By LINDA MOSS
Montclair homeowners should brace for a double-digit decrease in their property values if proposed Republican federal tax reform passes.
That’s the alarming message that Township Mayor Robert Jackson had this past weekend at a “Rally Against the Tax Scam” event, which drew more than 200 attendees, sponsored by BlueWaveNJ, NJ 11th for Change and New Jersey Working Families.
His comments, and a prediction that the township could lose nearly $1 billion in overall property values, came in the wake of a Moody’s Analytics report that projected the impact that the GOP tax changes will have across the nation.
Essex County, where Montclair is located, as well as Union County had the dubious distinction of ranking No. 1 of all the counties across the country in terms of who are going to suffer the biggest hit. As first reported on Slate.com, Moody’s said that Essex and Union both will suffer a 10.5 percent drop in home values, potentially a tough turn for Montclair, where home prices have been soaring.
“We’re the ring leaders,” Jackson said this week. “Essex and Union are going to get whacked 10 1/2 percent property-value decrease is the estimate … I don’t care whether you think Trump walks on water or, it doesn’t matter, nobody wants to lose 10 to 15 percent of their property values … Nobody can afford to take this hit.”
Twelve of the top 20 counties that will see declines in house prices are in New Jersey, according to Moody’s study.
The tax overhaul by the Republican-controlled Congress would translate to a roughly $17 billion tax increase for the Garden State, New York, California and Maryland, Jackson said. The rest of the states would see tax decreases.
“I don’t care what your politics are, if the bill goes through 46 of the 50 states are going to see a tax cut,” Jackson said. “Those four states are transferring $17 billion to the other 46.”
New Jersey and the three other states will suffer mainly because their residents would no longer be permitted to deduct state and local income and sales taxes from their federal taxes, and the Garden State is a high-tax state. The GOP tax legislation also sets a $10,000 limit on property tax deductions.
Experts say that those are factors that will make home ownership less attractive in the four states most impacted by the tax changes. Property taxes in New Jersey are high compared to the rest of the nation, and Montclair’s are high compared to the rest of the state.
“I understand the politics of it because if you look at those four states, I’m sure that the view [of Republicans] is ‘those are blue and so who cares? … No matter what we do, we’re never going to get those four states to vote for us,’” Jackson said.
Montclair is undergoing a revaluation now, and increases in home values could be reduced or wiped away by the federal tax reform, according to Jackson. There was a revaluation about 10 years ago after the real-estate market downturn. The township’s valuation dropped from roughly $7.2 billion to $5.7 billion then, according to Jackson.
The mayor is anticipating that the revaluation will adjust prices to market level, and bring the township back up to a $7 billion or so valuation. But if those values drop by 10.5 percent because of the tax changes, that translates to roughly $750 million, or a nearly $1 billion loss of value, Jackson said.
“This is like taking a club and hitting us in the back of the head, and really I think it’s going to tamp some of that growth we’ve seen in values,” he said.
Jackson said that he expects Montclair to remain a popular place for people to want to live and buy homes, because of it lively downtown, transportation, restaurants and entertainment. But the elimination of the various tax deductions will mean that owning a home in the township less affordable for some, put it out of their reach, according to the mayor.
“To me it’s got to be addressed,” Jackson said of the GOP tax overhaul. “There’s got to be redress.”