Soak the rich! Bring your pitchforks. I'm rather amused.
So these people are going to trade NYC for Naples Fl, that’s a laugh. I grew up in NYC and now live in Naples because I got a $500,000 house for $75,000 from Fannie May in 2010. There is nothing to do here except the red tide beach. The only culture is Artis Naples.
I keep myself busy with a ton of projects but it ain’t NYC. Weather is nice in winter, rains all summer with the occasional hurricane. Irma was no fun.
1
in the 1930's reporters supposedly asked Willie Sutton the bank robber, why he robbed banks. His supposed reply was "Because that's where the money is."
In 2019 why tax the rich?
Because that's where the money is!
1
None of this would be necessary if the NYC property tax abatement scam was ended. Apply the appropriate rates for each class of property to all properties that fall within that rates definition. No exceptions. No PILOTs. No sales tax rebates. Nothing. Nada. Zip. Zilch. Squat.
1
It's because these people already have so many opportunities to avoid the taxes they should be paying. This guy (and others like him) lucked into a system that gave him scandalous levels of wealth along with the tools to not pay the piper that led him on his way to undeserved riches. I don't resent rich people. I just wish they would pay their taxes!
"Mr. Cuomo estimated on Monday that the state could raise $9 billion in bonds off that revenue". And there it is, the city is going to borrow long based upon a revenue stream which could be severely diminished in a real estate crash. And then how would they pay the bondholders? Do they raise taxes even more?
NYC, NY and a host of other cities and states have been writing checks for the past ten years they cannot cover. What are they thinking??
2
While fundamentally I agree with the tax, it's the government I have an issue with. In 1989, a 1% tax was added to all homes sold in NYC. At the time, NYC real estate was depressed and the tax impacted a limited amount of homes. Fast forward to today, the tax impacts darn near everything. Why hasn't this tax been adjusted for inflation? The concept is to tax the wealthy and the mansion tax is governmental overreach. Once politicians install a tax, they are loathe to ever let go of our money.
3
Not only has the high end real estate market drove up prices making Manhattan real estate less affordable to middle class families, but the noise and disruption of the construction itself also lowers the quality of life for those that can afford to remain. In fact many of these luxury construction projects buy permits from the City that allow them to work all night long giving additional meaning to "New York, the city that never sleeps!"
3
Let's go ahead and tax the second homes. Then let's also tax the NIMBYs for anti-development regulations and efforts that prevent new housing supply in the market and accelerate gentrification and the displacement of the poor.
1
It's been my experience that development in the core of urban areas spur more smaller and expensive homes, not so affordable. At least NIMBYs believe in preserving their neighborhoods, and it's a tough battle.
3
Recind all established property tax breaks for any NYC apartment, regardless of value, if the inhabitant is not a New York City resident.
7
I’m against millionaire taxes because NY’s tax base relies on a relatively small number of people who can live anywhere if they choose. If someone chooses to make NYC their home, they should be welcomed regardless of what their bank account looks like.
However in this case I do agree with this tax. These half empty buildings sprouting up everywhere are nothing but blight in disguise. New York’s character comes from, and is defined by its neighborhoods. But to have a neighborhood you need neighbors. Whatever money the city gets from this phenomenon, it’s not worth it.
5
Tax them as much as you can! Tax rules should be very simple..Tax everyone except me.
4
"Liberal supporters of the tax had long pointed to a range of problems associated with pieds-à-terre, including
encouraging real-estate speculation,
inflating property values and associated taxes and
speeding up gentrification in once-affordable neighborhoods."
And this doesn't even mention the aggravation inflicted on New Yorkers when these 1000-foot high towers are built.
Just imagine how many trucks are needed to bring the construction materials into midtown Manhattan.
I recall being stuck on a cross-town bus (a journey of less than 3/4 mile) for over an hour, wondering what was happening---until we finally got to the construction site at 57th and Park where a guy was standing in the middle of the road with a hand-held stop sign, as if on a road construction project, blocking traffic as a crane hauled supplies up hundreds of feet in the middle of the day.
Fortunately, I could (mostly) avoid that route after that experience---but what about commuters who depended upon that bus route every day? The pied a terre tax is a small bit of compensation for what billionaire's row has put the majority of us through.
6
“So many people have told me they are planning to transition to Naples, Miami or Palm Beach,” she said. “It may not be today, but soon.”
c'est la vie! So much the better for us middle class Manhattanites...
9
Florida charges a higher tax rate on second homes than on primary residences. If someone is trying to make a point, it gets lost if they move someplace that is already doing what they are protesting.
10
NYC will still go bankrupt.
3
May Boston follow their lead.
4
No kidding.
The new high rise condos built and bought for non-primary housing built in Boston is killing the availability of moderate income housing.
Not to mention the destruction of family neighborhoods.
It’s a disgrace.
5
Yes!!!!!
We, native New Yorkers made New York cool and artsy, and now it’s a Disneyland for wealthy foreigners. We should be paid for creating such a wonderful city, since they’re taking it away from us.
12
Taxation without representation? Bring it on!
Great! Next enact height restrictions on all new buildings outside of Midtown.
4
why's everyone angry at this guy? didn't he just drop $238 million into the New York economy? and is it his fault the property tax is less than some house in Queens?
1
Into the 'economy'? Wow, that's a stretch.
5
Amen!!
Next up, landlords that let storefronts sit vacant for the tax write-off.
9
Please explain how that works. The marginal tax rate is less than 100%. Not collecting rent never leaves you more money after taxes than collecting rent.
2
How about stiffer penalties on people with rent regulated apartments that they use as a pied a terre or sublet illegally?
8
Make these taxes as loophole proof as possible,please.
2
Yes, yes, yes!!! In addition, I find it incredible that we at times give property tax breaks (property tax breaks!) to the uber wealthy who non-inhabit these mansions in the sky.
9
@Barbara Yes. Stop the tax abatements that result in huge inequities where I subsidize new luxury buildings and single family houses in outer boros worth more than my small apartment.
1
This is one way to stem gentrification which is partly driven by rich people who don't even live there, as the article pointed out. Who cares if high-end builders are not able to make a fast buck because of this tax? And why should New Yorkers care about those rich people who don't even live there?
