Streams

Are Property Taxes Making Your Rent Too High?

Monday, June 16, 2014

New York City's complicated system taxes rental buildings at a higher rate than co-ops and condos. Jessica Gould explains a lawsuit brought by two renters who say that the system is discriminatory and talks about how the different rates might be discouraging

 

Guests:

Jessica Gould

Comments [27]

Jacob from Brooklyn

The guest was dead wrong about the property taxes being controlled by the City Council, right?

Someone should put together an info-graphic about which NYC laws/regs can be changed only by going through Albany (e.g. speed limit, income tax, property tax, etc.). Could not believe the 25mph change had to go through the State.

Jun. 20 2014 10:00 AM
ralph

The inequity is even in Class 1 (as the guest mentions)

See http://timingblog.brooklynmarathon.com/2014/06/nyc-tax-assessment-ratio-for-our-public.html

Some of our public representatives have the lowest assessment ration (assessed value / market value).

Brad Lander and Bill DeBlasio are some of the lowest.

Also for a chart of Class 1 Assessment Ratio by zipcode, see: http://timingblog.brooklynmarathon.com/2014/05/2014-new-york-city-class-1-property-tax.html

It shows that for class 1 Queens, Bronx, Staten Island and some of Brooklyn
are assessed around 6% while Park Slope and Manhattan are assessed around 1%

Jun. 17 2014 04:23 PM
Peter from Brooklyn

>he fact is, New York City homeowners in general pay far lest in property taxes than their suburban counterparts.

Yes, that's true, Dave. However, those suburbanites don't (with the exception of Yonkers), have to pay a municipal income tax.

Jun. 17 2014 07:45 AM
le from New York

In a 30 unit co-op in Tribeca (I've been here since before it became chic). I have to pay $22,000 a year in property taxes. My apartment is only 1350 square feet. My taxes have risen significantly under both Guiliani and Bloomberg and are scheduled for another hike very soon. Brownstone brooklyn looks like heaven to me, the taxes are forcing me out of the neighborhood.

Jun. 17 2014 06:54 AM
jc

Yes, Brian the city can't change the tax system without approval from Albany.

Re coops - shareholders should know the percentage and amount of their monthly maintenance that goes toward RE taxes because we all get a 1098 each year that states the amount paid on behalf of each unit. If you itemize you can declare that amount on your tax form. This segment was really confusing and badly done. Neither Brian nor the guest demonstrated knowledge of the tax system. How about a redo at some point that deals with the history and currently existing anomalies?

Jun. 16 2014 12:05 PM
Cervantes

this isn't to cast aspersions on any one person or group;but to use the idiotic catchall demographic moniker of "Latino" or hispanic,when referring to certain people's of Spanish speaking backgrounds,makes no sense. i don't understand, how people from Puerto Rico and the Dominican Republic;don't comprehend, that in the NYC area, the media is ostensibly referring to them without saying as much,when they say that a perp looked "hispanic". so,in being PC to those groups ,by calling them hispanic;we inadvertently cast a shadow of undeserved criminality on all, from all, Spanish cultural backgrounds. it's a lose lose for all,and unfortunately, it's the term of common currency.

Jun. 16 2014 11:41 AM


The reason that Maire de Fargio cannot simply raise the rate for the "filthy rich" one-percent to off-set reductions in other property rate categories occupied by the "righteously deserving" and the "most pitifully vulnerable among us" - the total city-wide amount collected from the one percent category is too small to grant reductions for the "righteously deserving" or the "vulnerable" absent draconian raises of the rates for the rich.

Since your expert, reporter, guest was unable to give the tax rate for even individual residences, I would not expect her to realize that.
However, Brian, you sometimes seem able to handle the "arithmetic" if your segment producers prepare you.

Jun. 16 2014 11:38 AM
Truth & Beauty from Brooklyn

cekulesh: Co-op owners own shares in the building, but not real property. They pay pro-rata shares of the building property tax, but none of their own because individual owners do not own real property.

Condo owners own real property and pay taxes like any homeowner, but based on the assessed value of the unit and comparables in the building and neighborhood.

Jun. 16 2014 11:31 AM

Every single real estate-owning New Yorker should grieve their taxes with the Tax Commission (NOT with the Dept of Finance). An attorney is NOT needed to do so. It is not complicated.

Jun. 16 2014 11:21 AM
Barb from Manhattan

There should be a sizeable transaction fee/tax on the purchase of apartments costing $2 million and up. That would capture significant money from the foreign billionaires who buy multi-million dollar pied-a-terres in NYC.

Jun. 16 2014 11:21 AM

I am a coop owner on the Upper East Side, in a relatively small, pre-war building. As a board member, and the former treasurer, I am acutely aware of our property taxes. Our building is located in a prime area of the city, however it is not a luxury building. We are surely an upper middle class building, but definitely not in the 1%, or even in the 10%. Our building has a steep property tax burden. It accounts for almost 50% of our operating budget.

Coop owner *do* pay property taxes, however the taxes are bundled into our monthly maintenance.

Jun. 16 2014 11:20 AM
Dave From NorthEast Bronx

The fact is, New York City homeowners in general pay far lest in property taxes than their suburban counterparts. A 1,500 sq ft home in the northeast Bronx pay about $2,500 per year. In comparison, the same square footage in Westchester carries an above $10,000 property tax bill. Maybe that's why they have better schools and services up there.

