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Why New York Barely Taxes Its Billionaires

If taxed at an average rate, the buyer of One57's $100.5 million penthouse should have paid $1.3 million in property taxes. Instead, the property was assessed at $17,000. Here's why.
June 6, 2015, 5am PDT | Philip Rojc | @PhilipRojc
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Henning Klokkeråsen

Writing for CityLab, Kriston Capps examines the decidedly regressive turn property taxes have taken in Manhattan. Luxury residential supertalls, among them One57 with its $100.5 million penthouse, are quickly turning sections of Midtown into what some have dubbed "Billionaires' Row." For the purposes of tax assessment, though, these opulent 21st-century palaces might as well be workaday apartment buildings. 

The underlying problem, says Capps, is historical. Changes to the tax code in the 1970s decisively favored condo owners to keep them in town. "The overarching sentiment behind property-tax reform in the 1970s was understandable: Homeowners were fleeing New York City, and lawmakers at the city and state level had to do something to stop the bleeding."

Current law determines taxes for now-luxurious condos by comparing them with apartments in the same outdated "category." From the article: "For stellar condo buildings—a category that has yet to be wholly accounted for in previous [tax] literature [...]—there simply are no rental apartment buildings that compare for tax purposes."

The effect, beyond rising unaffordability and inequality, is that untold millions go missing from city coffers. "Building luxury residential condos isn't the problem. Subsidizing luxury residential condos that rise out of reach of the city's levy is a crisis."

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Published on Monday, May 11, 2015 in CityLab
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