NYC Council members propose ‘gentrification tax’ for new homebuyers

Posted On Thu, December 26, 2019 By

Posted On Thu, December 26, 2019 By In Policy, real estate trends

Photo via Creative Commons

New homebuyers in New York City could be charged property tax based on actual market prices, the New York Post reported on Wednesday. A group of city lawmakers is pressing Albany to change state laws to close a loophole that offers tax breaks to homebuyers in gentrifying neighborhoods. The “gentrification tax,” as the Post called it, would have homebuyers pay market rate taxes, rather than the assessed value, as a way to make the system fairer.

Currently, buyers across the five boroughs pay property taxes based on assessed value, which is typically much lower than its market value. This means New Yorkers who buy a multi-million dollar home may pay the same amount in taxes, or sometimes even more, as a homebuyer of a more modest property.

Council Member Joe Borelli, who represents Staten Island and is backing the change in tax law, told the Post that people are “just getting fed up with the loophole.”

“My proposal would end the practice of charging more tax on $500k home on Staten Isl etc. than a $2m home in Park Slope,” Borelli tweeted on Thursday. “This can be done jan 1.”

The bipartisan group of city lawmakers includes 13 Republican and Democrats, led by Borelli. The Staten Island pol sent the resolution earlier this month to City Council Corey Johnson and State Assembly Speaker Carl Heastie requesting the change.

Jennifer Fermino, a spokesperson for Johnson, told the Post that the speaker is waiting to read the report from the Advisory Commission on Property Tax Reform, a group formed by Johnson and Mayor Bill de Blasio in 2018, before supporting the proposal.

“The Advisory Commission is looking at Real Property Tax Law 1805 as part of its review of our broken system,” Fermino told the newspaper. “Any recommendations for changes will be part of the commission’s preliminary report. The Speaker is looking forward to reviewing their recommendations when the report is ready.”

The commission was expected to release a preliminary report in July with recommendations on how to overhaul the city’s property tax laws. But the proposals have not been released, making any significant tax reform plan unlikely to be pushed through in 2020.

“I think it’s highly unlikely it will get fixed this legislative session because the issue is so complicated,” Johnson said during a press conference last week, according to Crain’s. “I hope that we make some very significant changes by the time I am done being speaker.”

[Via NY Post]

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