Long Island real estate prices climbed last month, as buyers got into bidding wars over a dwindling supply of homes.

In Suffolk County, homes sold for a median price of $360,000 in October, up 6.2% from a year earlier, the Multiple Listing Service of Long Island said in a report released Thursday.

Nassau County homes traded for a median price of $500,000, up 6.4% from a year earlier.

Throughout the Island, there were 11,395 homes listed for sale last month, down 12% from a year earlier. The number of closed home sales increased year-over-year by 5.7% in Suffolk and by 1.5% in Nassau.

"The buyers are paying full price and sometimes over full price," said Jerry O'Neill, owner of Coldwell Banker Harbor Light in Amity Harbor. "It's a good time for sellers to come to market."

Long Island home prices rise
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Home prices have posted year-over-year gains nearly every month for the last two years. However, it's an open question whether that trend will continue if federal lawmakers limit or eliminate Long Islanders' ability to deduct state and local taxes, local real estate experts said.

Such deductions lower the cost of homeownership. Without them, buyers would need to trim their budgets, they said.

House Republicans voted Thursday to pass their version of a $1.5 trillion tax overhaul. The measure would end the deductibility of state and local income taxes but allow deductions for property taxes up to $10,000. The Senate version eliminates all state and local tax deductions.

The House version also reduces tax breaks for mortgage interest. The measure allows homeowners to deduct interest paid on mortgages up to $500,000, half the current limit. The Senate bill makes no change to the mortgage interest deduction.

If Long Islanders' ability to deduct state and local taxes — and possibly mortgage interest — on their federal returns gets curtailed or eliminated, "it's going to be a major tax increase on New Yorkers," said Stephen Breitstone, who heads the private wealth and taxation group at the law firm Meltzer, Lippe, Goldstein & Breitstone in Mineola.

Such changes "could have broad, sweeping economic consequences for Long Island and beyond," he said.

If those deductions are cut, home prices could level off or even decline, as buyers shop for lower-priced homes or decide to rent or move to a lower-tax state such as Florida, said Irwin Kellner, an economist based in Port Washington.

But O'Neill, the broker in Amity Harbor, said other elements of the proposed overhaul, such as lower tax rates, could put more money in home buyers' pockets.

Homeowners "are saying, 'oh, this is going to hurt if I can't deduct that anymore,'" he said. But, he said, "they may gain on some of the other pieces of the reform."

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