The idea of a mansion tax — an increased tax on those who buy seven-figure residential properties — has been floated around for the past couple years. Last year, Mayor de Blasio put forth a proposal that would add a one percent tax for sales over $1.75 million and a 1.5 percent tax for sales over $5 million. As 6sqft reported, he estimated the plan could have brought in “an extra $200 million a year in tax revenue, money that would be allocated to affordable housing programs,” but it was ultimately rejected by lawmakers in Albany.
In response to the Mayor’s preliminary 2017 budget, the City Council is now looking to revive this proposal, but use the increased revenue to fund programs for youth, immigrants, and women, reports the Wall Street Journal. Coupled with a tax on carried interest for some investment managers, they predict the taxes could create an additional $410 million for the city.
The mansion tax becomes an extremely hot-button issue when we look at instances like that of the $100 million apartment at One57 (the most expensive sale ever in the city). As previously noted, the owner only pays $17,268 in annual property taxes, “or 0.017 percent of its sale price, as if it were worth only $6.5 million… In contrast, the owner of a $1.02 million condo nearby at 224 East 52nd Street is paying $24,279, or 2.38 percent of its sale price.” This occurs partly due to the 421-a program that offers tax breaks for the inclusion of affordable housing, thereby enticing developers and lowering the billable-assessed value of a property, as well as “the city’s convoluted method of assessing market value for condos and co-ops.”
Under the new proposal, the City Council called for $790 million total in new spending, which includes $101 million in property tax rebates, income tax breaks for low-income households, tax exemptions on feminine hygiene products, and summer employment programs for youth. As was previously the case, the mansion tax needs approval in Albany before it can be put into effect.
- City Wants to Up Mansion Tax to Raise Funds for Affordable Housing
- To Increase Affordability, Mayor de Blasio Wants to End 421-a for Condos and Up the Mansion Tax
- Charting the Property Taxes of the City’s 10 Most Expensive Apartments
- Owner of $100M Apartment at One57 Only Pays $17,268 in Property Taxes
Lead image © Wade Zimmerman courtesy of Agence Christian de Portzamparc (ACDP)
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