decent summary of the problem...
http://mycrains.crainsnewyork.com/greg_david_on_new_york/2011/03/the-politics-of-unfair-property-taxes.php
What if you paid far more taxes than your neighbor, who actually had a more valuable house, and the Bloomberg administration said it would fix the problem, and then never did?
That is why some developers are increasingly angry over the wide disparities in the city's property tax system and with the mayor.
[Read my print column on a related topic in today's issue of Crain's.]
No one is about to take on the administration publicly. The mayor is, after all, the best friend the business community has in New York, and public pressure would be counterproductive. Frustration is growing, however.
Four numbers from the Independent Budget Office illustrate just how messed up the city's property tax system is: single-family homes account for 49% of market value and pay 15% of property taxes; multifamily rental buildings represent 24% of value but pay 40% of the taxes.
The real estate industry wants some help with this problem in connection with renewal of the 421-A tax incentive program. Without a change in real estate taxes, developers say, construction of mixed market-rate and affordable rental housing in Manhattan and parts of Brooklyn will come to a screeching halt. Worse, developers claim, as the tax break on these so-called 80/20 buildings expire, the only alternative will be to convert them to condos.
The real estate people say the administration promised to fix the problem. At least, Bloomberg administration officials involved in housing and economic development said they would tackle the issue. Unfortunately for the developers, the mayor has given the Office of Management and Budget veto power in all discussions about possible changes. That office opposes any loss of revenue.
The mayor--and his political advisers--know they can't raise property taxes on homeowners--whether they live in single-family buildings or co-ops or condos. He's already raised property taxes too often. As an opponent of the millionaire's tax and other soak-the-rich schemes, he can't put a heavier burden on the average New Yorkers.
The developers are right that the mayor, who has put such an emphasis on both market-rate and affordable housing, is shooting himself in the foot by failing to tackle the issue. Unfortunately, the politics of any fix are hard to figure.
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Response by nyc10023
about 15 years ago
Posts: 7614
Member since: Nov 2008
Trouble is that the number of people who benefit from the current system (lower taxes) is probably lower than the number of people who don't.
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Response by notadmin
about 15 years ago
Posts: 3835
Member since: Jul 2008
> Worse, developers claim, as the tax break on these so-called 80/20 buildings expire, the only alternative will be to convert them to condos.
why cannot they keep on renting them at mkt rate!?
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Response by sledgehammer
about 15 years ago
Posts: 899
Member since: Mar 2009
No wonder Brownstones in Brooklyn are doing so well, property taxes for the year on a 3000sq feet townhouse can be about 1 month worth of maintenance/property tax only in a Manhattan condo.
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Response by somewhereelse
about 15 years ago
Posts: 7435
Member since: Oct 2009
not to mention, the newer condos and co-ops are subsidizing old co-ops as well... rediculous formula...
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Response by MrSuttonPlace
about 15 years ago
Posts: 155
Member since: Aug 2009
taxes in nyc, totally unfair. Obviously, my taxes are at the high end of unfair.
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Response by NYCMatt
about 15 years ago
Posts: 7523
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"not to mention, the newer condos and co-ops are subsidizing old co-ops as well... rediculous formula.."
How are they doing that with all these tax abatements?
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Response by wellheythere
about 15 years ago
Posts: 166
Member since: Dec 2008
"why cannot they keep on renting them at mkt rate!?"
For a lot of apartment buildings of recent vintage that are losing their 421-a exemptions, the numbers just don't work as rentals anymore. As in, they literally lose money. Many buildings are getting tax bills in excess of 40% of GROSS revenue.
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Response by nyc10023
about 15 years ago
Posts: 7614
Member since: Nov 2008
Not just apt buildings of recent vintage. It's more complicated than that.
For example, 10-unit townhouses can have very large tax bills. See 317 West 77th.
Matt: don't be funny. He means after the expiration of the abatements. Look at 200 Riverside Blvd and the taxes on a 4-bedroom apt.
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Response by NYCMatt
about 15 years ago
Posts: 7523
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I guess New York will have to start making the folks in the projects start shelling out more cash for THEIR apartments ... or kick them out.
Working people cannot be expected to pull the weight of everyone else indefinitely.
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Response by nyc10023
about 15 years ago
Posts: 7614
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That's not the issue.
How do you justify or explain 3k (and often lower) taxes on a 2m townhouse in Fort Greene or Park Slope when a 2m condo (after the abatement period is over) on the UWS can easily have taxes of 24k?
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Response by AvUWS
about 15 years ago
Posts: 839
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Why should any of this matter? Everyone knows that higher taxes on rental landlords will merely be passed on to the renters plus some additional percentage as a profit margin.
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Response by nyc10023
about 15 years ago
Posts: 7614
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I can't speak to the impact of the current property taxation system on rentals. Don't know what it is.
But the issue for homeowners is the unequal tax treatments residential properties receive, depending on when it was last renovated/had a change of C of O. It's not as bad as Prop 22 (at least it's not tied to ownership change),
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Response by lo888
about 15 years ago
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Btw, how come sometimes the taxes on a specific Manhattan house are much higher than the taxes of all neighbouring houses even if it has not been renovated in ages?
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Response by nyc10023
about 15 years ago
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I can tell you exactly why if you give me the address.
What is the C of O? Tax class 1 (which I think is 1,2, maybe 3 units) hass the lowest tax rate.
