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Is Class 2 taxes really 70% of rent income?

Started by dc10023
almost 13 years ago
Posts: 85
Member since: Jun 2008
Discussion about
Am I missing something? MV of tax class 2 brownstone (say 4-10 units) is based on the following formula: Rental Income x Multiplier x 45% x Tax Rate If I'm looking at a reo that has a multiplier of 12.5 and the tax rate is 13% then the effective tax rate is 73% of rent income? Does anyone have clarity what the city considers "physical improvements"?
Response by wellheythere
almost 13 years ago
Posts: 166
Member since: Dec 2008

If the number is 12.5 it should be either NET income times 12.5 or GROSS income divided by 12.5%. For the types of buildings I'm familiar with (not 4-10 units) effective taxes tend to be 30%-40% of GROSS income.

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Response by dc10023
almost 13 years ago
Posts: 85
Member since: Jun 2008

So at 12.5% cap rate (same as 8x multiplier) I get 46.8% of Gross Income (46.8% = 45% x 13% / 12.5%).

So if Gross Income multipliers for Manhattan ranges 8-12.5, then the taxes range from 47% - 73% of gross income. Not accounting for other expenses or caps in tax increases. Yikes.

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