NYC "renters tax"

I like this dicussion.

My apartment is taxed extremely high compared to other buildings on the same block, in the same area, etc...

I sure would like to see some equitable taxation. Also, why am I taxed on the 2nd floor the same as someone on the 33rd floor? Why base it on PCI? It should be based on market value of the apartment. Something needs to change.

Poor Jason.

"Fairness" is usually arbitrary and hard to pin down. Should the tax be redistributive, or should it reflect the owner's use of City streets and services?

In any event, this gets back to basic market theory: rents are determined by what the renters will pay, not what expenses or savings are borne by the landlord. At best, the effect of higher RE taxes is to depress the purchase value of the buildings ... but only a wing-nut looney-toon would argue that that's happening.

if you own a condo in the city and it is not your primary residence because you are renting it out than you are screwed. Actually your tenant is screwed because the landlord is going to pass this RE tax hike onto the tenant. I believe this tax hike just occurred last quarter so expect to see rents go up by at least 3 to 5% higher next quarter and moving forward.

>landlord is going to pass this RE tax hike onto the tenant.

How so?

Ho so. Landlord gets bill from NYC tax and finance dept. He sees that his tax was just raised on his condo 5%. For example he is now paying an extra 200 per month for taxes since it it's not an owner occupied condo. I think there there's a good chance he's going to pass part or most of that increase onto his tenant when the leases gets renewed.

Like every time there is a tax... 4 effects: the government takes a share, consumers pays, producers pay and some transactions, which would happen without, don't happen because of friction costs. It is true about every tax... It is not necessarily bad.

>Ho so.

Did you just call me a Ho?
Because the rest of your paragraph didn't make sense either.

besides the ho so. What exactly didn't you understand?

houser, I'm not a real estate attorney, but it is my understanding that residential rentals, co-ops and condos all fall into the same tax category and are assessed as such. Please explain to me how a condo owner who chooses to rent out that unit is suddenly screwed and paying different taxes from what he/she was paying while living in the unit?

houser, are you such a benevolent landlord that you charge less than you can get in rent? At renewal time (after taking into account the cost or repainting, etc., at turnover), do you offer renewal leases for less than you reasonably believe you can get?

No. You're not. You already want the most money you can get, and you're already getting the most money you can get.

So are you foolish enough to think that charging $200 more than you can get ("passing the cost along"), will land you a qualified tenant with no greater vacancy?

Furthermore, market rent is market rent, residential rentals are not triple net lease structures, so if I suddenly as a landlord have to pay an additional $200/month and I attempt to pass that on to my tenant, unless rents have actually increased proportionately and I could command that by bringing in a new tenant, my current tenant is going to tell me to GFM.

Again, please explain your logic...

Of course, unless like alanhart said above, you happen to be charging below market to begin with.

NYC10007 I might be wrong here but due to recent changes in the state law co-op/condo abatement is being phased out beginning July 1 2012. I believe it will show up on this quarters tax bill.
Let me know what you think NYC1007 about this.

It's being phased out for non primary residence owners. In other words if you are renting out your condo you can expect a sizable increase in your RE taxes.

houser, you meant July 2013, not 2012.

no I meant July 2012 it is being reversed in July 2013

Here read this article to help you understand what's going on here.

http://www.nytimes.com/2013/03/26/realestate/tax-abatement-changes-affect-many-unit-owners.html?pagewanted=all

Yep, they are clawing back 12/13 abatements that have been revoked, and charging them back over 13/14 in equal parts over the 4 quarters.

houser, my building is in year 8 of a 10 year 421-a abatement. I plan to rent my apartment soon, which is currently owner-occupied. When I hand the keys over to my new tenant, I will see no difference in RE taxes due to the changes you mention in the state law.

What you're talking about does not apply to condominiums that benefit from (or have benefited from) other types of abatements like 421-a, J-51...etc. It also doesn't apply to units that have simply not been receiving the condo/co-op abatement in the first place. Your comment is overly broad, and while it may affect some, I expect the sting will be mostly felt by those who have been benefiting from artificially low RE taxes to begin with. In which case, tough noogies and thank you to those who will finally be paying their fair share.

Whatever happened to upperwestrenter/iguanaboy? Those were the days, iguanaboy and Catguy.

NYC10007--Good point

As soon you rent your condo and its no longer your primary residence, it will no longer qualify for the abatement - fact. And the penalties are pretty stiff if and when NYC finds out otherwise.

after the 421, etc. expires that is

jnnj...owners of units that benefit from 421-a are not and will not benefit from the sunseting state abatement that is currently being discussed. Therefore, primary residence or not, owners of other types of tax abated condos are not going to be subject to a large jumps outside of the fully assessed taxes that will be reality once the abatement period each is subject to is up.

I'm not disagreeing with you that it will no longer qualify for the abatement, but since owners of these units never actually received the abatement in the first place, it won't affect RE taxes paid.

My point is, the likes of those who are suddenly getting 'screwed' because of this expiring condo/co-op abatement are already getting screwed, so for many, they won't see any chance in their tax bills.

