One of the key changes in the House GOP tax bill was to implement a cap on home interest deductions to the first $500,000 worth of mortgage debt and eliminate interest deductions from second homes. Of course, given active opposition from some very powerful realtor and homebuilder lobbying groups, it’s unclear whether the changes will find their way into the final tax bill. But, at least according to Bloomberg, New York’s “millionaire, billionaire, private jet owning” hedge fund managers aren’t waiting around to find out and are already taking steps to game any potential tax changes.
Out in the Hamptons, Wall Street’s favored beach resort on Long Island, brokers and buyers already have a workaround for a tax-plan provision under consideration in Congress that would take away the mortgage-interest deduction for second homes.
A client of Brown Harris Stevens broker Jessica von Hagn who works at a hedge fund decided to turn the vacation home he’s buying into an investment property by setting up a limited liability company. That will allow him to deduct the interest and earn rental income at the height of the season from the modern home on Bridgehampton’s Lumber Lane, with four bedrooms, three baths and a swimming pool on an acre of land.
This post was published at Zero Hedge on Nov 10, 2017.