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New York passes pied-a-terre tax

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Re: New York passes pied-a-terre tax

#131

Post by idontwantthis »

everdrive wrote: post #21

I'm really curious about this. Wont, as a rule, any super-rich 2nd, 3rd, and 4th homes in New York be completely unaffordable for almost everyone? It feels a bit like you're potentially spreading around the super-luxury homes across a wider breadth of the super-rich, but not much else. Is there a better way to think about this?

Economics always applies at the margins. If this means that no one can afford $500 million homes anymore, then builders will stop building them, and start building slightly cheaper homes. That will increase the supply of the slightly cheaper homes, so they will have to become cheaper, thus putting pressure on the even cheaper homes. Eventually, if other friction isn't too great (which is not given) the downward price pressure and increased supply should reach the regular person market.

Re: New York passes pied-a-terre tax

#132

Post by frumplestlatz »

LauraMedia wrote: post #39
ExoticPearTree wrote: post #27

[flagged]

This argument is used again and again and I wonder: Why do "people with money" stay where they are when there are countries, islands, even just states where there is less taxes to pay?

I ran a company in NYC for six years before the taxes and onerous regulatory environment convinced me to bail.

The final straw was when we had to hire a fixer to clear up a state regulatory error that would’ve destroyed our business. No amount of calls or letters over months — by me — fixed the issue. The guy we hired got it cleared up in a week.

That’s how I learned firsthand that the more involved the state tries to be in protecting everyone from everything, the more opportunity there is for bad actors and gross inefficiency, and the worse things get.

Re: New York passes pied-a-terre tax

#133

Post by swiftcoder »

dec0dedab0de wrote: post #85
cactacea wrote: post #52

Earlier quoted context omitted.

Sure yeah, all those middle class families with second homes in New York City . Right. Nobody affected by this is middle class. Nobody that will be affected by this in the next 20 years would be considered middle class by any rational measure.

That really depends on how you define middle class. I can easily see how someone with a net worth of 100m being considered middle class compared to billionaires.

And here people gave Mitt Romney shit for saying $250k was middle class...

Re: New York passes pied-a-terre tax

#134

Post by onlyrealcuzzo »

sunshowers wrote: post #43
DocTomoe wrote: post #20

Earlier quoted context omitted.

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.

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 put 20+ years.

So "owning" a million dollar home means anything from: you put 3.5% down, and you're currently underwater cause prices went down in a lot of the US (i.e. you are literally own NEGATIVE equity)... to you actually have $1m in equity.

I "own" a $1.2m home. I really only own about $425k of it. If I had to sell it, that typically costs close to 9% - so I'd be lucky to get $300k.

The person underwater who put 3.5% down on a home could easily have -$250k if they had to sell... So the idea that everyone who "owns" a $1m house is "rich" is a bit strange...

I mean, in general, people who "own" $1m houses are not destitutely poor, but that's about as far as you can extrapolate.

Re: New York passes pied-a-terre tax

#135

Post by SoftTalker »

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.

I would disagree, I think income taxes and inheritance taxes are morally wrong. Earning money to support oneself and family instead of relying on public largesse should not be taxed. Passing the fruits of a lifetime of work to ones heirs so they can continue do productive work instead of relying on public largesse should not be taxed.

Re: New York passes pied-a-terre tax

#136

Post by steveBK123 »

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…

This also closes some loopholes/arbitrages around declaration of primary residence for purposes of NYC income tax. There are C-suite execs who declare residence in CT/NJ while spending Anyway, NYC real estate taxes are a mess and in some cases regressive.

For example, taxes are based on values set by the city which for the ultra high end, the are understated by an ORDER OF MAGNITUDE..

See: > Griffin purchased his 24,000-square-foot penthouse at 220 Central Park South in 2019 for $238 million. ..t he city values the apartment at just $15.5 million .. property tax bill for the 2026-2027 tax year is $858,332

.. Griffin’s property tax bill would more than double to $1.87 million .. in the 2028-2029 tax year, it would increase to just under $4 million

I don't feel terribly about someone paying $4M on property probably worth close to $400M at the moment. Normal high income NYers already pay $10-20k/year on properties worth $1.5M by comparison.

Another regressive aspect there was a proposal to change was a purchase tax for cash purchases. Currently one of the closing costs in NYC/NYS is a mortgage recording tax of nearly 2% of mortgage amount. This means if you are rich enough to buy in cash, you can avoid this tax. And if you are a rich cash buyer you are probably buying a higher end property so.. doubly regressive in a sense.

Re: New York passes pied-a-terre tax

#138

Post by rbtprograms »

thomasjeff1 wrote: post #128

Why tax the middle class within $1m-$5m. The tax should only apply to upwards of $10m. This is wrong.

the amount of people who are middle class with a second home is rare. if you can afford another dwelling, you can pay more tax on it. lets not be this disconnected.

Re: New York passes pied-a-terre tax

#139

Post by sensanaty »

everdrive wrote: post #21

I'm really curious about this. Wont, as a rule, any super-rich 2nd, 3rd, and 4th homes in New York be completely unaffordable for almost everyone? It feels a bit like you're potentially spreading around the super-luxury homes across a wider breadth of the super-rich, but not much else. Is there a better way to think about this?

Well it's two-pronged right? They either keep their extra houses and pay the tax, which increases tax revenue which can be used to fund things like constructing housing in NY, or they sell them off. The people potentially buying these houses will be more hesitant themselves to buy, so they're forced to lower the sell prices, making the houses more available to the general public.

I guess three-pronged, cause it says if they turn it into a rental that it's exempt from the taxes, which means someone is still at least living in it rather than just being used as a speculative asset.

Re: New York passes pied-a-terre tax

#140

Post by kevin_thibedeau »

jimbob45 wrote: post #74
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…

I agree and I’d prefer to see apartments excluded from this. Apartments are what I want second-homeowners to own rather than hoarding valuable land.

NYC is filled with apartments dedicated to the wealthy with token poor-doors for access to a few mandatory low income units in each building. All housing has to be subject to taxation for this to work.
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