Renters don't pay real estate taxes. It's just one of those bizarre rules that under rent control the price increases must be justified by a cost formula, but since the renters is only paying a fraction of the true rent, its a spurious argument.

"Renters don't pay real estate taxes."

Hmmm? What? Huh? Did you read the article? Its not talking about rent controlled apartments - its talking about market rate units as the issue. If a LL pays a higher tax in NYC than the same LL does for similar properties in prime SF or West LA or Washington DC, that LL passes that cost on to the renter.

"that LL passes that cost on to the renter." If you look at it this way, that also means the land lord passes along his insurance costs, debt service costs, turn over costs, salaries & benefits to any employees, utility costs that may not be paid directly by the renter...and the list goes on.

Bottom line is, whatever you want to call it, free market units are exactly that, free market, supply and demand, so if a lease comes up and the tenant will accept a $200 increase at renewal, then that's what the landlord will get. If the market isn't there to support it, then the LL won't get it. There's no such thing as just passing along a cost to a LL.

Gee, I want to re-finance and cash out all my equity, I'll just go ahead and pass along my $1,500/month in additional debt service payments to my tenant, no problem!

I meant "passing along a cost to a tenant."

"Gee, I want to re-finance and cash out all my equity, I'll just go ahead and pass along my $1,500/month in additional debt service payments to my tenant, no problem! "

I think that's a bad analogy for cashing out with a home equity is something you are not forced to do.However if all the landlords throughout Manhattan or let's say just the West Village get a tax increase of 200 per month rest assure that will be passed onto the tenant at lease renewal. If they can't get all of the 200 due to market conditions they will try to get a portion of it from their tenants. Whats the difference between an increase in taxes or an increase in common charges. I don't think there is any and the landlord will try to pass along this increased cost onto his tenants.

I agree my example is a bit extreme, but my point is that you can call it what you want, every year a landlord is going to try and maximize his potential income at lease renewal. You may find a select group of small owners who don't do this, but if I'm not charging market rent every time my lease is renewed, then shame on me. Common charges and taxes are going to increase annually, but to somehow say a spike in one or the other simply gets "passed on" to the renter is simply inaccurate. If the market supports it, then fine, call it that, but a blanket statement that condo owners who are renting their units are suddenly screwed, and on top of this, their tenants are suddenly going to be absorbing this tax increase are the ones who are really suffering, are both gross over-generalizations and simply inaccurate if one assumes the market is efficient.

There ARE good reasons not to charge market rate at renewal -- the "known" vs. "unknown" about current tenant vs. future (timely rent-payer, not a PITA); the cost of repainting or even bigger upgrades to lure a new tenant, and the downtime for that to happen; the temporary vacancy because pricing is not a perfect science; the annoyance of showings felt by neighbors and condo board (if any, and the costs and delays associated with approval); the time and energy out of your, or your organization's, schedule.

But other expenses incurred by you (including new taxes, and including the higher cost of cold-storing your wife's mink and sable coats for the summer) are not among them. Computer says no.

I think that generally markets set rents -- but there is a bit of wiggle room that allows rational landlords to have some say in rental prices.

"every year a landlord is going to try and maximize his potential income at lease renewal"
I disagree. Certainly landlords are in the business to make money, but the best way to make the most money (with the best lifestyle considered) does not include pushing every rent to it's full market rate each lease expiration.

The more you push rents, the more turnover you're going to have. Turnover is annoying, expensive and time consuming. Often landlords give rent renewals at rates that are below market. The near market rents give us some room to raise rents in future years if our expenses spike and they keep our general work load more manageable.

A tenant is much more willing to accept a big rent increase if I can say "hey last year I gave you a break, but this year oil went from 80 to 110 so that's why I'm asking for a bigger rent increase now" - it's been my experience that the kind of tenants I want to keep understand the logic and are willing to help shoulder the costs in the lean years as long as I don't gouge them in the fat years.

I think you'll find some correlations between rent increases and large jumps in property taxes. In years where property taxes or oil spike, I think you'll notice that rents in general went up more than normal. When we feel we're taking it on the chin in expenses we're much more willing to push the rents (even if that means we need to turn over a few more units) and our tenants are much more willing to accept the increases. Certainly the relationship between expenses increasing and rents increasing isn't linear but I think you'd find some correlation.

Jazzman, fair enough, I agree with your assessment. No pun intended!

As a landlord, my rents are always under market. The reason is that I would rather take a little less and rent immediately instead of waiting months, or many months, to find a tenant. On renewals I keep in mind the my cost for painting and cleaning and the time it will take before I find another tenant. My tenants average over 4 years with me and most left only because work took them outside the city. And Jazzman you are correct.

>As a landlord, my rents are always under market. The reason is that I would rather take a little less and rent immediately instead of waiting months, or many months, to find a tenant.

So what's your definition of market?

"So what's your definition of market?"

Market is the actual price the apartments are renting for in that building. Pretty simple.