9
All the wealthy will move to Florida?
Florida’s loss; New York’s gain.
8
There are two issues here. One is laundering me through apartments rather than banks and the other is whetherthere should be high taxes on legal owners
3
Is it just me? Or won’t people have their “companies” purchase the real estate. Or put it in another person’s name in the family.
It's just you. The ownership of a residence does not affect the property tax.
4
This is a good, obvious first step. One wonders what took them so long. Not really that onerous a tax, it merely serves to address the inequity in the city's property tax system that allows addresses like 220 Central Park South to pay disproportionately low property taxes. Next up: a gentrification tax, one that would similarly redress the outrage of multi-million dollar brownstones in places like Park Slope paying a fraction of what is paid for less valuable properties, mostly in remaining working class areas in the boroughs.
4
We really don’t need absentee luxury apartment owners. If they no longer want multi million pied a yerre apartments maybe the price will come down by a million or so and be affordable to the multi-millionaires and billionaires that actually live and work here. The ones who actually live here are also the ones who donate to our museums, hospitals etc.
6
I don’t think a million dollar drop in price is going to result in making these apartments more affordable for the average buyer.
@Thomas Baker
How many decent apartments could be carved out of a 24,000 sq ft unit spread over 4 floors? The cost of construction was probably in the $20-40 million range, so an asking price of $238 million is just trying to hit the lottery.
I don’t understand the property tax situation. Why isn’t the property tax on a 200 million dollar house enough? The story says the apartment is assessed at $9M. The tax on that is $0.5M or about 5%. It goes on to say the tax on $200M would be about $2M or only about 1%. How’s that make any sense? Then also, how does it make sense to tax a $200M property as if it were worth only $9M? Then again, what does NYC do with the tax money? Why’d it take 100 years and billions of dollars to build three stations of the 2nd avenue subway stump?
6
Good questions these are. -Yoda
I understand the emotional resonance of empty penthouses looming over hard-working people who have to commute to far suburbs to afford a small place. But economically, I don't see the distinction between 1st and 2nd residences. It sounds like the real issue is your valuation system: you've got folks paying property tax based on a tiny fraction of market value. Just like here in Cali, with Prop 13. Fix that and things will be much better. It should also address the problem of vacant retail space, removing incentives to keep properties idle.
6
Great if they do this, but a more effective way to lessen the disparity is to reevaluate RE taxes on Class 1 (1-3 family) dwellings.
Class 1 dwellings have an estimated market value twice that of Class 2 (4+ units), yet pay less tax overall. The Mayor himself owns two Class 1 dwellings that are worth 2M each yet pays less than 5K per year in taxes on each. Tale of Two Cities, indeed.
Is that fair? City Council could change this!
5
250 million dollar penthouse assessed at less than 1/25 its selling price. Maybe someone should investigate the New York City Assessors Office. New Yorkers should be demanding an answer to why a 250 million dollar property is assessed at 4% of its sale price. I wonder how many New Yorker's pay a 2 dollar per 1000 of the full market value of their value of their homes. I wonder how many have homes assessed at 1/25 their fair market value. Nice scam if you qualify. I guess "Money does have it privileges"
Here is some salt on the wound. As a hedge fund manager I bet his income is taxed as carried interest, which means it is taxed at the much lower capital gains rate and taxed at a lower rate than everyone else's income.
I think most Americans are now realizing the policies of the New Guilded Age started by Reagan and made obscene by Trump, needs to end and end soon.
Leona Helmsley was right; in New York only poor people pay taxes.
22
“made obscene by Trump”? Where have you been? It is the limit on SALT that is causing the wealthy to flee NY, IL, CA for more reasonable tax treatment elsewhere. Why should average Americans underwrite the profligate spending of these liberal bastions?
1
@Thomas Baker Actually, we are underwriting the really poor budgeting and lack of adequate taxes elsewhere. I don't have an issue in paying my fair share of taxes. I do object to subsidizing states that don't levy taxes or don't contribute to the overall fisc and then expect NY, IL and CA to underwrite them.
9
@Thomas Baker: Why should residents of states like NY, who significantly underwrite their federal-dollar-dependent fellow citizens in states like Kentucky, be penalized by SALT caps? You do realize that some states receive disproportionately more funding from the federal government than states with higher taxes, right? NJ, Mass., Conn., Calif., and NY are among the least dependent on federal dollars: NJ is ranked 47th, Mass. 46th, Conn. 42nd, Calif. 39th, and New York 36th. Guess which six states are the most dependent on federal dollars? From #1 to #6: New Mexico. Kentucky (hello Sen. McConnell), Mississippi, Alabama, West Virginia, and South Carolina.
6
The claim that non-resident owners are “better” because they use fewer city services is dubious, at best. I don’t know the details of NYC taxation and public funding, but in the mountain west, many ski resort communities struggle as property values are artificially driven up by the wealthy who buy homes they may occupy only a few weeks a year, while locals are forced out due to lack of affordable housing. Absentee owners contribute nothing to the community, other than the annual property tax. Residents spend their money, and participate in local civic and social life throughout the year. They keep the community alive.
20
Cuomo’s plan sounds logical in the short term, but what say him after the money dries up in the long term - even exhausting the MTA’s budget?
1
The greed and envy implicit in such a tax is nauseating. The owners of these second homes or investment properties already pay NYC’s exhorbitant property taxes and utilize virtually no city services. Why kill the goose? These owners do not crowd the subway or sidewalks, they fund salaries and benefits for building employees and service contractors, they pay for their own essential services including trash hauling and snow removal. They don’t require classroom space. Why penalize them for making an investment in the future of the City?
24
@Thomas Baker -- it might interest you to know that property taxes are far from exorbitant in NYC, because income taxes extracted from non-residents who work in the city, but who don't even qualify for discounts at city-subsidized museums, and taxes paid by businesses have historically reduced the need for property taxes.
Residents of nearby suburbs pay much higher property taxes as a percentage of value ... and many of them pay income taxes to the City as well, since they work there.
