Condo rentals are bad!

Condo rentals

Condo rentals are hurting the entry level home owner market in my humble opinion here in New Jersey. Why? Because by buying a condo and renting it out people who cannot afford to buy a free standing house are being locked out of the marketplace.

A change in the New Jersey’s tax laws gives landlords a massive tax break and I can understand that it is good for the State of New Jersey, but the legislators did not think of how it would hurt the entry level home buyer.

Per an article in NJ101.5, “Under the new tax laws approved last year, landlords will be getting a big new tax break when they file their taxes in 2019.

It’s 20 percent of the net income, which is in addition to all of the expenses that the landlord already has,” said Peter Greco, the chief tax researcher for CSI Group.

He said this means if someone is collecting $30,000 rent a year on a property and “they have an expense of $10,000, and the net income is $20,000, they will be deducting an additional $4,000, so they’ll be paying tax on $16,000, not $20,000.”

He said landlords get this additional break in addition to all of the deductions they already claim, including insurance, depreciation, mortgage, tax and repairs.

Greco said this will be a big benefit for anyone who qualifies.

Sounds great for the landlords, but this means that they will go out and buy more condos to rent out because their profit margin will go up due to this new tax break. Thus leaving fewer condo units for those who want to own instead of rent.

Also when you reach the magic number of rentals in a condo association, a number known by the banks, then the banks become very reluctant to make or even give an outright denial of any loans to purchase a condo by people who want to live in it. This to me means that those who have the money to make the investment to rent out a condo are actually hurting those who want to buy their first home or are downsizing.

It is about time for the state to realize that condo associations should be allowed to limit rental units so that no one will be denied a loan due to too many units being bought to be rentals.

That is my opinion- Jumpin Jersey Mike

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