NYC 's proposed property tax overhaul
Workisfun. Never, never sell if you can help it. When you own a property you have wealth. You may need to fine tune some aspects of what is going on with the condition of the house but please don’t sell. I live in Clinton Hill and all I see are long time owners getting out for what they think is a lot of money. Truth be told unless you are moving to someplace well outside of NYC you would still need to fully pocket quite a bit of the sale proceeds to stake a new life elsewhere. Owning a home is one of the toughest but greatest privileges you can have. Work it out. I hope you do. Good luck.
BKALLDAY
in General Discussion 5 years and 9 months ago
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someonecalleddob | 5 years and 9 months ago
RE: https://nypost.com/2020/01/30/the-winners-and-losers-of-nycs-proposed-property-tax-plan/
Can someone with some knowledge of what is being proposed shed some light on what this would mean for your every day homeowner? Would properties be re-assessed at current market values (i.e., would it be possible for my property that has doubled in the last 8 years have a property tax bill that can go from 5,000 to 30,000?). I just threw out those numbers FWIW. Or will the taxable value be assessed on new sales, similar to California?
What does the community take on this actually getting passed?
greenworks | 5 years and 9 months ago
haven’t gotten thru the whole thing yet but if I were in brownstone brooklyn, I’d run for cover. Verdict is out for outlying parts of the borough like where I live.
I also keep thinking of that poor guy who posted a while ago agitating for property tax reform, thinking it would benefit him. I don’t think this was the property tax reform he was looking for.
chemosphere | 5 years and 9 months ago
All the slopeheads are going to fight it. Any proposal that actually gets through will be severely watered down. But basically we are undertaxed. It’s one reason why schools are struggling compared to rich parts of Westchester where everybody pays $30k a year. Imagine what the city would do with all the additional money.
As a Flatbush resident I’d like to see more fairness and more of the fancy neighborhoods taking on their share and am willing to pay a little more if that happens. I currently pay about 0.005%. According to the city’s study the median rate for 1-3 fam homes valued $2m-5m is 0.0025%.
WRPListings | 5 years and 9 months ago
Seems like this would worsen the impact of gentrification/middle class flight from NYC in areas like bed stuy where there a lot of people who have bought homes but are not rich. Rental prices will go up for sure since people will need to have more income to pay for higher taxes.
hkapstein | 5 years and 9 months ago
Yes your taxes could go from 5000 to 30,000. The benificiary, and lobbyists pushing for this, are landlords of big apartment buildings. People of Donald Trump’s ilk. Since more revenue can be generated from homeowners, who have generally enjoyed a cap on tax increases so they couldn’t be priced out of neighborhoods, the overall tax rate will go down, and that will reduce the taxes of the newer big buildings. A brownstone might go down in price by 20% or more, but those big glass buildings might go up in price by millions, helping the enrich big landlords that spent money pushing this agenda. I’m sure the case will be made that this is “progressive” because landlords will pass that savings on to renters. But I don’t see why anyone would cut the rent. If costs are lower than expected, that money goes in the landlords pocket. It’s not like there’s a demand shortage and apts are priced as cheaply as possible to get someone in. In fact, even if landlords were losing money, they would still price the apts as highly as they could.
For people who are not ultra rich, it could be ugly. Your equity will probably get completely wiped out if you had put 20% down, and you may have to come up with cash just to pay the mortgage off if you sell.
What I don’t understand is who’s protecting the pied-a-terres. Seems like out of towners that that can afford a rarely used home in nyc would be a great source of tax revenue. Probably the developers like selling to these folks and don’t want them getting hit with a big tax increase. Billionaires buying in the new super talls will probably get a nice tax break since those are assessed at market anyway, and developer can now capture a higher price, while a family who’s owned in bed stuy since the 80s might have to move.
NeoGrec | 5 years and 9 months ago
How can this be achieved politically? Many families in Brownstone Brooklyn have been here for decades. They are working or lower middle class with multiple generations in residence. Here’s a random survey of 10 adjacent houses of my Prospect Heights block (including my own home): 4 are working/lower middle class long term owner-occupied (20 years+); 3 are upper middle class long term (20 years+) owner-occupied; 1 is UMC gentrified (I’m defining as owner occupied for less than 20 years); 2 are middle-class long term owners (20 years+) and rented. Essentially only 3 sales out of 10 homes in 20 years — pretty low turnover. Actually at least 6 owners have been here 30-50 years! How will the mayor justify an increase of $5 – 30k on those deeply established lower income families? All those households would be forced to sell. Surely it’s just not politically do-able?
hkapstein | 5 years and 9 months ago
Chemosphere, keep in mind, in westchester, people pay no city income tax like we do here in NYC, and that’s a lot of money. Also, property taxes go directly to the school attended by the folks that can attend the school. Here there is little accountability for what the tax revenue gets spent on at schools. Your taxes could go up, but another school could benefit or it could get spent on administrative costs or pork and you’d never see it at your zoned school.
