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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

#141

Post by nonethewiser »

VikingCoder wrote: post #106

> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said. I heard about a system for this that struck me as brilliant. Make someone declare the value of their property. Then the government has the choice of taxing them at the scheduled rate, or bu…

> Then the government has the choice of taxing them at the scheduled rate, or buying the property from them, for that cost.

Uhh... what? How is this not an insane system?

1. You give an accurate, good faith projection.

2. Government taxes you.

   OR
Government buys your house. Weird. You buy a comparable house with the proceeds.

3. Repeat.

Re: New York passes pied-a-terre tax

#142

Post by lokar »

idontwantthis wrote: post #115
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.

I can’t tell if it will apply generally or just vacation homes. It says “gradually”, but that seem to be about the rates, it the scope.

And it does not explain how the current system arrives at such low valuations.

Re: New York passes pied-a-terre tax

#143

Post by idontwantthis »

DocTomoe wrote: post #20
onlyrealcuzzo wrote: post #7

I think this is in the right direction, but the cut off at $1M is interesting. Why's there an obsession with the $1m cutoff? The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC. Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes. So why the arbitrary cutoff? Chicago wanted to add a "millionaire's tax" o…

1 million remains the hallmark of 'wealthy' (as in: not us), to the point where pop culture has started mocking the concept decades ago (See: That Austin Powers movie...) Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.

You are confusing owning a house with having paid off a mortgage. I can go get a mortgage for $1 million tomorrow, but that does not make me a millionaire. It makes me an debtor with a house I can't afford.

Re: New York passes pied-a-terre tax

#144

Post by wisemanwillhear »

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?

That's a great point. I'm guessing the politicians knew the rich would find a work around, but they're obligated to go through the outward motions so they can claim to keep their promises.

Re: New York passes pied-a-terre tax

#146

Post by sunshowers »

onlyrealcuzzo wrote: post #134
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.

> Owning a house where your equity in it is over a million is absolutely wealthy. Only ~30% of home owners own their outright. ~60% own 40% of the house or less. I'd argue that you can't own more than ~92% of a home, because it costs a lot to sell a house... The "average" homeowner moves every ~7 years in the US, and this is heavily skewed to people with less equity - the people who outright own typically have stayed…

I agree that owning an expensive house where you have negative equity is not wealthy (at least based on that data point itself; maybe you have a 401k or something else that makes you wealthy)

Re: New York passes pied-a-terre tax

#148

Post by blactuary »

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…

The goal of this isn't simply to raise revenue, it's also to discourage parking money in empty properties when it's one of the most expensive cities to live in and doesn't have enough housing

Re: New York passes pied-a-terre tax

#149

Post by MSFT_Edging »

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…

I'm not sure why if you or I were to expatriate and let go of our US citizenship, we'd still be on the hook for taxes for (iirc) 15 years, but the ultra wealthy can get away with tax havens while remaining citizenship and reaping the benefits of protection by X state.

What prevents the tax following the offshoring attempts? Is it simply that the IRS doesn't have the manpower? or is there a legal loophole for avoiding paying your share that only works for the ultra wealthy?

Re: New York passes pied-a-terre tax

#150

Post by koliber »

arw0n wrote: post #110
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…

The fairest and easiest to realize wealth tax is on inheritance. It is great to want to give your kids a headstart in the world, it is terrible for them and the people around them to set them up for life.

The problems with inheritance tax is that they can be avoided through trust structures and insurance schemes. In theory it's a good tax, but in practice many wealthy people figured out how not to pay it.
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