Jun. 16 2014 11:18 AM

How much does Michael Bloomberg pay on his Upper East Side mansion?

Single-family homes get an unjustified subsidy from other homeowners. Most brownstone owners pay a tiny fraction of what the same people in four floor-thru co-ops would in the same building.

I have no problem with people of lower income having tax abatements to keep them from losing their homes, but multi-millionaires in multi-million-dollar homes should be paying their fair share.

Jun. 16 2014 11:18 AM
Mike C from Manhattan

Why not create a public housing program with rent to equity. If you live and pay rent into a city housing development for 10 , 20 , 30 years you gain equity in the public corporation that owns it add an additional small equity fee to the rent and give the working poor equity and ownership

Jun. 16 2014 11:17 AM
jgarbuz from Queens

1,2 and 3 family homes are considered "homes" and not businesses. Businesses incur more taxation, and as with all other businesses will pass along any additional costs, i.e. tax increases, to their consumers, the tenants. This does put tenants at a distinct tax disadvantage. OTOH, tenants are not liable for normal repairs and maintenance as are home owners. So it is very hard to establish equity.

Jun. 16 2014 11:16 AM
Sheldon from Brooklyn

Well said Mario - the bottom line is: rent-stabilized or not, landlords will charge as much as they can for an apt.

Jun. 16 2014 11:16 AM
Flora Rodriguez from Manhattan

Near Inwood, no ammenities, no doorman, 46 units, 6 floors, built in 1946. 110K a year.
Too much.

Jun. 16 2014 11:15 AM
dina

Piketty sort of suggestion:

Other types of NYC property--CAPITAL owned by the rich among us--need to be taxed much higher and real estate property taxed lower.

Jun. 16 2014 11:14 AM
Rachel from Sunset Park

I don't have the exact numbers, but I know that Park Slope pays much less on their property taxes given the value of their two family houses compared to the working class neighborhood of Sunset Park.

Jun. 16 2014 11:14 AM
Sam from Manhattan

I'm the treasurer of a co-op of 175 units. Real Estate taxes consume 48% of our common charges each month. To make this crystal clear to our shareholders we break out RE Tax as a separate line item on the monthly billing. This strategy helps our shareholders understand this important issue.

Jun. 16 2014 11:14 AM
Sheldon from Brooklyn

This lawsuit seems unfocused and nefarious (who is really behind this suit?)

These plaintiffs are implying that the NYC tax code is somehow racially biased, even through the odds are - the landlord(s)/owners of 4+ family buildings are most likely not black or hispanic; plus - the buildings are rent-stabilized anyway.

The NYC property tax code may be unbalanced, although I'm not sure why, for profit, "class 2" - buildings should NOT pay a higher rate than "class 1" - 1-3 family buildings and condos, MOST of which, are ostensibly used in some part by their owners for residency.

Property taxes are not the main reason for surging rents in blue collar neighborhoods. It's naive to think landlords will pass on any future tax savings to their tenants.

Jun. 16 2014 11:11 AM
Mario from Washington Heights

The point is fair, with one exception: lowing property taxes on landlords will not result in lower rents. The amount of rent that a landlord charges for a market-rate tenant is determined solely by the amount of money they can get away with charging. It is total myth that there is a relationship between rents and expenses. Landlords can charge 5 times as much for a building in the Upper West Side that is identical to a building in Bensonhurst... the costs don't determine the rent, the demand does. The maximum increase for a rent-stabilized apartment is based on how much the Rent Guidelines Board approves. Any adjustment to property tax rates that benefits landlords should be tied to a measure that ensures that the savings are passed onto tenants, not just more money in the pockets of landlords.

Jun. 16 2014 11:10 AM
Ian from Brooklyn

Why not build more affordable homes like they do in Brooklyns Spring Creek. You can collect property taxes off of owners and create communities at an affordable cost. Stop with the affordable housing and create affordable HOUSES.

Jun. 16 2014 11:09 AM
Eric from Manhattan

I pay an additional 80 dollars a month for a "421-a abatement" which goes up by 80 dollars every year. Can you explain?

Jun. 16 2014 11:09 AM
Mary from Manhattan

Unless landlords are forced to pass through savings on lower taxes, tenants won't receive any. Brian mentioned this in passing - but there have been other cases where duties are lowered and costs aren't lowered....

Jun. 16 2014 11:08 AM
jgarbuz from Queens

Historically, most government revenues came from either tariffs on imports, consumption taxes like sales taxes, taxes on assets such as your real estate or luxury taxes on yachts, etc., "death taxes" or inheritance taxes on properties left behind by the deceased, or income taxes.

Since we have mostly eliminated tariffs for free trade reasons, and try to keep consumption or sales taxes low not to hurt the poor, and met great resistance to inheritance or "death taxes," and of course general resentment at income taxes and the many ways of the corporations to get around paying much, it primarily leave the shrinking middle class of homeowners to shoulder too much of the burden. So we either have to reduce government, which is highly unlikely, or start upping other kinds of taxes. But few politicians get elected by promising to raise taxes anywhere.

Jun. 16 2014 10:41 AM
Shoshandra

Simply, yes. If taxes approach 1000 per month or more alone in some cases (not including maintenance, building staff, water, heat, mortgage, etc) how can there ever be affordable rents. This is one of the biggest hidden costs to the renter.

Jun. 16 2014 10:10 AM

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