Florida real estate is picking up again, and golfers are starting to take advantage. (Tim Gavrich/Golf Advisor)

A golfer's market? New American tax laws might influence your golf course real estate purchase



In an otherwise turbulent and controversial presidency so far, Donald Trump's biggest domestic policy accomplishment has been the passage of the Tax Cuts and Jobs Act.

Passed on December 22, the measure constituted what accounting and financial services giant PricewaterhouseCoopers called, "the most significant overhaul of the US tax code in more than 30 years."

This bill has some implications for the real estate market, which means it has some implications for golfers, especially those in the market for condos, townhomes and houses on or near golf courses in the future.

If you're considering a move - either part-time or permanent - to a golf hotbed, here are some factors to consider:

Property tax and mortgage interest deductions

Under the new tax scheme, homeowners can only deduct $10,000 worth of "SALT" (state and local) property taxes they pay. In some places, like Jersey City, New Jersey, this is causing property tax burdens to spike dramatically.

Before the passage of the bill, homeowners could deduct interest paid on mortgages of up to $1 million. The Tax Cuts And Jobs Act lowered that threshold to $750,000. Golf being a broadly affluent sport, there are probably plenty of residents of houses in the $750,000 to $1 million range who have seen their tax obligations increase because of this change to the law.

Still, it could have been worse. Early drafts of the Tax Cuts And Jobs Act proposed to disable multiple homeowners from deducting the property taxes on any residences beyond their primary ones. Backlash against this prompted an adjustment to the bill, such that now, if you have two mortgages totaling $750,000 or less, you'll still be able to deduct that property tax. But in order to take that deduction, you will have to itemize your next tax return.

Varied though their impact may be, increases on property tax burdens make the prospect of living in states with lower property taxes an attractive one. It just so happens that golf-hotbed states like Hawaii, Alabama and South Carolina are among the least property-tax-burdensome in the country. If you want to escape high property taxes in the Northeast, Midwest or California, you'll find plenty of golf communities with properties that will provide some relief.

Rent or buy?

Many people drawn south and west by the prospect of warm year-round weather and lower property taxes are not inclined to jump in fully. Instead, they'll dip a toe in the water by renting a place for the fall and winter months, living as traditional "snowbirds." By doubling the standard tax deduction, the Tax Cuts And Jobs Act makes renting - even longer-term than a few months - a more attractive proposition than it had been. Per an article from Time.com:

"One recent study by the Urban Institute found that under the new tax law, so-called “breakeven” rents — the monthly amount above which renters are better off becoming homeowners — jumped significantly for upper-middle class and wealthy taxpayers. For instance, under the old rule, for a typical three-person family earning $75,000 owning became more financially advantageous once the family’s monthly rent exceeded $893. Under the new law that number climbs 14% to $1,017.

For wealthy families the difference can be even more dramatic. For one family making $300,000, the breakeven rent jumps 32% from $2,757 a month to $3,631."

So, depending on your circumstances, if you were leaning "buy" before, run the numbers again and you might end up leaning "rent," at least in the near future.

Take cues from the experts

Golf Life Navigators, based in Naples, Fla., is an up-and-coming firm that aims to pair golfers looking to purchase real estate and their "best-matched" communities and clubs in the Sunbelt; the company has recently expanded beyond Florida to Arizona and the Carolinas as well.

According to PGA Professional Jason Becker, Golf Life Navigators CEO and co-founder, the new tax legislation has helped prod golfers into action.

"We have seen a sizable increase in consumers reaching out to us this first quarter" says Becker. "There are many factors including weather, a lifestyle change, etc. But, we believe that the new tax reform laws are playing a role in consumers expediting their plans to relocate south into a tax-friendly state such as Florida."

Golf Life Navigators recently developed the ProGuide3, a free, 10-minute online survey that is helping real estate- and club membership-seeking golfers make sense of the hundreds-deep fields of options in the Sunbelt.

On the rent vs. buy issue, Becker says it's not cutting into ProGuide Inquiries. "In the first quarter we actually saw a 3% increase in consumers who would like to purchase real estate alongside their golf membership," he says. "This tells us that folks are beginning to think about selling up north and relocating south. If that number had decreased we would have assumed that consumers are looking to rent as opposed to buying."