31
@JM - non-NYC residents who work in NYC do not pay NYC income tax. That tax went away when Guiliani was running for NY State senator
16
@Thomas Baker
Dude, no envy: Most of this wealth was unearned. When central banks hand you trillions, and you make 300%+ by simply squatting on assets, that's the reason for the anger, as evident by rise of Trump first and now AOC/ socialism)
40
It’s frustrating to no end to see empty luxury condo buildings throughout the city sitting empty and undertaxed while NYC faces a continuing housing crisis. This legislation cannot come soon enough.
I provide legal services to NYC’s most vulnerable homeowners - seniors, people with disabilities, low-income communities of color. Life-long residents are priced out of their homes and face foreclosure due to increasing property taxes. Meanwhile, the city and state services they rely on are constricting around them. It’s bad enough that De Blasio’s multimillion dollar brownstone in Park Slope is taxed at about the same rate as a home a fraction of the value in the outer boroughs but these under taxed, unused investments are obscene.
NYC has important tax credits and exemptions for the disabled, seniors, vets, but many cannot overcome the hurdles the Department of Finance puts in place in obtaining them (annual certifications, unintlligble applications, hard deadlines to apply - this Friday, March 15th! BTW). NYC absolutely needs property tax reform, but any progress dies in committee or that ineffective commission De Blasio convened.
This tax is definitely a step in the right direction and I could really care less if it dampens the high-end real estate market. It’s only the Real Estate developers and brokers that really benefit from that market anyway. Depress those values and make room for a displaced family from a rapidly gentrified historically minority neighborhood.
153
@Scott Kohanowski. Thank you for your thoughtful comment and the good work you do.
Interestingly, the mayor and I have homes worth roughly the same value, yet I pay nearly 6 times the property taxes he pays. It's criminal.
A 1% tax on all residential property is fair, simple and would provide the city with the funds to fix the subway and more. If someone has a better plan, I'd like to hear it.
18
It sure makes more sense than some arbitrary punitive rate subject to interpretation and appeal. California’s Prop 13 was intended to cap property taxes at 1% of a homes purchase price. See below:
The proposition decreased property taxes by assessing values at their 1976 value and restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2 percent per year. It also prohibited reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. These rules apply equally to all real estate, residential and commercial—whether owned by individuals or corporations.
It worked in some ways, like slowing runaway state spending driven by escalating real estate values and tax revenues, but decimated school funding as property taxes were the source of these monies. Schools in California have never recovered.
6
@Scott Kohanowski. Agree. Especially on the insane complexity of the forms required to file for partial RE tax exemption for the elderly and the disabled. These forms are essentially designed to prevent anyone eligible for such exemptions (usually also means financial hardship) from getting them. Our oh so progressive mayor, De Blasio, hasn't done squat to make that easier. But then, he had an audience of 43 (!) at his event in Iowa some days ago, and it was unclear who was just there for the free coffee. That's about the level of support he deserves!
2
Cuomo is absolutely correct - those able to pay $5 million plus for an occasional residence will barely notice a tax which could make NYC tangibly more livable for us, the not-so-great-after-all-unwashed.
It's called spreading the money around a little. It'll need to happen much, much more often if the ultra-rich expect to avoid pitchfork brigades from knocking down their gilded doors in future.
101
@James A uniform property tax when there are no discounts fir rehabs and other development nonsense would lower the tax rate for everyone not just the superrich. Does a popular city like New York really need rale estate incentives in the Manhattan area?
9
Discouraging those pied-a-terre houses will benefit every New Yorker as they are driving up real estate prices and driving out those who actually want to live and work there.
66
While we're on the subject of correcting some wrongs in New York real estate:
I would also like to see a vacancy surcharge imposed on commercial real estate that sits empty for more than 6 months, unless it's actively undergoing renovation. This should especially target retail and light manufacturing spaces. So many stores and spaces sit empty while otherwise thriving small businesses are driven out of business by crazy rent increases when their lease comes up for renewal. Making it more expensive to let store space sit empty (vacancy surcharge) would make it harder to artificially inflate commercial rents, and help keep tax paying businesses alive and their employees employed, also paying taxes.
Thoughts? Suggestions?
12
Unless the landlord is up to something sinister, she is already losing money by sitting on an empty property. If the long range plan is to empty a retail space in order to re-lease it at a higher rate, maybe the former tenant could be allowed to remain in place on a month to month basis until a new lease is actually executed. I know this presents problems with staffing and inventory but it may be preferable to getting put out on the street.
Wouldn't it make more sense to charge a "pied a terre" tax on ALL second homes? Seems to me that those at the lower end of the range are the ones that make home ownership more difficult to achieve for residents, by scooping up the more affordable properties.
A lot more people would qualify to buy a $500K home than a $5 million one ...
66
@JM. I had the exact same thought and wrote so in my comment here. So, yes, I agree: tax all secondary /tertiary etc. residences here, not just the high end!
15
This tax is intended to satisfy envy, nothing else. Leaving aside whether city property tax rates ought to be rationalized, this proposal taxes people for NOT living in the City — thereby using little police, fire, sewage, water, schools and sidewalks. Meanwhile hundreds of thousands of suburban commuters come to the City every day, use a greater portion of those services, and pay nothing. Why do we tax the former? We’re jealous of their wealth. Why not tax the latter? Many are our friends and neighbors.
17
@H Walters People who commute to NYC for work pay city and state income taxes even if they live in another state. Many of the people who buy second and third homes in NYC do not. If you spend less than 184 days in NYC and your "primary residence" is in another state (or another country) - you don't pay state or local income taxes.
Personally I think it is absurd that I can pay more in taxes to NYC/NY as a renter than someone who owns a $5M second home.
28
If you work in NYC you have to pay income taxes there. Owners of pied-a-terres pay taxes on the value of their property and income taxes based on where they earn their income. Am I missing something?
2
Well said. Green with envy is not a good look.
2
A property brings in more revenue than property taxes to a city. People living in the unit buy all inds of food and services in the locality. The city taxes on this revenue usually exceed the property tax by many times. When people buy a unit and then do not live there, the city loses out on all of that revenue.
The solution is to increase the property tax on property to recover this revenue and make it less lucrative for people to buy these units and not live in them or rent them out. The city then should pay back those people who actually live in or rent out their units by giving them a credit against the property tax. That credit can be proportional to the fraction of the year that the property is occupied.