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Response by lo888
about 15 years ago
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More than one case. All of them are single family homes so assessed at 6% of market value.
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Response by wellheythere
about 15 years ago
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Correct. Tax class 1 (1-3 units) is assessed at 6% of "market value" while tax class 2 (4+ units) is assessed at 45% of "market value". Of course, "market value" is established through opaque and arbitrary means imposed by the legislator, meaning that "market value" rarely bears any resemblance to actual market value. There's literally no rational justification for it. It screws multifamily housing as a class when if anything it should be the opposite from an urban planning point of view,
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Response by lo888
about 15 years ago
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But how can houses in similar condition and size on the same block be assessed so differently? Many Manhattan blocks feature nearly identical houses. I understand higher assessments for renovated houses and/or houses with build outs but don't get disparities when the houses are practically in the same condition. I guess they don't all get reassessed at the same time. What triggers unique reassessments besides renovations? Sales? Requests (obviously if you are hoping for a reduction, not the other way around!)
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Response by bob420
about 15 years ago
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The comparables are often not in the same area either.
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Response by nyc10023
about 15 years ago
Posts: 7614
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Lo888 - to my knowledge, there are VERY few stretches of completely identical houses - a row of an identical 6 would be a long run. There is sufficient variation in size on most townhouse blocks on the UWS at least. Don't forget that 2 feet in width translates into many millions of dollars in actual RE vale. And I have not encountered even on chichi park blocks (UWS) greater than 5 identically-sized single family houses.
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Response by MrSuttonPlace
about 15 years ago
Posts: 155
Member since: Aug 2009
look at a tax map of manhattan --- there tax $/psf from building to building varies greatly - there is no consistency
Trouble is that the number of people who benefit from the current system (lower taxes) is probably lower than the number of people who don't.
> Worse, developers claim, as the tax break on these so-called 80/20 buildings expire, the only alternative will be to convert them to condos.
why cannot they keep on renting them at mkt rate!?
No wonder Brownstones in Brooklyn are doing so well, property taxes for the year on a 3000sq feet townhouse can be about 1 month worth of maintenance/property tax only in a Manhattan condo.
not to mention, the newer condos and co-ops are subsidizing old co-ops as well... rediculous formula...
taxes in nyc, totally unfair. Obviously, my taxes are at the high end of unfair.
"not to mention, the newer condos and co-ops are subsidizing old co-ops as well... rediculous formula.."
How are they doing that with all these tax abatements?
"why cannot they keep on renting them at mkt rate!?"
For a lot of apartment buildings of recent vintage that are losing their 421-a exemptions, the numbers just don't work as rentals anymore. As in, they literally lose money. Many buildings are getting tax bills in excess of 40% of GROSS revenue.
Not just apt buildings of recent vintage. It's more complicated than that.
For example, 10-unit townhouses can have very large tax bills. See 317 West 77th.
Matt: don't be funny. He means after the expiration of the abatements. Look at 200 Riverside Blvd and the taxes on a 4-bedroom apt.
I guess New York will have to start making the folks in the projects start shelling out more cash for THEIR apartments ... or kick them out.
Working people cannot be expected to pull the weight of everyone else indefinitely.
That's not the issue.
How do you justify or explain 3k (and often lower) taxes on a 2m townhouse in Fort Greene or Park Slope when a 2m condo (after the abatement period is over) on the UWS can easily have taxes of 24k?
Why should any of this matter? Everyone knows that higher taxes on rental landlords will merely be passed on to the renters plus some additional percentage as a profit margin.
I can't speak to the impact of the current property taxation system on rentals. Don't know what it is.
But the issue for homeowners is the unequal tax treatments residential properties receive, depending on when it was last renovated/had a change of C of O. It's not as bad as Prop 22 (at least it's not tied to ownership change),
Btw, how come sometimes the taxes on a specific Manhattan house are much higher than the taxes of all neighbouring houses even if it has not been renovated in ages?
I can tell you exactly why if you give me the address.
What is the C of O? Tax class 1 (which I think is 1,2, maybe 3 units) hass the lowest tax rate.
More than one case. All of them are single family homes so assessed at 6% of market value.
Correct. Tax class 1 (1-3 units) is assessed at 6% of "market value" while tax class 2 (4+ units) is assessed at 45% of "market value". Of course, "market value" is established through opaque and arbitrary means imposed by the legislator, meaning that "market value" rarely bears any resemblance to actual market value. There's literally no rational justification for it. It screws multifamily housing as a class when if anything it should be the opposite from an urban planning point of view,
But how can houses in similar condition and size on the same block be assessed so differently? Many Manhattan blocks feature nearly identical houses. I understand higher assessments for renovated houses and/or houses with build outs but don't get disparities when the houses are practically in the same condition. I guess they don't all get reassessed at the same time. What triggers unique reassessments besides renovations? Sales? Requests (obviously if you are hoping for a reduction, not the other way around!)
The comparables are often not in the same area either.
Lo888 - to my knowledge, there are VERY few stretches of completely identical houses - a row of an identical 6 would be a long run. There is sufficient variation in size on most townhouse blocks on the UWS at least. Don't forget that 2 feet in width translates into many millions of dollars in actual RE vale. And I have not encountered even on chichi park blocks (UWS) greater than 5 identically-sized single family houses.
look at a tax map of manhattan --- there tax $/psf from building to building varies greatly - there is no consistency