The biggest change for golfers?

Perhaps the most consequential-to-golf effect of the Tax Cuts and Jobs Act has nothing to do with real estate, but with an aspect of many golfers' on-course time, regardless of where their rounds are taking place. The legislation stripped taxpayers of the ability to deduct half of expenses incurred in the name of client entertainment on their tax returns.

This means that if you are one of the many businesspeople who have long regarded golf as a way to build and strengthen relationships with prospective and entrenched customers, this legislation may cause you to play less golf. Deducting portions of green fees paid during golf with a business angle used to help many golfers justify not just the odd Friday-afternoon round, but their entire private club membership. It's too early to tell just how much of an effect this lost deduction will have on the golf industry, but it nevertheless worth considering in the wake of the Tax Cuts And Jobs Act's passage.

Do you foresee the recent American tax overhaul affecting your golf habits or future real estate considerations? Leave a comment to share your perspective with your fellow Golf Advisor readers!

(Correction: An earlier version of this article mistakenly conflated the Tax Cuts And Jobs Act's changes to property tax and mortgage interest deductions. This mistake has been rectified above.)

Apr 13, 2018



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Mike McCoy's avatar
Mike McCoy wrote at 2018-04-16 18:58:18+00:00:

I have heard some discussion of taking a client to lunch at a golf course and a tee time is included with the lunch. Business related meals remain 50% deductible. Just saying.

jim's avatar
jim wrote at 2018-04-16 02:40:49+00:00:

I find your article fascinating. I live in California belong to a private club and live on the course (home worth $750,00). I think your missing the point. Why do people live and belong to private clubs ? (So we don't have to play with a schmo.)

Cyd Greenhorn 's avatar
Cyd Greenhorn wrote at 2018-04-16 16:16:29+00:00:

Lmao I agree with you.. but not all of us are as you say SCHMO... I’ve been a RN for 32 yrs and yet a modest income will not or cannot be part of a private club because of the attitude towards golfers that can play.. why be a private club member when there many more challenges to be experienced when out there.. I calculated it last night and my family spend approximately $30000 on golf and golf trips a year.

Ed's avatar
Ed wrote at 2018-04-16 00:20:44+00:00:

In a very successful and promising start to his Presidency so far is the way this article should have started. You have no clue about owing and managing property let alone, knowing anything about the new tax laws. I own two properties--one on the 13 green of a golf course, and I will do OK under the new tax laws.

What you didn't say is that this law was aimed at high earners since that id What our President was trying to do. In my view many folks earning 7 figures are probably paid much more than they are worth and can afford the hit they are taking. Which was part of the objective of the law which most liberals won't admit. So I might suggest you stick to something you know about with limited life experience. By the way I am a member of two golf clubs!

Jason's avatar
Jason wrote at 2018-04-15 23:39:55+00:00:

I will be looking to transfer my club membership, due to the change in the tax code.

Greg's avatar
Greg wrote at 2018-04-15 20:37:27+00:00:

At year's end I'll review the tax impact of my club membership with my CPA. if the impact is burdensome I will consider dropping the club membership in favor of an alternative semi-private club in the area where I can pay a simple green fee and play. If I continue with the private membership it will most likely be because my golf buddies at the club are retired and may not write off their club expenses anyway.

Mickey's avatar
Mickey wrote at 2018-04-15 19:25:48+00:00:

With the President being a golfer and a real estate developer, you would have thought any legislation passed would have been friendly to both. I'm a Realtor and a golfer and so far I haven't heard anything negative from my buddies who are country club members. In the real estate industry we're not seeing anything slowing down in San Diego. Overall, not sure the new tax code has had much of an effect on consumer motivation to buy or play but then again, no one has filed a 2018 return yet. We'll see.

Pete's avatar
Pete wrote at 2018-04-15 19:11:59+00:00:

"In an otherwise turbulent and controversial presidency so far, " , opening your article in this manner, was both unnecessary and insulting to your readers. No need to editorialize, your feelings for the President are now well noted. As a 30 year California resident, i meet people every day that are, like us, planning their Calexit. High taxes, traffic, ultra left wing politics, will result in a Arizona boom.