For example, a property worth $1M might presently have a property tax of $20,000 per year(2% of the property value). The rule would raise the property tax to $50,000 per year (5% of the property value) and give a credit worth $30,000 for keeping the unit occupied the entire year.
2
The rich ought to be delighted to pay this tax. It will help make room on the streets for their limousines. The results in improved transportation will help their house help to get to work on time. This is a win-win for everyone. Why should they complain?
7
Michigan has had a second home (non-homestead) tax for years. After several lawsuits and a lot of complaining, it was upheld and is now a standard part of the tax system.
11
The super-rich owners--investors--of these super-luxe apartments should insist on paying substantial taxes on their second (third, or fourth) homes in Manhattan; thoe taxes, properly applied, would protect their investment. Leveraging a pied-a-terre tax into bonds would pay for the improved infrastructure that helps make New York, New York. This city is already frayed about the edges. That multi-million dollar garconnier may not be worth quite as much should the financial condition of our fair city devolve to that of 1974. Was good for ME then--bought my junior-4 on the Upper East Side for $23K, when NY'er were fleeing to the burbs. I suspect that the owners of multi-million dollar pads would not like to see the days of a shut-down grand central repeated any time soon.
4
Realestate in NYC is a hidden nightmare, not unlike the recently exposed elite college scandal. Extremely wealthy individuals park cash and fund ostentatiously lavish real estate development that receives tax breaks – as if they really need them – comfortably nestled into anonymous real estate trusts.
The result is underfunded, crumbling city services and infrastructure – inevitably lamented by the well appointed – in addition to potentially hiding illegal or otherwise ill begotten wealth.
Needed cures:
All end buyers be clearly identified and funds used be traceable to legit sources.
Real estate sold above a certain threshold be taxed – billionaires tax.
Second homes be taxed – millionaires, billionaires tax.
Our laws and regulations should reflect who we all aspire to be … which is not a third world, tax haven for illicit, shielded wealth. The above cures and the repeal of tax breaks for large corporations and luxury real estate development might help the subways run properly and restore NYCHA housing and its services. Imagine what that would be like!
12
Can anyone tell me if this would affect people who rent out their apartment to full-time tenants? My family just moved to Westchester to send our kids to a normal school and are paying crazy property taxes here. We are renting out our lovely NYC apartment to a nice family and still pay property taxes there... We are hoping to move back once the kids are in college. It makes sense now but not if we have to pay a pied-a-terre tax too!
1
@Kristen You would only be impacted if your home cost over 5 million. If it did, go hire an account and get professional advice, you can afford it.
6
Good. Working class people pay annual taxes on their primary assets, the house and car...even though they may be deep in debt to own those assets. The Rich do not have this level of asset taxation. We should annually tax their furs, jewels, artwork and more. This is a step in the right direction. Is this out of envy, no it is driven by a thirst for justice.
6
What about the tax abatements that the city grants to build these opulent monstrosities? Their elimination or claw-back should be the starting point, with a luxury tax added after that. As things stand, the luxury tax would just bring things back to par for the very very richest.
13
Better to just reduce tax abatements and other loop-holes, and just let them pay market-rate. Or maybe institute progressive brackets on all super-luxury apartments. Not sure I understand the case for primary residence vs. second homes, as they have lower burdens on municipal services.
2
@Graham
They want to tax out-of-towners, not share the burden. And it's easy to pass. A tax on investment property will definitely reduce investment, but I don't think they will get the effect they are looking for (presumably more affordable housing). Likely they will get less of everything.
It'll be interesting if this becomes widespread and New Yorkers get to pay taxes on their second homes on Long Island or the burbs. It's not even clear how they will get to determine which is first, second, or nth home. But NYC loves this kind of engineered problem.
1
The owners of the apartments that would be subject to the proposed tax are less of a drain on city services: they don’t use the schools, they don’t throw out much garbage due to infrequent occupancy, they don’t ride the subway or need social services and they are law-abiding citizens. It turns things on their head to increase their already high property taxes (which is what this is) given they don’t cost the city that much to have them around.
5
@John McMahon You are obviously unfamiliar with NYC real estate taxes. First of all, many of these new buildings are tax abated and owners are not paying anything close to the real tax rates for 20 years. There is no reason at all for all of us to subsidize high end luxury real estate development. Second, the lion's share of full tax rate is paid by Manhattan owners and coop/condo owners Citywide. There are hugely differential tax rates paid by coop/condo owners that subsidize artificially low taxes on single and two family houses outside Manhattan.
You are just wrong that there are already high property taxes on most new buildings like this. They are artificially low.
4
The argument that these pied a terre owners useless city services is absurd. Using less services in no way offsets not paying state income taxes, shopping locally, eating at restaurants, paying for professional services, etc... and generally not contributing to the community at large.
2
ALL pieds a terre, second homes, and foreign ownership should kick in a 100% tax.
And municipalities need to stop approving luxury developments since all it does is pander to the 1%, when they should be serving the ENTIRE PUBLIC and start building affordable housing.
Build it and they will come seems to work both ways here.
8
Hope it gets done. Time for New York to do more for the "bottom" 99%.
10
Another way to generate revenue would be to have residents of stabilized apartments pay NYC income tax on the amount of the “gift” they get from their landlord in the form of below market rent.
13
Many luxury condos in San Francisco are owned by absentee users who may come for an opera or a world series game, etc. I'd love to see these pied a terres taxed to the hilt in our housing starved city.
33
@pollyb1 San Francisco, as recently as 2015, has actually considered the idea.
https://www.bna.com/property-tax-post-b17179923032/
And I'll be interested to see if NY's action inspires other states/cities to look to do the same.
9
@pollyb1 The same thing happens in Madison -- condos purchased for football weekends, rented out for the rest of the year with a provision in the rental agreement that the tenant will vacate a certain number of weekends per year. Better than letting them sit empty, I suppose, but our "affordable housing crisis" has been creeping upward in the last two decades from the truly destitute and the marginally employed to middle class workers paying 50% of their income in rent or unable to afford a place big enough for a family.
