The point of this post isn’t about how “well” the New York City real estate market is doing. It’s about what it means to that city.
There were approximately 1,900 condominium, co-operative, and single-family home sales in the 2nd quarter, 2006; there were 3,900 condominium, co-operative, and single-family home sales in the 2nd quarter, 2007.
The average sales price for a condo or co-op increased over 8%, during that time period.
Sales prices and sales volume increased in each of the city’s five boroughs.
The city collected an additional $350 million in tax revenue, because of this. This year, the city will collect an estimated $1.7 billion in revenue.
So, surprisingly, some city officials want to give some of the money back to its residents, by lowering the city’s real property transfer tax.
Okay, that’s all the background, but here’s what I want you to understand.
The city of New York’s real property transfer tax imposes a levy on people or businesses selling property, who must pay up to 2.6% of the sale price to the city. The state has a similar tax, which takes in less than 1% of each transaction.
The transfer tax is usually paid for BY THE BUYER.
So, if you buy a $600,000 condo, you’ve got to come up with $12,000 to pay the city and $4,000 – $5,000 to pay the state (I honestly have no idea how much the state gets …), at closing.
That’s before any of your other closing costs are even calculated.
That’s rough.
I know, it’s hard to cry for someone buying a $600,000 condo, right?
( ** By the way, in case you care, there are at least two problems with the city council’s proposal.
One, no one can reasonably expect this amazing increase in tax revenue to continue; how will the city deal with future drops in receipts?
Two, taxes are not collected evenly across all types of properties, in NYC. Some single-family homes in the outer boroughs have higher tax bills than multi-million dollar condos in Manhattan. That doesn’t make any sense. Before giving the money back to everyone, how about some equity in the tax laws, first? **)
Source: Crains New York Business Economic Spotlight Chart – June 2007 – By Jonathan J. Miller, Matrix
Also: Tax Breaks Sought Amid Boom – Property Sales Swell Coffers of City, State – By Eliot Brown, The New York Sun
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