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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

#181

Post by kibwen »

HDThoreaun wrote: post #126
usefulcat wrote: post #68

Earlier quoted context omitted.

Well, you need to read the rest too: "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." It also mentions they plan to adjust property valuations in coming years, and when the valuations go up the rates will go down: "After the valuation adj…

Taxes has no income tax. NYC plus ny state has income tax at close to 10%.

This policy appears to target ultra-wealthy investors who are just parking their assets in NYC real estate and don't reside in NY to begin with, and thus aren't paying NY state income tax.

Re: New York passes pied-a-terre tax

#182

Post by ceejayoz »

nonethewiser wrote: post #175
ceejayoz wrote: post #119

Earlier quoted context omitted.

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 E…

Now remember they are changing how property values are assessed. So everyone's base rises and the rich with 2nd homes dont pay the extra tax because they move it into an LLC.

> the rich with 2nd homes dont pay the extra tax because they move it into an LLC

Sounds like something worth addressing as a second phase!

Re: New York passes pied-a-terre tax

#183

Post by nonethewiser »

neckardt wrote: post #169
nonethewiser wrote: post #141

Earlier quoted context omitted.

> 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.

The government would only buy your house if you underestimated the value of your property. You wouldn’t be able to buy a comparable house with the proceeds because it got sold for much less than it was worth.

>The government would only buy your house if you underestimated the value of your property.

Nope, that's not in the rules. It's up to their discretion.

It seems like you agree it would be bad for the government to be able to buy your house when you give an accurate assessment. So why not design it out of the rules?

Re: New York passes pied-a-terre tax

#184

Post by nonethewiser »

tantalor wrote: post #176
nonethewiser wrote: post #141

Earlier quoted context omitted.

> 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.

For the tax authority (and the public) it's a win/win: 1. Property is taxed at correct rate (win) 2. City buys property at low cost (win)

Thats not the scenario I detailed. Read it again.

Re: New York passes pied-a-terre tax

#185

Post by jandrewrogers »

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…

It isn't done because it has overt pathological economic characteristics. This forces the owner to write a long-term call option on a non-commodity asset without even collecting the offsetting risk premium expected for such a call option. This puts the asset permanently underwater by construction, which would crater asset values. The maths don't math. You can't just pick one side of a balanced equation and pretend the other side doesn't exist.

At least as important, this scheme is trivially exploitable for corruption and weaponization by government officials in countless ways that don't currently exist. This is not something that anyone should want to enable.

Re: New York passes pied-a-terre tax

#186

Post by cucumber3732842 »

pydry wrote: post #123
Aurornis wrote: post #95

Earlier quoted context omitted.

> 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…

Land value taxes don't discourage desirable behavior when raised. Property taxes might discourage construction but if land values are high enough then property taxes approximate land value taxes. Raising income tax on the other hand discourages working even when it is set very low. This is one which ought to be lowered if anything. tl;dr it doesnt work the same way for every tax.

>Land value taxes don't discourage desirable behavior

Are you serious? LVTs expressly incentivizes landlords to kick out "grandfathered in" developments and uses in favor of redevelopment and sale for that purpose.

But those grandfathered in developments and uses are exactly what made the place valuable in the first place and you need some amount of them to remain.

Re: New York passes pied-a-terre tax

#187

Post by elevation »

skybrian wrote: post #59
elevation wrote: post #35

Earlier quoted context omitted.

[flagged]

What do you mean? It's not a tax on commercial property. One effect might be that wealthy non-residents prefer to stay in a hotel when they visit New York? The amount of money being collected as property tax would pay for a very fancy suite. I imagine there will be luxury hotel conversions.

> It's not a tax on commercial property.

This makes more sense; I had engaged with just the phrase "property tax" without this qualification.

Re: New York passes pied-a-terre tax

#188

Post by unethical_ban »

GenerWork wrote: post #84
lorecore wrote: post #47

Earlier quoted context omitted.

Miami? Have you checked home insurance rates lately? The thought of these NYC second home owners getting gutted by the next hurricane is rather amusing though.

The rich don't really care about insurance rates down here because they can a) pay them, b) tend to gravitate towards newer buildings that have better protection and c) have the money to retrofit older buildings with the necessary protection to lower insurance rates. Miami has the strictest hurricane codes in the country, so while there's a possibility that they may get gutted, it's probably going to be less than peo…

So they can pay the higher insurance without a thought, they can pay for the relocation across the country, but they're unwilling to finance public services for the city they live in.

Re: New York passes pied-a-terre tax

#189

Post by cakealert »

swiftcoder wrote: post #105
cakealert wrote: post #62

Earlier quoted context omitted.

> The elites always promise us trickle down economics, maybe this time it will happen. Are you under the impression that the wealthy keep their money in a savings account? They have more money than they can spend so they invest it, what do you think investment does?

> what do you think investment does? Accrue more money pretty much indefinitely?

When you invest money it disappears from your control and you get a piece of paper that says you own shares in an entity.

Re: New York passes pied-a-terre tax

#190

Post by nonethewiser »

>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.

>Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.

Hold on a second. Reading between the lines, this means everyone's property taxes are going up, right? Because the valuation system is being revised to more accurately reflect resale value.

Obviously this would affect more expensive properties more. But I havent seen anyone acknowledge that everyone's taxes will increase. Is that because I have the details wrong or because it's just flying under the radar?

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