The housing investment dollars that have been coming in in the last decade or so seem to mostly go to "luxury" apartment towers designed to separate wealthy students and recent grads who have scored lucrative local tech jobs from their under-valued cash. Must be a great scam (sorry -- ROI) because huge buildings full of apartments no regular worker can hope to afford have been sprouting like mushrooms all over town. True workforce or family housing, not so much...
2
Good. Anybody who can buy a penthouse for $238 can afford to pay taxes on it.
42
@sjs Yes. They can sell a Tesla or 2 to pay for it. It will make more room for their Bentleys.
1
Be careful what you ask for New Yorkers (or what you think you are asking for)! When these people leave New York (along with the tax revenue), the officials with this tax-appetite will find other sources to make up for it.
8
@Mike Why would they leave New York? They are buying these ridiculous apartments because they are in New York. They won't find them in Montana, no matter how low their taxes are. Few other places have the ability to sell them real estate with such growth potential. Did Paris real estate collapse when they started taxing billionaire's apartments?
2
@Mike
If they leave, good riddance, New York was wonderful before they arrived and chased out everyone from musicians at Lincoln center to painters in the east village.
2
I wonder how many pay a property tax that matches the %percentage of value paid by homeowners in Queens. There are so many gimmick to reduce property tax in New York it is sickening and unfair to the middle class. Billions are lost yearly. Blasio does nothing as have mayors of New York Past.
5
One thought: What's the point of living in a super tall building if your apartment is on the second floor? Or any low floor...
2
My nyc apartment is on the second floor of a tall building. I don’t like heights, I think views are overrated, and I prefer walking stairs over riding elevators...but I appreciate the services offered in the building. Each to his own.
2
@Stephen, because they're cheaper but still reap the amenities of a super tall building.
Aren't sales and property taxes enough? Real state is important to our NYC. Don't destroy that!
We just lost the amazon campus deal because of SOCIALIST ignorance.
5
@Wendel, we lost the amazon deal because our imperial governor negotiated it in secret, presented it as a fait accompli and did not include locals or their politicians. nor did he try to sell it to the voters. that's not socialism, it's despotism.
7
As all of these high end real estate developments are nothing but money laundering operations for international cartels and criminals, I'd tax them into poverty.
It's about time the city and state did something.
52
There’s an online listing for an apartment on Billionaires Row - $12.5 million, with property taxes of $38,000. Seems like NYC is already doing quite well off this place, given that they supply essentially zero in municipal services.
Contrast that with multi-million dollar brownstones in Brooklyn that routinely pay less than $5,000 in property taxes. The only difference is that the brownstone owner has a political voice, the absentee owner none.
6
@GC In Westchester, I pay $24K a year on a house valued under $900K.
11
Two differences between NYC and the typical suburb. 1 there’s lots of commercial property here which generates a disproportionate share of property taxes and 2 in NYC there’s an income tax.
The only fair comparisons are therefore among NYC properties, where taxes vary wildly relative to property values.
5
I should add that that $38,000 is based on a temporary abatement. When that goes away in 10 to 20 years the taxes will rise to a market rate, or about 3x what they are now.
1
Don't get me wrong: I am all in favor of soaking the rich when the rich are defined as those who have more money than I do. But isn't there already a system of property taxes based on the value of the home? When I lived in upstate NY, I used to pay around $7000 a year for my $200,000 property. Prorating this, a $238 million property should be taxed at something like $8 million a year. Seems fair to me; and one wealthy family is not likely to use that much dollar value in bridges, social services and restaurant inspection services.
3
“Five million dollars sounds like a lot; you can buy the biggest house in Montana,” said Dolly Lenz, [...] “In New York, $5 million buys a two bedroom in Hudson Yards.”
Probably because Hudson Yards had so much emphasis on appealing to investor-level, high-end properties, rather than increasing the less profitable housing stock.
If you're putting up housing where most of the homes will usually be empty, you are not helping the neighborhoods.
Similarly, if people are buying up homes, but turning them into short-term rental properties, like in the recent article about Airbnb, you are not helping the neighborhoods.
In the second case, you have an extra impact, if hotel rooms stay empty because homes are unavailable for people who would like to actually live in them, the city is doubly hurt, and hotel employees find their jobs and income at risk.
8
I like the real estate person says how all the wealthy people will move to Florida.
All the wealthy have residences in Florida where there's no income tax and claim that as their primary residence. And if what Ms. Lenz says is true, the high end market should collapse if this tax goes through. Anybody want to bet that that happens?
11
@Steve Hi-End property purchasers aren't going anywhere, unless the city reverts to its '70's persona, the one I recall from my first days in the city. NY has been selling itself too cheaply for quite some time now; the rest of the world--certainly the uber rich--has been getting the greatest city in the world at a discount. Time they paid up--and enjoy the benefits of improved infrastructure that, long term, will preserve the value of their investment.
38
@Steve For those of us struggling with the cost of housing in NY C, having the high-end collapse is not a bad thing.
I'd agree this tax on empty residence. We have so many empty houses in West University, Tangle Wood, River Oaks, and Greater Memorial areas in the city of Houston. These are expensive areas for ordinary folks. With high property and related taxes from 2.5% to 3.6% annually, I don't know how they can afford such high costs. However, they can. So I guess if they pay a bit more will not hurt these rich folks much at all.
3
@Usok. I wonder how many of these absentee owners have these properties also to claim Texas as their primary residence - no state income tax. For someone making tens or hundreds of millions a year in, let's say New York or California, those real estate taxes in Houston pay for themselves in a month or less with the State and local taxes they evade.
12
"The bill’s sudden political momentum blindsided real estate executives, who fear the tax could irreparably damage the city’s high-end market, which is already experiencing a downturn."
GOOD.
33
About time! To me, the one fly in this ointment is that it is limited to the high end of the market, i.e. values of five million and up. Why not tax all secondary/part-time homes? The thing is that most people, including myself (unfortunately) don't compete to buy or rent for places that cost five million dollars and up in an overtight market. Most of us City residents end up competing with mere out-of-town multimillionaires, who buy or rent a studio or 1-2 bedroom pied a terre. Yet, those places also sit empty for most of the year, and their owners don't pay NY City and State income taxes, just like the super rich who buy the $ 100 million and up penthouses. So, why limit the surcharge to high-end real estate?