Owen's avatar
Owen wrote at 2018-04-15 18:41:40+00:00:

Tim - The complete inaccuracy of your opening paragraph as it relates to the deductibility of real estate taxes makes me question the validity of any of your other observations in the article. Your comments are like saying if you have a handicap of over 15, you only count one stroke for every two putts.

TimGavrichGA's avatar
TimGavrichGA wrote at 2018-04-15 20:31:20+00:00:

Owen--

The poor wording of the section you refer to in the original article has been changed to be more accurate.

--Tim

sanjosgolf's avatar
sanjosgolf wrote at 2018-04-15 17:58:25+00:00:

I understand this article is not directed at the middle-class or poorer. But, I thought I'd rant anyway. Let's see, the golf industry is struggling to stay afloat...on its own terms (i.e., golf is for rich, WASP males only. Tiger Woods be damned!). Meanwhile, the Golf Galaxy store in Rockville, Maryland, closed a couple of weeks ago. Golf club membership fees equal the price of a car, the downpayment on a house, or a semester of college. A single golf club can cost over $1,500 (thank God for Top Flite!). Were it not for municipal golf courses, I would never have discovered golf! Good luck growing the game!

Average Hacker's avatar
Average Hacker wrote at 2018-04-15 20:54:13+00:00:

You can easily buy a an entire set of clubs for under $1,500.. Deals on daily fee courses abound and semi private courses are starving for members. Memberships in a Private course have never been reachable for the rich and/or corporate individuals so this law won’t affect golf . It’s popularity has already decreased due to cost and competition from emerging sports and other Millennial gaming or social experiences.

sanjosgolf's avatar
sanjosgolf wrote at 2018-04-15 21:07:12+00:00:

Thanks, Average Hacker! I bought my set on Ebay for under $50! I play municipal courses because they're affordable for me. As much as I love golf, its impact on the environment does not make me sad about its decline.

Jim's avatar
Jim wrote at 2018-04-16 00:45:53+00:00:

You are way off on your comment about golf courses making a negative impact on the environment, nothing could be further from the truth !!

sanjosgolf's avatar
sanjosgolf wrote at 2018-04-16 11:52:58+00:00:

Jim, I was referring to how deforestation destroys the wooded habitat of deer and other wildlife that need such environments to live and thrive. True, it is not as bad as building construction, which completely decimates wildlife habits. But, it does make life more difficult for them. While the golf industry is working to make golf course management more environmentally friendly, the needs of wooded wildlife must also be considered.

Mike's avatar
Mike wrote at 2018-04-16 21:21:13+00:00:

Golf courses provide one of the only (large) refuges in an urban setting for wildlife, along with parks and cemetaries. And the edge environment that golf holes with wooded areas provides more variety for more species than just a woodlot. Golf courses clean the air, water, and environment they occupy.

Sandra's avatar
Sandra wrote at 2018-04-16 21:32:35+00:00:

Mike, I concur.

richard's avatar
richard wrote at 2018-04-15 17:52:44+00:00:

Sad that the tax information is so inaccurate. Having someone with just a mediocre knowledge of the new tax law review the article prior to posting it would have prevented this.

TimGavrichGA's avatar
TimGavrichGA wrote at 2018-04-15 20:31:27+00:00:

Owen--

The poor wording of the section you refer to in the original article has been changed to be more accurate.

--Tim

mike's avatar
mike wrote at 2018-04-15 17:41:06+00:00:

golf tournaments that you participate in are not tax deductible..you are receiving goods(in this case, golf) for your money...you're not just giving money.

Jay's avatar
Jay wrote at 2018-04-15 17:07:22+00:00:

I agree with MIke, I like your article but your tax information is not accurate. Stick to golf.

Christy May's avatar
Christy May wrote at 2018-04-15 16:15:16+00:00:

How are golf tournaments affected tax wise? Are foursomes bought for golf fundraisers still deductible to any degree? Charitable? How about sponsorships?

