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New York passes pied-a-terre tax

cnbc.com

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Re: New York passes pied-a-terre tax

#111

Post by jamiequint »

Aurornis wrote: post #95
burlesona wrote: post #22

Property tax is the workable wealth tax. There's no such thing as a perfect policy, but in the context of NYC this seems worth trying. I'll be interested to see if it helps create some liquidity in the housing market (the goal), or if it only functions as revenue source. One wrinkle I haven't heard much discussion of -- cities respond to incentives too. NYC is a global destination for the mega wealthy. If it turns ou…

> If it turns out the uber-rich don't mind paying and this becomes a cash cow for the city, that creates incentives for the city to cater to them and try and get more uber-rich people to have second homes in the city. The tax is reasonably small enough that I wouldn't expect a lot of wealthy people from divesting from their properties, but it's probably going to make them think twice about buying new properties. That…

"If you make the tax too high it starts discouraging the behavior you're taxing, which can paradoxically reduce overall tax revenue."

I am generally against more taxes, but the structure of this one is quite good in terms of the incentives. If wealthy people who only live in the city part-time stay in hotels instead of buying second homes, the net effect should be to increase the cost of hotel rooms and reduce the cost of owned-housing. NYC charges nearly 10% tax on hotel stays, so recoups some of the cost there. Having property in your city mostly being occupied by people who live their full time, particularly when property is already very expensive, seems like a good thing overall.

Re: New York passes pied-a-terre tax

#112

Post by usefulcat »

andrewstuart2 wrote: post #24
nemomarx wrote: post #13

Earlier quoted context omitted.

It affects wealth, but the owner can also sell the property to someone who'll live in it and then they won't be taxed despite owning expensive property. So it's more targeted than a general wealth tax would be and I think the intent is to free up housing supply a bit.

Or they can move to NY "full time", if I'm understanding correctly, which will likely also improve the city's tax revenue from more of that person's expenses incurring city taxes.

Wouldn't that mean that they would then also pay NY income tax?

Re: New York passes pied-a-terre tax

#113

Post by lokar »

They would probably be better off fixing how they asses the value of condos. Which, AIUI (and one have a good explanation?) is based on imputed rent, capped at the rent of the closest example they can find. So no condos get taxed more then the most expensive rental (I could have this wrong).

Re: New York passes pied-a-terre tax

#114

Post by VikingCoder »

Dumb question - what about corporations (or charities?) that own homes? Are they automatically "second homes", since a corporation has no primary residence?

Are we going to see things classified as not-residences, but then people can vacation there anyway, much like Mar-a-Lago supposedly cannot be a residence, but apparently President Trump lives there and votes there, anyway?

Re: New York passes pied-a-terre tax

#115

Post by idontwantthis »

lokar wrote: post #113

They would probably be better off fixing how they asses the value of condos. Which, AIUI (and one have a good explanation?) is based on imputed rent, capped at the rent of the closest example they can find. So no condos get taxed more then the most expensive rental (I could have this wrong).

TFA makes clear that addressing this is part of the phased implementation.

Re: New York passes pied-a-terre tax

#116

Post by happytoexplain »

newaccountman2 wrote: post #89
sunshowers wrote: post #43

Earlier quoted context omitted.

In what world is 1 million US not wealthy? Have tech salaries distorted people's opinions that much? Owning a house where your equity in it is over a million is absolutely wealthy.

> In what world is 1 million US not wealthy? In the US itself (?) lol I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be. A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.

"that's worth living" is doing some Herculean lifting there. I'm sorry to inform you that only the wealthy can live in the places you deem "worth living". You are not using the phrase "middle-class" correctly.

I'm not coming at this from a rural perspective. I live in the greater NYC area. I have friends in NYC. They make a lot of money and live very close to Grand Central, and even they don't live in $1M properties.

Re: New York passes pied-a-terre tax

#117

Post by usefulcat »

DocTomoe wrote: post #26
toomuchtodo wrote: post #16

Earlier quoted context omitted.

I think it is unlikely anyone with a second home at these price levels is going to sell to avoid this (immaterial to them) tax. But certainly, if they do sell to someone who will occupy as primary residence, that's also a win, regardless of the coin flip (heads, wealth tax, tails, more housing for those who actively live in the city). Edit: You start somewhere and keep tightening the policy ratchet as loopholes or ot…

In reality, they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home - while itself being owned by the original owner. Problem solved significantly cheaper than this new tax. In fact, I would not be surprised if they have already done that four months ago, when the law was being discussed. The ones who will be hit are those who do not have the legal frame…

> they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home

How will that help to avoid a tax on secondary residences? Are they somehow going to claim that these properties are the primary residence of a company? Seems nonsensical.

Re: New York passes pied-a-terre tax

#118

Post by omot »

For all the fear-mongering the media-zeitgeist tried to stir up about Mamdani's NYC mayoral campaign, I find his policies measured and fiscally responsible. A second mansion in NYC does seem excessive, and the tax could free up supply. The tax rate isn't outrageously high, if I'm wealthy enough, I'll just pay it, otherwise if I'm on the cusp, maybe it's better to sell and liquidate. Feels like a Keynesian policy at its finest.

Re: New York passes pied-a-terre tax

#119

Post by ceejayoz »

freediddy wrote: post #73

What's to stop them from selling to a holding company so that it's not literally his own second house?

https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...

> It is unclear how DOF will treat properties owned by LLCs and trusts. In general, these owners are not considered residents. However, this does not mean that the properties are not used as primary residences. For instance, based on publicly available information, Mayor Bloomberg established his primary residence in two adjacent buildings on the Upper East Side, one owned by an LLC, and the other a cooperative apartment corporation. It may be possible for some LLC owners to rent to themselves and avoid the tax.

Re: New York passes pied-a-terre tax

#120

Post by prmoustache »

nxm wrote: post #19
jmclnx wrote: post #5

$ have to come from somewhere, with the Fed cutting taxes for the rich and benefits for the poor every other term, time for the states to take over.

Issue is not revenue, it's spending. Florida has 2x the population, yet half the spending on NY.

Spending is not necessarily an issue and can be a net benefit for the taxpayers depending on where you spend that money.

Thinking stuff like healthcare, education, housing, public transport, cycling infrastructures or even law enforcement.

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