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January 23, 2008

How Will Spitzer’s Budget Affect Real Estate?

spitzer-budget-01-2008.jpgYesterday Gov. Spitzer introduced his $124.3 billion budget for the fiscal year that begins in April, a plan that calls for a spending increase of 5 percent as well as various cost-cutting measures meant to address the state’s estimated $4.4 billion budget deficit. So what sort of impact will the governor’s plan have on real estate? For starters, one of the most significant aspects of the budget involves increasing the real estate transfer tax, which is paid on property purchases above $175,000. Spitzer is also proposing a freeze on spending for the $4.7 billion School Tax Relief program, which uses state money to lower property taxes by funding school districts and giving rebate checks to homeowners. At the same time, Spitzer is looking to increase spending on affordable housing via the new $400 million Housing Opportunity Fund, which will go to the creation and preservation of low-cost and supportive housing. Some independent budget analysts say Spitzer’s plan doesn’t go far enough in terms of curbing spending. Nevertheless, the uncertain economic climate was clearly weighing on the governor. “Like every other state in the nation, New York is feeling the effects of a serious economic downturn, requiring us to make tough decisions necessary to continue moving our state in the right direction,” Spitzer wrote in a statement accompanying the budget.
Spitzer Plans Cuts and Fees to Close Deficit of $4.4 Billion [NY Times]
Spitzer's Budget Triggers Backlash [NY Sun]
2008-2009 Executive Budget [NY State]
Photo from state.ny.us




Posted by Gabby at 9:00 AM | Comments (22)
Categories: Money, Politicians

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Comments

RE Closing Costs are a ripoff to begin with. Especially on Condos. Spitzer should consider cutting spending by 10 per cent and reduce payroll before "adding" to the tax burden...

Posted by: guest at January 23, 2008 9:38 AM

Well Spitzer was right - "on day one everything changed...."

Now I look at Pataki fondly.

Posted by: guest at January 23, 2008 9:51 AM

Is the transfer tax a lump sum or a percentage of the transaction cost? If its a lump sum, an increase of $325 on the closing costs of a million dollar (and up) house seems pretty benign. If its $325 per X amount, well that's a different story.

Posted by: WBer at January 23, 2008 10:20 AM

Spitzer should be impeached for his stonewalling of the Dirty Tricks Scandal. If he was a republican gov. he would have been forced out by now.

Posted by: guest at January 23, 2008 10:29 AM

Spitzer is the worst governor.

Posted by: guest at January 23, 2008 10:32 AM

When the real budget comes out after Election Day, and school aid to the city is slashed leading to a drastic reversal of any progress here (as in the mid-1990s) so that school districts in the rest of the state can spend more, the value of family housing in NYC will suffer a relative decline, as young people see the writing on the wall and once again flee.

Just like the 1980s housing bubble and bust, expect history to repeat in public policy.

Posted by: guest at January 23, 2008 10:37 AM

Did someone mess with NYT link? Check out the sidebar. New tax on cocaine?

Posted by: guest at January 23, 2008 10:38 AM

“Like every other state in the nation, New York is feeling the effects of a serious economic downturn, requiring us to make tough decisions necessary to continue moving our state in the right direction,”

So that means spending an extra 5% in an already inflated spending budget and raising taxes on the flailing real estate market in order to make it even more expensive to own a home and drive more people and business out of the state and city.

This guy is the worst - way to tax and spend NY into the ground like all of the other failing high tax democratically controlled governments.

Posted by: guest at January 23, 2008 10:41 AM

The transfer tax is a percentage and it is already a very large cost when selling a home.

For residential properties sold for $500k or less the city transfer tax is 1% of the sales price. For properties sold for more than $500k it is 1.425%. So if you sell your home for $1M you pay $14,250.

Then the state gets another 0.4% on top of that.

For non-residential properties (includes 4-fam and up plus commercial properties) the rates are 1.425% if the sale is less than $500k or $2.625% for sales greater than $500k.

So sell your 4-fam for $1M and you end up with a $30k transfer tax bill between the city and state.


http://www.nyc.gov/html/dof/html/property/property_rec_rptt.shtml

http://www.taxadmin.org/fta/rate/Realtytransfer.html

Posted by: guest at January 23, 2008 11:01 AM

check out the 40 tax. It'll add $.68 to the price of a 40.

Posted by: guest at January 23, 2008 11:06 AM

Spitzer is planning on taxing drugs seized during arrests.

Posted by: guest at January 23, 2008 11:08 AM

Move to the suburbs if you want. I got frustrated enough just getting home to Brooklyn from Midtown yesterday with some slow moving subways. We'll pay the extra taxes to stay in the city, and wait this out. If I ever left Brooklyn it would only be to move to Manhattan.

Posted by: guest at January 23, 2008 11:12 AM

Spitzer's budget also kicks education another way: No tax credit for parochial school parents, who pay twice for education (their kids, through tuition, and other kids, through their taxes). A break for middle- and working-class parents who use independent and religious schools is crucial to keeping many of them in business; every Catholic or other school that fails = more kids overcrowded into the nearest public school. For all his vaunted independence, Spitzer appears to wear the choke collar of the UFT quite obediently, since their bedrock opposition to subsidizing educational choice is legendary. It's a shame, 'cause I really had hopes for him.

Posted by: Brenda from Flatbush at January 23, 2008 11:14 AM

Not just the city 11:12 - Spitzer is the STATE Governor, remember?

So unless you are talking about moving to out of State Suburbs...

Posted by: guest at January 23, 2008 11:16 AM

This is a joke, So he is basically raising taxes so he can increase spending by 5%.

How about we keep spending increases at zero before we raise taxes. That might make sense.

Posted by: guest at January 23, 2008 11:25 AM

Dosent make sense to the massive bureaucracy and unions that count on your tax dollars to stay in power and employed 11:25.

Its easier for Spitzer to screw all of us rather than confront them.

Posted by: guest at January 23, 2008 11:31 AM

I would never vote for a politician who supported giving tax breaks for people who send kids to private or parochial schools.
Those schools get too much indirect aid already.

Posted by: guest at January 23, 2008 11:51 AM

Raise my taxes to the sky - all I ask is the occasional evening F train that's not packed to the gills.

Posted by: Johnny at January 23, 2008 12:24 PM

Dear 11:51, what indirect aid would that be?

Posted by: guest at January 23, 2008 2:00 PM

Worst governor ever. Don't blame me I voted Faso.

Posted by: guest at January 23, 2008 2:37 PM

New York State is a financial basket case. Upstate NY is practically a Third World country. The whole house of cards is dependent on the New York City economy particularly the financial markets and real estate. What a disater of a state that manages to combine the worst central planning and high tax aspects a socialist system with the callous disregard for citizen's health and well being of nineteenth century capitalism. The worst of both worlds. Spitzer is a one-man gang who can't shoot straight.

Posted by: guest at January 23, 2008 2:56 PM

why the anger at spitzer? - its the entrnched corrpution that makes our taxes so high. Spitzer got less than zero support when he tried to fix that. I don't care if he uses dirty tricks on bruno, just get the whole rotten corrput bruno, silver and the rest of them out now.

Posted by: guest at January 23, 2008 4:31 PM

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