City Wants to Up Mansion Tax to Raise Funds for Affordable Housing

Posted On Wed, November 19, 2014 By

Posted On Wed, November 19, 2014 By In Policy, real estate trends

When completed, 520 Park Avenue will have a $130 million penthouse, the most expensive apartment ever in NYC

As the city continues to explore new avenues for the creation of affordable housing, the WSJ reports the latest idea being floated is a new “mansion tax” that would increase the amount collected on the most expensive apartment sales. Currently, homes that change hands for more than a million dollars are subject to a 1% tax, but the city wants to up this to take advantage of the red hot luxury housing market. The proposal, unsurprisingly, has met with much criticism.

The WSJ writes that a number of developers believe the tax singles out the extremely wealthy and will be detrimental to the market. Extell’s Gary Barnett, one of the developers opposed to the hike, expressed his distaste saying, “Anything that’s discriminatory against a class of owners, visitors, buyers in New York City sends the wrong message and will be counterproductive.”

However, there are others that are all for the new tax including Related’s Stephen Ross, who told the paper that the tax is a great source to tap for additional funds especially given the strong market for top tier housing. Domino Sugar factory developer Jed Walentas said, “A tax on very high-end condos would be a better way to create resources for affordable housing than further taxing rental development.”

It’s not clear what the increase will be, but the city’s Independent Budget Office estimates that a small increase of just 0.5% on apartment sales of $5 million could raise another $34 million in 2015. Last year, the mansion tax generated approximately $259 million.

If the plan moves forward it will need approval from the state legislature.

[Via WSJ]

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