220 Central Park South. Image via Vornado Realty Trust and Robert A.M. Stern Architects.
New York’s 2020 budget was revealed this weekend; among many other items, the proposed “pied-à-terre tax” went away, but a progressive “mansion tax,”–a one-time tax on properties valued from $1 million to $25 million or more–and an attendant transfer tax when those properties sell–will reportedly raise $365 million, according to The Real Deal. The money will head straight to the MTA. The new tax will top out at 4.15 percent.
A big tax on big ticket buys
Outside of 432 Park Avenue, Mayor de Blasio held a press conference on Thursday to discuss his mansion tax. The proposal calls for a 2.5 percent surcharge on sales of city homes valued at $2 million or more, which would in turn fund affordable housing for 25,000 senior citizens. De Blasio fittingly positioned himself outside 432 Park because, according to the city, if the proposed tax had been passed, this residence alone would have generated $30.2 million since 2015 in support of housing for low-income seniors. “And that would have been based–and this is stunning to me–on the sale of just 62 condominiums. But it would have meant enough money to subsidize affordable housing for 2,000 seniors,” he said.
Find out more here
In preparation for his State of the City address this evening at the Apollo, the Mayor announced two major affordable housing initiatives. The first will allocate $1.9 billion for 10,000 new apartments reserved for households earning less than $40,000, 5,000 of which will be set aside for seniors and 500 for veterans. The second implements a new Elder Rent Assistance program to provide 25,000 seniors with monthly rental assistance of up to $1,3000, to be funded by the city’s proposed Mansion Tax.
More details ahead
Mayor De Blasio will renew his call for a “mansion tax” before this state Legislature in Albany today, reports Politico. In support of rent subsidies for 25,000 low-income senior citizens, the mayor has detailed a proposal that will raise the property transfer tax to 2.5 percent for any sale above $2 million. “We are asking for some basic tax fairness from the wealthiest New Yorkers so low-income seniors can afford their rent and continue to call the greatest city in the world their home,” the mayor said in a statement.
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.
More details here
Back in March, we learned that the owner of the $100 million apartment at One57 (the most expensive sale ever in the city) pays only $17,268 in annual property taxes– “or 0.017 percent of its sale price, as if it were worth only $6.5 million,” as we noted. “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.” Why does this happen? It’s in part due to the 421-a program, which offers tax breaks for the inclusion of affordable housing and “lowers the billable-assessed value of a property to incentivize real-estate development,” according to CityLab. It’s also thanks to the city’s haphazard system for assessing market values of condos and co-ops.
In response to this growing issue of inequality, Mayor de Blasio announced just last week that he hopes to end 421-a for condos, as well as implement an even stricter mansion tax. To make the issue a bit more black-and-white, CityLab has put together two charts that show just how disproportionate the actual value of the city’s ten most-expensive apartments is compared with their property taxes. As they note, “In NYC, billionaires pay 1/100th the average property-tax rate.”
Find out more here
Mayor de Blasio via @KevinCase via photopin cc; One57 © Wade Zimmerman courtesy of Agence Christian de Portzamparc (ACDP)
From the onset, Mayor de Blasio has been extremely vocal about his plan to add 200,000 units of affordable housing over 10 years, 80,000 of which will be new construction. Though many feel this is an arbitrary number, backed up by no data as to where the units will be, the Mayor seems committed to reforming current policies to reach his goal. And after months of speculation, he has revealed his planned changes to the city’s 421-a tax incentive program, which is set to expire in June.
According to the Times, under his proposal, the controversial tax would no longer apply to condo projects (to understand the logic behind this decision just look at the $100 million sale at One57 that received the tax abatement). But it would apply to new rental projects, which would have to have apartments for poor and working-class residents make up 20 to 30 percent of the building in order to qualify for city tax breaks. It would also extend the abatement from 25 years to 35 years. Another part of the overhaul is to eliminate so-called poor doors.
De Blasio also wants to up the city’s mansion tax. Currently, home sales over $1 million are subject to a 1 percent tax, but de Blasio proposes adding an additional 1 percent tax for sales over $1.75 million, as well as a third 1.5 percent tax for sales over $5 million. He estimates this will bring in an extra $200 million a year in tax revenue, money that would be allocated to affordable housing programs.
More details ahead
This Week’s Features
Images: Rendering of Pier 55 park via Heatherwick Studio (L); Forest Hills Gardens via Joe Shlabotnik via photopin cc (R)
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.
More on the mansion tax here