43
@Pete in Downtown
You are also competing with out of town people priced out similarly to yourself who would be happy to move back in and make it their first residence... so don't expect a second home tax to make it easier for you.
Like the curious thing was the dog who didn't bark in the night, the curious thing here is that there wasn't a tax on homes that could only be for the rich in the first place. The rules are always different for the people who buy the people who make the rules.
10
My taxes In SI are almost 12k a year for a property that is 100 by 43. I am all for this tax, but property taxes should be adjusted so that the wealthier people in the city pay there fair share..The governor should also look at a commuter tax for the people who live out of the state working in the city. If a New York resident works in NJ we have to pay tax there.
11
@Robert. Amen to reexamining the commuter tax! It really was an unholy alliance of Republicans who then ran City and State - Giuliani and Pataki- who got rid of it in 1999.
10
@Pete in Downtown, don't forget the role of sheldon silver in abolishing the commuter tax, in hope of winning one assembly district in westchester. he lost anyway.
@Robert
Why do you think a commuter doesn't pay NY taxes?
1
Seems odd to me that with many folks still waiting for the Reagan tax cuts to trickle-down to their level, yet there are those who fear things now are swinging too far the other way.
1
I just hope the pendulum doesn't swing too much in the other direction. With AOC at the helm, we are headed that way.
Don't get me wrong. The pendulum swung too much towards the 0.01% since the 1980s, more so since 2009, when central banks started printing trillions and the 0.01% got their hands on this freshly "printed" money.
I know folks like to pile on Reagan for the excesses that began in the 1980, but the Presidents and Central bank presidents that came after including Obama, Greenspan and Bernanke are equally at fault.
They are responsible for the first whiplash (Trump) and now the second whiplash (AOC/ socialism).
None of the whiplashes are good for the country just as the original reason for the whiplash wasn't: government supported rise of the 0.01%
1
She is one of over 400 congress people. She's not only not at the helm of congress, she's not even at the helm of NY congress people. Let's keep her power in perspective--she's a strong new leader with great ideas, but she isn't controlling what's happening in NYC right now, her new position is the byproduct of it. @mehul
"The real issue is that New York City needs to fix its property tax system, said Martha E. Stark, a professor at New York University’s Robert F. Wagner Graduate School of Public Service, and the city’s former finance commissioner.
The $238 million apartment, purchased by the Chicago-based hedge fund billionaire Kenneth C. Griffin, is currently valued at $9.4 million, according to the Department of Finance."
9
As #CouncilSpeaker, Corey Johnson approves these or other similar zone-busting projects. He approves rezonings that create the opulence in the sky, which he now denounces. Corey Johnson is responsible for inequality. #NoNewJailsNYC #FightForNYCHA
1
absolutely. the rezoning is the reason that these kinds of properties exist and they get passed almost unanimously by the city council. and then they complain that they contribute to income inequality and the opulence that we see. I've said this before in a comment before here but all DCP cares about is expanding the tax base. the article on Hudson Yards quoted a DCP spokeswoman admitting as much. it's ridiculous. it does nothing to disrupt the high end market and makes home ownership less attractive to the average working family. the city likes the affordable housing approach because it allows them to step back and have the developer take much of the risk involved with the development while they don't have the responsibility of maintaining the asset. the city issues bonds and financing of course but that's small potatoes compared to the taxes that come in from the development. and if the developer folds and declares forclosure / bankruptcy, the City seizes the property and continues to claim that they've "developed" affordable housing.
4
Remember when New York was cool and not filled with lawyers and stockbrokers? This may hurt but the regular folks are moving out to NJ and New York is...boring.
27
- I wondered when the pols and public outcry would catch up to this issue - soooooo gouche this particular hedge fund guy who must have found being impoverished and ignored as a child quite painful - he "ruined it" for everybody as Peterson once angrily told the equally ghastly Steven Schwartzman, with his own garish spending, after one of many birthday parties.....the real estate sales people will just watch as listings sit.....and consider another trade....I suspect the constant display and publicity surrounding wealth promulgated by instagram AND the like has "jumped the shark".....one can only hope....
4
It is way past time to do something about inequality. This tax is a little start.
12
The issue is not that property taxes are too low. The issue is the tax burden is very unfairly distributed.
Mayor deBlasio and I both have homes worth about $1.9 million. He paid $3,500 in property taxes last year for his single family home in Brooklyn. I paid nearly 6 times that for my smallish condo in Manhattan.
Please explain how this is not absolutely perverse.
28
@Sparky - I agree, my one bedroom coop is worth $650,000 and my real estate tax is $7,900. This is unfair and needs to be changed.
3
@Sparky
I'm curious how it is that you have to pay 6 times. What does it depend on? Is the mill rate that much different in Manhattan vs Brooklyn? He has an abatement and you don't?
1
@Not Convinced
Townhouses are classified differently for tax purposes than condos or coops in NYC.
It makes no sense of course, but nothing really does in NYC.
1
This tax should have been instituted long ago. And it should be significant. At present, NYC is unaffordable to anyone but the superrich and those who have lived there for a long time. To the rest of us, good luck. A studio should not sell for close to a million dollars. That is insane and why so many children are still living with their parents.
19
YES YES! These types of tax don't hurt anyone and produce critical revenues for the city. Bring it on! If I were rich, I'd be more than happy to pay my fair share. In fact, I don't see why there should be a cap. "Pied a terre: Pay your fair share!"
39
to the broker, Ms Lenz, who said this in the story: So many people have told me they are planning to transition to Naples, Miami or Palm Beach,” she said. “It may not be today, but soon.” Let your wealthy customers transition to southern Florida soon. They'll be underwater soon enough.
76
@jw. Many of these current or prospective buyers of 5 million dollar plus apartments already have their supposed primary residence in Miami, Boca, Palm Beach, Jupiter or Naples, if only to avoid paying New York state and city taxes. If they would be honest, they'd have to declare at least part of their income in NY, proportional to the time spent here.
Instead, their cheating on their taxes, knowing full well that neither the city nor the state have the manpower and wherewithalls to investigate them. This proposed tax would also make at least some of these tax cheats pay something.
