New York is close to implementing new “pied-à-terre tax.” If the bill passes, which the New York Times believes is likely, cities of a million or more people will be able to levy an additional property tax on non-primary residence homes worth $5 million or more. The additional tax would be based on the following sliding scale:
So let’s say for argument sake that you own a pied-à-terre in New York City worth approximately $238 million. Based on the above, your additional tax would be $370,000 + [4% x ($238 million – ~$25 million)]. That’s almost $8.9 million. Most of the revenue from this tax is expected to come from this upper (and open-ended) valuation bracket.
New York City estimates that the tax could bring in about $650 million annually. The state in turn believes it could then raise $9 billion in bonds. And the intent is that these additional funds could be used to fund things like transit and housing. I am curious how elastic the demand is for trophy real estate in New York.
Another thing I noticed while reading up on this bill is that the New York State Senate has made it pretty easy to voice your opinion on proposed legislation. On the sidebar of every bill making its way through the system is a box that looks like this:
This is probably the clearest engagement tool I have ever seen on a government website. Do you think something like this could work for new housing?
Luv a $238M “small living unit” pied-à-terre!!!
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A place to put your head down right?
Trump’s changes to the tax code, which limit how much state income tax you can deduct from your fed income taxes, have already killed the super luxury NYC market (not saying that’s a bad thing). I’ve heard it’s been a real shot in the arm to florida real estate though…