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New York passes pied-a-terre tax

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Re: New York passes pied-a-terre tax

#391

Post by 8note »

jamiequint wrote: post #111
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…

"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 co…

> 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.

airbnb begs to differ?

the conversion goes from owned/rented housing to airbnb conversions

however, the slack is absorbed, and the airbnbs are gonna about match the actual need for how many ultra-rich people are actually in NY at a time

Re: New York passes pied-a-terre tax

#393

Post by themaninthedark »

ceejayoz wrote: post #239
SoftTalker wrote: post #224

Earlier quoted context omitted.

So if you're spending your inheritance living the high life, that economic activity benefits a lot of other people. Still a net positive in my view. I get the political power concern, and money = power at a certain point. But I'd rather work on getting money out of politics than putting limits on what people can decide will happen to their assets after they die.

Sure, and rape helps the therapy industry. https://en.wikipedia.org/wiki/Parable_of_the_broken_window

I think there a a long way to go between inheriting money and rape.

Re: New York passes pied-a-terre tax

#394

Post by diordiderot »

arjie wrote: post #147

Interesting. A $3m house is often valued at $300k so this is actually narrower than one would think. https://www.zillow.com/homedetails/62-Beach-St-APT-2F-New-Yo... Wild that there are so many rich people in NYC. Truly an engine of wealth creation.

Wealth cannot be created or destroyed, only distributed. /S

Re: New York passes pied-a-terre tax

#395

Post by everforward »

VikingCoder wrote: post #368
everforward wrote: post #202

Earlier quoted context omitted.

> Why not use it? It dramatically cuts housing security, and allows local governments to inflate their own property values by doing what is basically eminent domain without the requirement to show need. Make everyone pay taxes, use those to buy up homes, re-list the homes at a higher price. They can effectively price gouge using tax dollars. This could happen to you at literally any point, and that local government d…

I wasn't explicit, but I was proposing this for the same non-primary residences that the NY law is talking about. Now that I've explained that, do you still think this would "dramatically cut housing security"? If you still feel this would make housing "insecure", because someone's secondary home, if it has a value over $1 million, is subject to this system I propose, then you and I have a fundamentally different ide…

No, I don't have any fears about housing security, that changes the concerns to be primarily around corruption on both sides of that.

On one hand, we're talking about taxes large enough to be multiples of a public official _per home_. Open bribery is an option, but there's also the potential to push some money into campaign funds for whoever controls the department in control of this and then under-valuing the home by a huge margin. The home valuation is subjective here, so there's no perjury for under-valuing your home by a huge margin.

The other side of this is more brazen, but would involve someone having some kind of influence over the government official that makes buy/not buy decisions, intentionally over-valuing the home, and then having the government buy it.

I also just don't really understand the point. In order for the government to make sane "buy or not buy" decisions, they have to know what the house is worth on the open market. If they already know what it's worth, why not just tax that value and skip these hoops? If they don't know and can't find that number then this policy is going to be a crapshoot because they don't know if the home owner is undervaluing the home or if that's what it's actually worth.

Re: New York passes pied-a-terre tax

#396

Post by eli »

nonethewiser wrote: post #372
eli wrote: post #330

Earlier quoted context omitted.

No, there is no global change that I'm aware of.

Look at the article. It changes appraisals to be comparable sales. Thats how property taxes work in general for NYC. Do you see anything that says this change is scoped to these 2nd homes over 1M? I cant find that specified anywhere - it only mentions the general method.

Yes it is proposed for only the new second home tax. It does not currently exist at all.

Re: New York passes pied-a-terre tax

#397

Post by VikingCoder »

Nasrudith wrote: post #390
VikingCoder wrote: post #380

Earlier quoted context omitted.

> It isn't done because it has overt pathological economic characteristics. A secondary home over $1 million in value also has overt pathological economic characteristics. Especially if the taxes paid on it are tragically low. > 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. Eminent domain already exi…

A million dollars isn't even that much these days - it isn't dynastic wealth, it is owning your own home these days. It especially isn't much in New York City - a long notoriously expensive area. A million dollars today is only about 400K in say, 1991. The average Brownstone in Brooklyn in the 1990s was over that. Not an amount to sneeze at certainly but treating it like unimaginable wealth is a lot like treating you…

For a second home? In NY City?

I think someone has to be fairly elite to have a secondary, or tertiary home, in NY City, worth over $1 million.

Regardless, the entire point of this discussion is that people who have a secondary home can probably afford to pay more in taxes than other people can. I don't call that envy.

That's just a frank discussion of tax policy.

If you think taxes should be lower, because some government programs should be reduced, that's a perfectly fine discussion to have.

If you think governments shouldn't have to worry about a balanced budget, and maybe they should default on their debt (which is an argument the current President has insanely floated), that's a fine discussion to have.

At present, we're talking about secondary homes with a value over $1 million, in New York City, having an additional 4% tax.

And I was lamenting that home valuations appear to be unbelievably low, which would dramatically reduce the tax income of this law, and I was trying to propose a fix, for those homes.

If you think the only reason to have that discussion is because of envy, then I think you're not being fair to other people's motivations.

Re: New York passes pied-a-terre tax

#398

Post by eli »

postflopclarity wrote: post #351
eli wrote: post #327

Earlier quoted context omitted.

How does a tax on SECOND homes decrease supply? Wouldn't it incentivize sales of mostly vacant properties to someone looking for buy a first home?

when you tax things you get less of it. when you tax supply, you get less supply many of these second homes are currently on the rental market. if there is less supply of these coming into the rental market, rent prices rise. I don't know why everybody's brains are so broken when it comes to housing policy. let's say you own an uninhabitable 2 family home in Brooklyn that was built in 1910 but would require serious r…

Getting fewer people owning homes that nobody lives in is a good thing.

Where are you getting the idea that these homes are on the rental market? Why aren’t they being rented?

I also don’t actually think this applies to buildings that are uninhabitable.

Re: New York passes pied-a-terre tax

#399

Post by fsckboy »

the pied-a-terre tax is simply and perfectly "taxation without representation"

that is how it was designed, it only applies to people who are ineligible to vote in New York City, there is no way to push back.

As such, it's really quite disgusting, abuse of power motivated by pure greed, violating literally the founding democratic principle of these United States.

Our tree of liberty needs watering.

(I do not have to pay this tax, but I am a principled person)

Re: New York passes pied-a-terre tax

#400

Post by retired »

nemomarx wrote: post #370
retired wrote: post #304

Earlier quoted context omitted.

The Netherlands has a 2.2% tax on secondary properties with a €50k threshold (total wealth, not per-property). So any holiday home, shed, storage locker, garage space, parking spot, bungalow, pied-a-terre, apartment for your children falls under that tax. It's.... problematic to say the least. Say you bought a bungalow for €30k in the 2000s that you frequently visit to escape the city. You are a middle class worker,…

That's a pretty low threshold, but isn't the goal of the tax to make you sell the bungalow so someone can live in it? This seems like a policy working as intended if it's really worth 350k

Due to zoning (not sure how that translates) nobody can live permanently in the bungalow. It is only for recreational use. Has to do with infrastructure, power delivery, sewage, building standards. If it was allowed to live in that bungalow it would be worth double that.
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