Mike's avatar
Mike wrote at 2018-04-15 16:04:17+00:00:

As a tax attorney, I can say that the characterization of the tax changes are actually not correct. The article incorrectly suggests that the SALT cap (state and local taxes which includes deduction for property taxes) is only available for mortgages below $750K. That is not true. The $750K cap is the ceiling for mortgage interest deductability on new mortgages. SALT has nothing to do with that.

TimGavrichGA's avatar
TimGavrichGA wrote at 2018-04-15 20:32:07+00:00:

Mike--

The poor wording of the section you refer to in the original article has been changed to be more accurate.

--Tim

Will's avatar
Will wrote at 2018-04-15 15:37:35+00:00:

There’s lots to talk about as tax laws change and for most Americans it will help. Yea, depending on where you are, golf rounds may decrease but at Holiday Island Ar, a little gem in the Ozarks, rounds are up. Property Taxes 1-2k / yr on golf course homes and less than $1,000 per year includes all your golf. We’ve kept a place there for many years as it’s affordable, on Table Rock lake, within 45 minutes from Branson or Bentonville. And.... it’s much cooler there than hotter Dallas summers. Just saying there are probably many affordable golf destinations/ vacation/ retirement places that will work with $10000 tax deductions and higher personal deductions. If you like golf, there are ways to make it work. Maybe even better.

AB's avatar
AB wrote at 2018-04-15 15:30:41+00:00:

The state of Kentucky is trying to pass a bill that would tax Greens fees, country club dues and country club initiation fees. The KPGA is among several groups fighting it. The sad thing is, this bill is sponsored by republicans. Golf isnt exactly a growth industry, it’s in decline. It doesn’t make sense to hinder more people from playing the game. I am shocked that Republicans are supporting this oppressive tax.

AZGolfer's avatar
AZGolfer wrote at 2018-04-16 00:23:01+00:00:

In AZ green fees are taxed, not sure about club dues or initiation fees as I'm a public facility golfer. I do know Costco membership is taxed so I would not be surprised if golf dues is as well.

Rex 's avatar
Rex wrote at 2018-04-15 15:13:05+00:00:

Politics always has wider reaching tentacles than they would ever consider. Diabetes and obesity have more than doubled in the last 20 years. The healthcare costs are absolutely astronomical. This eliminates a lot of the tax benefits for corporations encouraging their people to get out and do something active rather than sitting in front of a computer screen or television. It may also cause more and more golf courses to go out of business as it eliminates one of the few text benefits for the golfing industry. No doubt the NFL loves it but our health is teetering over a very large precipice.

Harry's avatar
Harry wrote at 2018-04-15 15:06:45+00:00:

As a golf course owner I’m seeing a dramatic closing of course for numerous reasons but the inability of corporations to deduct corporate memberships is seriously hurting and voiding some closings.

Paul MacArthur's avatar
Paul MacArthur wrote at 2018-04-15 14:31:32+00:00:

Once you own you own it. More and more land lease is the new way, own the place lease the land and all the associated obligations come into play and you must pay.

As an aging society it all looks good on paper but it is a decision best taken with all the family first. Many like to rent going around trying to find what suits them where to settle finally and buy but.

Pulling up stakes from one place and reconnecting to a new community is not easy having to ensure when in need the same outlets are handy and there.What many people seem to forget if both drive and are healthy it helps but if the driver eventually can no longer drive or at night how does the other person keep connected.This is a big decision going forward similar to time share commitments one person suddenly dies.

My senior friends just successful through hard work seem now to want to simplify their lives not adding even more responsibilities for themselves and their grown children who may live far away and must jump into an owned property they now must administer. Age, health, income & savings being able to drive at night and where is the family located should be criteria to making a positive decision to maybe rent first and buy later..

And if Canadian the tax implications must be understood in buying both having an accountant & good lawyer at home to be advised accordingly if buying to own. and certainly guidance in these important areas of health, accounting and law where a person ends up permanently.

Being a US decision the decision is within but being a Canadian it is without and as we say we like to go South and through experiences many seniors are opting to three month renting being mindful of when done no obligations and go home to Canada already renewing for the next year so not to incur any unnecessary additional obligations as the aging process goes higher looking back at 49 versus 79 where the numbers have a different value in all areas of life and just living every day.

