Imposes an additional tax surcharge on certain non-primary residence class one and class two properties in a city with a population of one million or more

The tax would apply to 1-3 family houses, condos, and co-ops that have a market value of $5 million or more, and are not the primary residence of the owner(s) of the property, or the primary residence of the parent(s) or child(ren) of such owner(s).

For the purposes of this bill, "market value" is defined as a comparable sales-based valuation method, a method currently used by the NYC Department of Finance for determining the market value of class one properties.

The property shall be deemed to be the primary residence of the owner(s) if the property would otherwise be eligible to receive the STAR property tax exemption, regardless of whether or not the owner(s) applied for or are actually receiving the STAR exemption. The NYC Department of Finance is charged with promulgating any other rules relating to the establishment and/or certification of primary residency.

The tax would be administered as follows:

If the market value of the property is:ÑThe tax is:

Over $5,000,000 but not over $6,000,000Ñ$0 plus .5% of excess over Ñ$5,000,000

Over $6,000,000 but not over $10,000,000Ñ$5,000 plus 1% of excess Ñover $6,000,000

Over $10,000,000 but not over $15,000,000Ñ$45,000 plus 1.5% of excess Ñover $10,000,000

Over $15,000,000 but not over $20,000,000Ñ$120,000 plus 2% of excess Ñover $15,000,000

Over $20,000,000 but not over $25,000,000Ñ$220,000 plus 3% of excess Ñover $20,000,000

Over $25,000,000Ñ$370,000 plus 4% of excess Ñover $25,000,000

Section 2 states that this act shall take effect immediately.

Justification

Out-of-state purchasers are increasingly buying up high-end properties in New York City that they rarely, if ever, occupy. In one 42-square block quadrant of Manhattan, bordered by 70th Street to the North, Park Avenue to the East, 49th Street to the South, and Fifth Avenue to the West, the U.S. Census Bureau estimates that 30% of the apartments are vacant at least 10 months a year. At the same time, low-income New Yorkers continue to face a critical shortage of affordable housing.

The vast majority of absentee owners of luxury properties don't live and work in New York City, and therefore do not pay city incomes. Meanwhile, they benefit from New York City's outdated property tax laws, paying very low property taxes relative to the value of their real estate. High-end real estate development is often the recipient of lucrative taxpayer-funded subsidies, further reducing the tax burden on the owners of the most expensive residential properties in New York City.

By imposing a modest, graduated "pied-a-terre" tax on the most expensive non-primary residences, New York City can generate over $650 million in tax revenue annually, according to estimates by the Fiscal Policy Institute, while affecting less than 2% of the non-primary residences citywide.

Prior legislative history

S.7941 of 2014 (Hoylman) : Died in Rules A.10192 of 2014 (Glick): Died in Rules

Fiscal implications

None.

Effective date

Immediately.