, there’s no one to blame but myself.”

Regarding CENTURY 21 Cedarcrest, Krystle says, “Everyone is very willing to help and answer questions; I never feel intimidated. Everyone walks you through the processes and offers assistance. I also like to learn new things and there’s a lot of training here, which is great.”

Natasha Barinas - Century 21 CedarcrestNATASHA BARINAS also joined CENTURY 21 Cedarcrest in October after several years selling real estate in Los Angeles. Prior to that, she worked in fashion design and production, in retail, and owned her own swimwear line.

“I like real estate because you’re independent, taking responsibility for your business,” she says. “I also like the dynamic of working with so many different people; every day is different.”

She finds similarities between real estate and her work in fashion, where she did a lot of negotiating and interpreting ideas into reality. “With real estate you help buyers determine where they really belong. I love helping them discover the dream home they truly feel is right for them.”

After moving to Verona this past summer, Natasha enrolled in the NJ state licensing classes; she told her instructor she wanted to connect to a more intimate, boutique-style brokerage, like the one in California. “CENTURY 21 is exactly what you’re describing” was the advice she received. She says that she felt that immediately when she interviewed with Susan at Cedarcrest Realty.

“In Los Angeles I interviewed at around 30 agencies before finding the right one but here, I found exactly where I want to be right away. The way the agents joke around and really know each other—it felt like family.”

Carolina Marin - Century 21 CedarcrestCAROLINA MARIN of Clifton, who’d worked a few years ago at a Coldwell Banker office, has returned to real estate after a brief hiatus into other fields. She joined CENTURY 21 Cedarcrest in early November after a chance meeting with a friend, Paula Cano, one of our real estate agents.

“I mentioned that I wanted to get back into real estate and was looking for an agency that offered training and development. Paula recommended CENTURY 21 Cedarcrest because of the training and professional development here,” says Carolina. “I really appreciate that Cedarcrest Realty gives us the tools to develop our real estate practice.”

She says she likes helping clients find the home they’ll love, and that being at the closing and seeing them so happy makes her day. She also likes that “Everyone is very helpful and so nice about answering questions. In some offices, they leave you on your own with no support. But at CENTURY 21 Cedarcrest, everyone is willing to assist you.”

If you’re looking for a real estate office that supports its people—from new agents to seasoned pros—contact Susan Mazzetta for a confidential interview at (973) 228-1050.

CENTURY 21® Cedarcrest Realty is now a Designated Certified Commercial Specialist

We have expanded our expertise at CENTURY 21® Cedarcrest Realty, Inc., having achieved the designation of Certified Commercial Specialist by CENTURY 21 Real Estate LLC. In addition to the office, Broker Owner John J. Sass, Sales Manager Dennis DiSabato, and sales associates Adrienne Wheeler and Joseph Scotto have also been certified as commercial specialists. They all completed an intensive three-day training through CENTURY 21’s Commercial Management Academy, which covered a broad range of topics related to marketing commercial real estate; among them were:

  • Market opportunities, trends
  • Investment analysis, CAP rates
  • Identifying quality leads and prospects
  • Talent recruitment
  • Lease analysis, negotiations, best practices
  • Developing and managing a commercial real estate division

CENTURY 21 Commercial®
The CENTURY 21 Commercial® program helps real estate offices and agents leverage the core strengths of the CENTURY 21 System in the small-to-mid-tier commercial real estate and investment property markets. As a designated member of CENTURY 21 Commercial, CENTURY 21 Cedarcrest joins a network of 375 commercial designated offices throughout the United States.

Commercial real estate at CENTURY 21 Cedarcrest
Our office will market retail centers, office and industrial buildings, multi-family properties and hospitality properties for sale or lease, working with commercial real estate investors, owners and lessees in Essex County and surrounding areas. We look forward to growing our portfolio with quality commercial properties to list, lease or sell.

Join our team in commercial or residential real estate
We’re also looking forward to adding experienced real estate agents to our team, in both residential and commercial real estate. For a confidential conversation about joining our award-winning office, contact John Sass at (973) 228-1050.