40
@jw
Of course, portions of New York City may be underwater "soon" as well.
2
Oh thanks a lot Mr.-buyer-of-this-quarter-billion-dollar-condo! Now ALL the billionaires will have to pay more taxes. It’s just not fair!
6
Looks like the arrogance of the one-percenters has caught up with them.
19
To the real estate honchos concerned about the "chilling effect" on high-end real estate: Good. It's about time NYC put a chilling effect on developers building out the city exclusively for gazillionaires who don't even want to live there full-time.
94
@gmg22
So wrong, it's not even funny.
The property taxes paid in NYC on expensive taxes
funds the entire city. The top 1% pays over 50%
of the taxes. Get rid of the rich, and NYC will
crumble.
@gmg22
So wrong, it's not even funny.
The property taxes paid in NYC on expensive apartments
funds the entire city. The top 1% pay over 50%
of the taxes. Get rid of the rich, and NYC will
crumble.
$516K in property tax on a $238 m Penthouse is unconscionable. Subsidizing the lifestyles of the super rich is unnecessary and wrong. But on a cautionary note, remember that the Federal Income Tax started in 1913 as a 7% tax and as means to get the Super Rich to pay their fair share. Funny how these taxes designed to soak the super rich end up soaking all of us eventually.
8
@Lost In Utah The rich buy their loopholes. Never forget the Koch boys spent tens of millions over the years to get the Ryan Tax bill. They payback was instantaneous. I am sure Ryan is well awarded at his lucrative job at the Heritage Foundation for a job well done.
5
About time. Property is an investment vehicle and buy they should. It’s not so much that owners patronize events, etc when they visit, it’s about investment value. Buildings and people will come and go but owners are investing in location. So yes, a pied a terre tax on a non-primary residence is an excellent idea. It invests in the city and maintains / increases your properties equity and resale value. A win for all. How fortunate that you’ve been able to invest and own in an amazing and desirable city.
17
Enough is enough. It's high time that New Yorkers expressed the moxie that allows "ordinary" people to tolerate, rather than fawn on, the wealthy among us. New York's greatness comes from the opportunities for working families to rise and parent America's future leaders, not from playing escape pod or playground for oligarchs, plutocrats, and kingpins.
Focusing real estate on the uber-wealthy destroys commercial as well as residential properties. Skyrocketing business rents have littered New York's fine avenues with empty storefronts and corporate fast food. How is an entrepreneur supposed to launch the next big thing?
In a more equitably vibrant time, we took pride in the multitude of leaders that "grew up in Brooklyn" or "graduated City University." Now, as then, spreading around opportunity means more chances for future breakthroughs.
But just yesterday, the NYTimes ran "How the Superrich Leave Their Mark on New York" a relatively superficial piece about how we live in the shadow of billionaires' vanity.
Time to thumb our nose at prospective overlords and remember that real freedom comes from opportunities emerging out of shared infrastructure. We should make sure the superrich pay their fair share to ride on the city working families built.
33
@NYC Nomad
Prime Manhattan is not meant for working families.
It never was. It's for the rich. The people who pay
the lions share of the property taxes that fund our city.
Without the rich, NYC will fall apart, the schools will become crack dens, and the middle class won't have anywhere to work. Who do you think owns all the businesses?
@NYC Nomad. I don't want to thumb my nose at the rich and supperrich - I'm fine if they finally start to pay their fair share!
2
All non resident residential real estate units should pay a tax or fee based on the value of the property. NYC has a resident tax on income which is why
Property taxes are low. Non residents obviously don’t pay that.
Florida charges non residents more and they don’t have a state income tax.
It makes sense and can be used to fund infrastructure, affordable housing and transportation improvements
16
@Deirdre. Property taxes are not universally low! A condo in Manhattan generally pays a multiple of what a single family home in Brooklyn pays for a property of the same value. It's a massive subsidy. The biggest issue is not raising property taxes, but making everyone pay roughly the same rate.
4
@Deirdre -- anyone who works in NYC, whether they live there or not, pays income taxes to the city.
That's another reason property taxes stay low.
This style of tax should be implemented in any municipality where vacation home owners, air-b-n-bers, and even snow birds buy up limited real estate and force the housing market locally to inflate rapidly. Vancouver's tax was 1% on homes that sat vacant for 51% of the year. Cities such as Seattle and NYC of course fit the bill, but so do tourist towns across the country that are driving out working class families such as Flagstaff AZ, Breckenridge, CO, Asheville NC, Missoula MT, etc.
20
It's about time. NYC is increasing regularly taxes for homeowners in NYC - which will drive middle class families away and create vacuums in the market, or the possibility for all real estate to be purchased by individuals with money from China.
5
Oh, dear. The proposed law could have a chilling effect on luxury condos valued at more than $5 million. Whatever will the realtors and wealthy home buyers do?
115
@Steve. Those who can afford and want to have a secondary, tertiary or umpteenth-ary multimillion dollar residence in New York City will pay the surcharge. Those who can afford it and don't want to - good riddance! We don't want or need rich freeloaders here!
6
this so call ed pied a terre tax would not be the first or only implementation in USA. In Florida where there are many people with secondary homes, there is already a different tax rate (higher) for those people that are not full time residents. Check it out!
14
@Jay
Oh Florida You cannot out run New York , Know your place When you sold last time 238 million USD apartment in Miami.
Don't insert Florida in our glamorous NY story.
1
There Oughta Be a Law:
No residential real estate property of greater than 20,000 square feet in area shall be owned by a private entity, unless the owner maintains suitable public shelter within the property for the greater of (a) 5 homeless New York City residents or (b) one homeless New York City resident per 20 square feet in the difference of 20,000 square feet and its area.
13
As others have noted owners of Pied-a-Terres already pay property taxes on their apartments. In addition, when they stay at their apartments it is likely that they are either going to the theater, eating at high-end restaurants or shopping at luxury retailers, if not all three. This generates a substantial amount of sales taxes. Assemblyman Hoylman thinks the owners of these apartments are not paying for fire and police services? What are property and sales taxes used for? Also, the flip side is that these owners do not use many services, such as public schools, which their property and sales taxes pay for. This tax is simply a money grab from those who can't retaliate through the ballot box.