The decision to buy is not one to be made when wearing rose coloured glasses eyeing only the golf course forgetting the realities that are hard core numbers and facts.

And then renting may work fine just close the doors and leave as the next couple move in free of it all now to go home where nine months of the year and all your years are there not the other new there waiting for your return next year and as long as it works ONLY for you.

John.  's avatar
John. wrote at 2018-04-15 14:25:18+00:00:

While I haven’t read the new tax code I recall there is a sunset element to the tax law changes in 2024. If I am looking to move from Chicago to the sunbelt in 2025 how will this affect property values and Club membership opportunities and property tax deductions?

grandpadoc's avatar
grandpadoc wrote at 2018-04-15 14:06:31+00:00:

I play because I love the game and being outside. The comraderie is a big part. Unfortunately, since I'm older, I keep losing golf buddies as they die. But, when I wake in the morning I realize I've got another day to enjoy.

Todd's avatar
Todd wrote at 2018-04-15 13:55:19+00:00:

Well I will pay more taxes give less raises to the 62 employees and stop the beneficial staff and family golf outings and meals. Bad news but reality. Voted for trump. Love employees got a raise but between my increased taxes increased mortgage taxes ( less deductions ) I will spend less and decrease bonus’ and while I will still golf the people around me will get less free golf and free meals. Good news. Only 7 years. Ps no won’t be voting for this democrat president again.

S Richard's avatar
S Richard wrote at 2018-04-15 15:03:04+00:00:

Pres. Trump's no Democrat either. The elected Democrats I know have always protected residential property taxes as one of the basic necessities of life that should not be taxed (food, shelter and yes, healthcare). Why in recent polls are 80% of Republicans still supporting him?

AB's avatar
AB wrote at 2018-04-15 15:27:49+00:00:

Democrats have protected it because they control states that have high taxes. It’s their policies that have led to higher taxes. This is why people are fleeing blue states. They’re tired of being squeezed by oppressive taxation.

deankeinert's avatar
deankeinert wrote at 2018-04-15 20:03:50+00:00:

Because the Democrats would close a golf course and put free housing up for the free loaders in this country.

Bill's avatar
Bill wrote at 2018-04-15 15:14:15+00:00:

Corporate taxes are down..not sure why you're negative one this..

The reason golf has taken a popularity hit goes back to the decision to take away country club memberships as a business deduction. Prior to that, clubs were full and business was transacted every day at the club. This was years before Trump was in politics.

Now I go to golf communities ans the courses are neglected, families no longer use the club as their "go to" place to entertain and its killing golf.

Harry's avatar
Harry wrote at 2018-04-15 15:14:55+00:00:

Everyone wants to blame Trump for everything. If you think he intentionally made the tax laws to hurt your golf outing your I’ll informed. After all he is a multi course owner.

Todd's avatar
Todd wrote at 2018-04-15 22:13:31+00:00:

Not ill informed. Just giving reality of my situation. I was not intentionally targeted I was the compromise so his business could lower its taxes from 39% to 21%. Worth more than some write offs on his course’s. Service industry excluded. Not his type of industry. My reality which affects a large majority of small business’. And not asking for sympathy because I make more than 415k which phases out all write offs but since I make less I will give less.

Mark knable's avatar
Mark knable wrote at 2018-04-15 13:33:57+00:00:

I have already received notice from two long time vendors that they cancelled their yearly company golf outing for their clients due to the new tax laws

David's avatar
David wrote at 2018-04-15 15:15:08+00:00:

Do you think that some of those expenses could be considered advertising instead of only entertainment with clients?

Lou's avatar
Lou wrote at 2018-04-15 13:16:03+00:00:

No. We play since we love the game and time with friends. The deductions were something we just took advantage of, let’s be honest!! I will play no less. Most important I have more to spend w new tax rate.


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Tim Gavrich

Senior Writer

Tim Gavrich is a Senior Writer for Golf Advisor and the Managing Editor of the Golf Vacation Insider newsletter. Follow him on Twitter @TimGavrich and on Instagram @TimGavrich.