The key thing they will do is try to exclude lower income homeowners. Low income seems to mean <200k. But they'll still take a huge hit on their equity for when they want to retire, because you can't find someone making 200k to buy them out for 3,000,000 bucks. If we want to tax people with higher incomes, why not just increase the income tax rather than arbitrarily appropriating huge sums of money from folks that happen to own certain types of homes? Another more fair suggestion would be to allow a step up of 50% or something every time the home is sold, that way over 30 years or so the taxes will get pretty close to market. There already is a mechanism for that, but clearly it was not anticipated that values would grow so much faster than 5-6% a year.
chemosphere | 5 years and 9 months ago
They have a carve out for low income home owners. Did anyone actually look at the proposal?
hkapstein | 5 years and 9 months ago
@chemosphere: let’s make sure we understand what is happening before we react. If you bought a brownstone, you paid more for a place that was taxed at 5k than if the taxes were 30k. If you bought new development, you paid less than you would have if you had lower taxes. Let’s say you bought a 2.5 million dollar brownstone with taxes at 5k, now they go to 30k. Your house is worth 2.0 million now. You just lost 500k. Where does it go? Someone who bought in a recently constructed building now gets a big tax windfall. They were expecting high taxes, and bid and borrowed accordingly, but now they can sell their place for 200k more. You’re taking a huge amount of equity from one group and moving it to another somewhat arbitrarily, even if you provide some annual tax relief to those making <200k. They still lose their equity.
chemosphere | 5 years and 9 months ago
“Changes would be phased in over five years with annual increases capped at 20%.” Year one $5000, year 2 $6000, year 3 $7200, year 4 $8640, year 5 $10368, Year 6 $12441. Anywho, glad to see all of you fighting on behalf of the Park Slope brownstone owners and their $3m investment and taxes at rates below 0.001% and against the Carnasie homeowners with houses worth $500k.
chemosphere | 5 years and 9 months ago
This is all speculative because everyone who is politically powerful is going to make disengenuous arguments like they’re in favor of the little old lady down the street when they really are just arguing to keep their own rates the same and the legislation will either never pass or be severely watered down. The big picture is you want to keep the little old lady down the street, but also make her taxes high enough so she has an incentive to downsize, while at the same time making DOB fees low enough and construction prices low enough that she can easily convert 2 empty floors to apartments and the rental income will cover the new taxes. But the whole process is broken from start to finish. Instead we get hoarders and grand mostly empty houses falling apart and $300/sq ft for renovations.
WRPListings | 5 years and 9 months ago
I don’t think they are fighting on behalf of PS owners over carnasie owners, but rather saying that it doesn’t make sense to solve one problem by creating another. Brownstone brooklyn has a diverse group of homeowners with a range of wealth levels. You, and this proposal, act like all people who own in a certain area are rich and have lots of extra money. Many are struggling to survive in brooklyn, and this seems like a stroke that’s too broad and creates more problems rather than less.
chemosphere | 5 years and 9 months ago
ah yes, the old “people who own in park slope are not rich” argument.
WRPListings | 5 years and 9 months ago
What about all the other neighborhoods where people own brownstones that are now expensive? this is not all about park slope
true | 5 years and 9 months ago
I don’t know anything about the local political process, what exactly happens next?
hkapstein | 5 years and 9 months ago
When a canarsie homeowner bought a place for 500k, they knew they would have certain amount of taxes. Now if the taxes were half that when they bought, the seller would have demanded 600k because brokers know that someone who can afford x dollars a month can afford a bigger mortgage if the taxes are lower. The problem I see is that people who have most of their wealth tied up in a house will now experience a kind of massive tax lottery that could wipe them out. Also, the odds are in favor of slumlords and against homeowners. An investor owner of a 5-family rental in canarsie will probably see his taxes drop. Does he need that? He probably lives in park slope.
If we think the tax rates should be reassessed, then why not do it over 30 years so you don’t wipe people out. If you think that anyone who owns a house or co-op in brownstone brooklyn deserve to have 300k-1 million taken away, then I guess that’s what you want. But remember, these are families that live in Brooklyn, not high rise hedgefund billionaires.
cate | 5 years and 9 months ago
Taxes will go up in Flatbush and just about everywhere else in Brooklyn for all residential properties of all types under this proposal. The “safety” measures proposed to keep non-billionaires in their homes are too vague to be evaluated. Taxes are already going up under the current system. This new proposal is even more opaque because it doesn’t spell out what the waivers and income breaks would be. More info here: https://www.brownstoner.com/real-estate-market/nyc-property-tax-reform-mayor-commission-brooklyn-brownstones-coops-dof-report/
true | 5 years and 9 months ago
Haha, I’m very confused: isn’t the proposal covering single family homes in Canarsie too?
hkapstein | 5 years and 9 months ago
Thanks Cate. I like your write up.