8
@Stan If it's a condo, which they almost all are, they pay a fraction of the property tax as a similarly valued 1-3 family home. Also, I guarantee these pied-a-terres owners do not file state income taxes (primary residence in other states) and likely park their income overseas or worse hiding their income from their own governments in NYC to avoid paying their fair share of taxes at home. These very high valued properties are all part of a system of tax avoidance. Sure they may pay something, but it's definitely not a fair something.
87
@Stan
Since these are part time residents, their increasing population in Manhattan produces buildings and even neighborhoods where there is little need for the basic commercial establishments (supermarkets, etc.) that make a neighborhood livable for full time residents. Thus, tax revenue generating stores go out of business. The result is ghost neighborhoods, with inflated real estate prices.
39
@Stan I think you misunderstand how seldom some of these absentee owners even visit their New York properties. High-end real estate has become a place to park cash, period. (Or -- as someone pointed out below in the case of buyers like Ken Griffin paying wildly inflated sums for their property -- a place to try to create money out of nothing.)
13
I would think that the billionaire owners would use a shell LLC to protect them, better still they simply give the condos to their kids.
So ownership would be tough to prove.
Does NYC have a mansion tax? That's an additional sales tax on high end properties?
4
@JB New York already has a mansion tax, which is 1% of the sales price on properties $1m or more, which is paid at the closing by the buyer.
1
@Mitch C Which itself is a joke, since many NYC apartments are already over $1M and are being purchased by the middle class, not billionaires.
The mansion tax is itself unfair when 1M will barely buy you a small 1bdrm in Manhattan and certainly not a “mansion”.
We will look back at this purchase as the beginning of a new wealth tax. This new tax will be called the 'Griffin tax'. This gluttonous purchase will rightly inflame the average struggling new yorker and politicians will jump at the opportunity. The purchase of this empty space crystallizes how much money there is unused at the top. It is a failure of capitalism of sorts. We need to lower income taxes and tax this inert wealth at the top. Its not only right but will spur economic growth.
50
@Miguel Bilbao Perhaps we owe Mr. Griffin our gratitude for spurring lawmakers into action on something they should have dealt with years ago. Space is precious in Manhattan and it is in everyone’s interest to have an economically diverse city with decent supporting infrastructure. This tax could help. More importantly, perhaps there could be a more fulsome discussion on property taxes in the city so that we can all aim for sensible equity.
“State Senator Brad Hoylman, the Manhattan Democrat who has sponsored the tax legislation for several years. And, he said, “because of our system of laws, because of our fire and police, because we are a secure financial investment, they should be charged for that.”
This makes no sense...
Why should the purchase price of a home subject the purchaser to double taxation? The purchaser is already paying property tax to fund these services the State Senator refers to. If the services are inadequately funded, why not raise the property tax rate? I suspect we know the answer; raising the rate would impact everyone and the senator would soon be out of a job
5
NYC has relatively low property taxes because the city has an income tax. But if you aren’t a resident then it is fair that your property taxes should be higher than those residents pay.
In the past the city always had more renters than owners and the budget uses the income tax to ensure those that earn the most pay the most.
But if the owner doesn’t reside here...
8
@Levite It makes no sense to you? Let me help you out, then. Without laws, police, fire, and all the other things taxes pay for, you know what land you own? The dirt you are standing on. While you're awake. With a loaded gun in your hands.
A smart parasite keeps its host alive.
2
@Deirdre Residency is immaterial. As stated in the article, “Under the proposal, owners of second homes worth more than $5 million would be subject to a sliding tax surcharge and fees; homes that are valued more will incur higher fees and taxes.”
Therefore, the owner could live in New York (State or city) AND just own a second home and be subject to the additional tax.
Secondly, You are assuming that the person does NOT live or derive income from NYC which makes them subject to NYC income tax. The person could live in NYC, own two homes, pay property taxes on both, pay NYC income tax, and still be subject to the pieds-à-terre tax.
You are not socking it to the rich, you are not soaking the rich...you are trying to drown them.
I support the tax proposal. And I also have serious questions about Kenneth C. Griffin in particular. He has a history of paying wildly inflated prices for assets. (Including his deal with David Geffen for two paintings.) My hunch is that Mr. Griffin is more interested in establishing prices than in paying current market value. I wonder if this is all a way of attempting to inflate the perception of his net worth.
1
Luxury properties should be taxed at the same rate that ordinary homeowners pay.
56
@Rhonda They should be taxed higher if it's a second home, or one purchased by foreign nationals. I say go for the full 100%!
1
@Rhonda A gentrification tax, one that would similarly redress the outrage of multi-million dollar properties in places like Park Slope paying a fraction of what is paid for less valuable properties, mostly in remaining working class areas in the boroughs, would be a logical next step.
Why doesn't the city fix the unfair property tax system currently in place. This would resolve the issue. If a billionaire wants to buy a $238 million dollar condo, he should pay property taxes on that condo proportional to its value, whether he lived in NYC or not. New York City needs to completely revamp our property tax code that has not been changed since the 80s. Some households (Mayor De Baltimore) are paying less than their fair share, while other households are paying more than their fair share.
48
This would be a great first step. Then figure out how to curtail the purchasing and bundling of our housing stock by banks. What they've done since 2009 has been unconscionable. It's amazing how few NYC properties are owned by its residents anymore. Also we need to do something about LLCs who buy homes just to launder money through them (see Manafort). New York's housing should belong to NYers.
102
@Matt R. I would hope they treat LLC-type "buyers " automatically as non-resident owners, so they (the LLC) would have to pay the surcharge just as any other buyer who is not residing there. If the unit is occupied by someone who is paying city and state income taxes, it might be a different story, but the burden of proof should be on the LLC.
4
Well, leave it to the high end real estate brokers with their huge commissions from selling real estate to the international gilded age crowd! Perfect mix of entitlement and hubris.
How are we going to get the fodder for Bravo real estate shows?
23
If the pied-à-terre tax becomes reality (& it should), someone will figure out how to get around it or claim it as a tax deduction.
1