Paul Macapagal, Associate Broker, NYC

Recently, New York State enacted new tax laws that include a significant increase in personal income tax for upper-income taxpayers.

Personal Income Tax Increase

Retroactive to January 1, 2009, two new personal income tax brackets are established on top of the current top tax rate of 6.85%. The rate increases to 7.85% for married couples filing joint with incomes over $300,000; for head of household filers with incomes above $250,000; and for single filers with income over $200,000.

The rate increases to 8.97% for all filers with incomes above $500,000.

Phase-out of Itemized Deductions

Retroactive to January 1, 2009, taxpayers with a New York adjusted gross income over $1 million may not claim any itemized deductions except for 50% of their charitable deductions. Previous law for taxpayers earning $525,000 or more allowed 50% of all NY eligible itemized deductions.

Supplemental Wage Withholding Rates

Effective May 1, 2009, for all supplemental wages, (bonuses, stock award vesting's, option exercises, etc.) - regardless of amount - the New York State withholding rate will increase to 11.03% from 7.35%. This applies to all supplemental payments, regardless of one's adjusted gross income. The New York City supplemental wage withholding rate remains unchanged (4.0%).

Quarterly Estimated Taxes

All New York taxpayers (resident and non-resident) must now be current on their tax liabilities based on the new rates. As a result, you may need to adjust your 2009 New York income tax withholdings and/or make estimated tax payments during 2009 to avoid any penalties. Note that if you are basing 2009 estimated tax payments on the 2008 "safe harbor amount", the 2008 tax must be recomputed using the new 2009 tax rates.

If you have any questions please contact your personal tax advisor

The Real Estate Board of New York has weighed in on the local housing market in the first quarter, presenting a rather comprehensive body of stats that spills out into all boroughs and that shows, like reports last week covering Manhattan, drooping sales and largely steady prices.

Average prices per foot in the first quarter:

Manhattan $1,162

Bronx $240

Brooklyn $368

Queens $316

Staten Island $262

Median prices:

Manhattan $846,000

Bronx: $360,000

Brooklyn: $457,000

Queens: $390,000

Staten Island: $369,000

Manhattan neighborhoods with the most price cutsThese neighborhoods have seen the highest percentage of sellers cutting prices from quarter three to quarter four 2008:
Beekman - 50.6% of listings cut prices
Manhattan Valley - 45.7%
East Village - 43.1%
Central Park South - 41.9%
SoHo - 41.7%

Manhattan neighborhoods with the deepest price cutsThese neighborhoods have seen the most significant price cuts from quarter three to quarter four 2008:
Clinton - 10.93% average discount
Tribeca - 10.83%
Flatiron - 10.35%
Central Harlem - 8.58%
East Harlem 9.98%

Even the Celebrities are have Real Estate Troubles. I guess it goes to show that a celb owned apt are not immune to declining prices.

Lenny Kravitz has been trying to sell his penthouse at 30 Crosby Street for the past few years; most recently, he slashed the price of the loft from $18.75 million to $14.995 million. Is he now planning to give up entirely? Over the weekend, the listing for Kravitz's 6,000-square-foot pad was pulled down from the Corcoran website, although whether the rocker plans to try again with a new broker is any body's guess

1. A workout: this involves restructuring the loan with the loan holder; this can be done many ways which usually involves either lowering interest rates (don't count on it), accruals of interest, or extended maturity dates. Ultimately, most lenders don't want to have a mortgage in default and have to foreclose; they would prefer to work something out with the borrower.

2) Transfer of the mortgage to a new owner (transferability is dictated by the mortgage signed at closing); Mortgagors that are unable or unwilling to meet their mortgage obligations may be able to find a purchaser who can purchase the property from them before foreclosure happens. Of course, this may come at a huge loss of equity and possibly the mortgagor having to bring some funds to the closing, but it is more attractive than a foreclosure that ruins credit. I have also seen someone buy the place and leave the mortgagor in place as a rental tenant; it all depends on the price, etc.

3) Friendly foreclosure: This is a mortgagor who submits to the jurisdiction of the court and any right to assert defense or claims. This shortens the time a foreclosure takes. As a mortgagor, this should be one of the last resorts, next to a bankruptcy.

4) Prepackaged bankruptcy; This is very detailed and I would advise someone speaking with a Bankruptcy attorney.

5) Voluntary conveyance of the title to the mortgagee. Still ruins credit. The best possible alternatives to foreclosure are the first two options above. I have helped people find investors who were willing to buy properties at the balance of the note amount, sometimes a little less, and this has saved the mortgagor. It most likely is a tougher road to home in the co-op market.