The Bryan Ellis Investing Letter – Mayor Bill de Blasio of New York City has identified a new “bad guy” that he’s hoping to use as a cash cow in the coming year. That’s right: if de Blasio thinks your properties indicate you’ve got money to spare, he’s going to do his best to suck it up into the system via a new four-percent annual property tax that will apply to everyone who ever thought owning property in the Big Apple was a good idea across the country and around the world. If de Blasio’s tax makes it into law, the tax hike could not only discourage American buyers from making purchases in NYC; it could also turn off international investors and even derail the city’s booming luxury condo market permanently.
“This certainly does not help the reputation or future of our great city,” warned one Manhattan broker. “It’s probably a good way to start the collapse of the residential market,” added Steven Spinola, president of New York’s real estate board. However, supporters of the tax say that people who don’t actually live in New York City ought to be paying higher taxes. After all, noted James Parrott, deputy director and chief economist of the Fiscal Policy Institute, which proposed the measure, high-end property owners in NYC who do not live in the city “big up the price of New York City residential real estate…[and] contribute little to the local economy.” While the bill is being touted as a tax for non-residents, residents who own other expensive real estate will still have to pay the higher tax rate even if their NYC home is their primary residence.
The numbers are startling and bleak. A $95-million six-bedroom penthouse under contract at 432 Park Avenue, a skyscraper currently under construction, would face a $3.1 million annual surcharge in addition to $260,000 in regular property taxes if this proposed legislation goes through. Developer Gary Barnett warned that these types of fees would definitely derail the city’s presently-booming construction and development business. “There is no way in the world that any luxury buildings like these are going to get built again,” he said, adding, “There is the problem of killing the golden goose.”
Source: The Bryan Ellis Investing Letter
Do you think that the proposed property tax on the rich real estate owners in New York City is a good idea? Will it really be the end of residential real estate in the Big Apple?
Source: The Bryan Ellis Investing Letter
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