4 ms·

On unoccupied or secondary residences specifically, not on wealth overall. This is more of a housing policy?

deleted 5mo ago
[deleted]
toomuchtodo 5mo ago
Real estate cannot move. If you are wealthy enough to own a second home worth at least $1M or more, you are likely very wealthy (top 2% of US households by net worth threshold is ~$5.5 million). It is a wealth tax implemented on a real estate asset component of a high net worth human's total portfolio.
- nemomarx 5mo ago
  It affects wealth, but the owner can also sell the property to someone who'll live in it and then they won't be taxed despite owning expensive property. So it's more targeted than a general wealth tax would be and I think the intent is to free up housing supply a bit.
  - toomuchtodo 5mo ago
    I think it is unlikely anyone with a second home at these price levels is going to sell to avoid this (immaterial to them) tax. But certainly, if they do sell to someone who will occupy as primary residence, that's also a win, regardless of the coin flip (heads, wealth tax, tails, more housing for those who actively live in the city). Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
    - DocTomoe 5mo ago
      In reality, they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home - while itself being owned by the original owner. Problem solved significantly cheaper than this new tax. In fact, I would not be surprised if they have already done that four months ago, when the law was being discussed. The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
      - ndiddy 5mo ago
        Isn't that a good thing? It would encourage Joe Homeowner to sell the house to someone who could use it as a primary residence rather than leaving it empty and speculating on the real estate value.
        DocTomoe 5mo ago
        Joe Homeowner already is incentivized to sell grandma's home. Homes need upkeep. No-one keeps an old home around to rot and fall down - that tends to bee bad for the evaluation. The issue is that those who can't finance a primary residence now won't be able to finance a primary residence then.
      - usefulcat 5mo ago
        > they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home How will that help to avoid a tax on secondary residences? Are they somehow going to claim that these properties are the primary residence of a company? Seems nonsensical.
        DocTomoe 5mo ago
        No. The residence becomes an 'asset', and the original owner (and now owner of your friendly Mongolian NYC-condo-operations company [MNYCCOC]) now pays rent to the very same MNYCCOC as the landlord. They could even consider the condo to be a very exclusive one-suite hotel and pay by day, and deduct hotel costs for living in said condo as 'necessary business expenses'. In the meantime, the MNYCCOC is a good citizen, and pays taxes but only after ... and deducts everything necessary for upkeep, from dripping faucets to elevator repair to housemaids ('janitorial staff'), making them essentially free. It's accountancy that makes the world go round round round...
      - jmye 5mo ago
        Why is this mythical "everyman" you've concocted for empathy points not selling a property he doesn't need that happens to be worth a "magic 7 figures"?
    - cucumber3732842 5mo ago
      >Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly. God I hate this sort of armchair despot type thinking. People are not stupid. They're only ok with the absurd attitude given to the government to tax and regulate insofar as it's mostly kept it out of the grubby mitts of those who'll abuse it. Like yeah, you absolutely could strictly enforce the speed limit and use the clean water act to regulate people's lawns but if you did that someone would get elected on promises to depose you and change the law to prevent that in the future. This is the same reason the NSA doesn't go around using zero days on movie pirates and the FBI doesn't go around bringing RICO charges on everyone who ever ran a scummy business. The power is more useful to have on hand to use surgically. If you abuse it you'll lose it.
      - toomuchtodo 5mo ago
        The scope of my comment you cite is the usual "extremely wealthy people using loopholes to avoid taxes while burdening your average joe with them instead". This is not "your math is slightly off and we're going to be punitive." This is defending against tax evasion strategies by those with the wealth and power to attempt them. If you don't believe in taxes, or don't believe the wealthy should have the majority of the burden, certainly, we will not find common ground. My mental model is "You are very wealthy because you are very lucky. The cost to you for the societal socioeconomic system enabling this wealth is higher tax rates than those who work. Please pay your taxes due for a system that enabled your accumulation of wealth, and permission to keep it during your lifetime. If you attempt to evade the system, we will improve the system accordingly." One owes taxes on a lottery ticket, this is no different, just a different form of lottery ticket that paid out. If you’re so smart, why aren’t you rich? Turns out it’s just chance. - https://www.technologyreview.com/2018/03/01/144958/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ https://www.technologyreview.com/2018/03/01/144958/if-youre-... - March 1st, 2018 Ref: arxiv.org/abs/1802.07068 : Talent vs. Luck: The Role of Randomness in Success and Failure https://arxiv.org/abs/1802.07068 https://arxiv.org/abs/1802.07068 Tax evasion by millionaires and billionaires tops $150 billion a year, says IRS chief - https://www.cnbc.com/2024/02/22/tax-evasion-by-wealthiest-americans-tops-150-billion-a-year-irs.html https://www.cnbc.com/2024/02/22/tax-evasion-by-wealthiest-am... - February 22nd, 2024 Panama Papers helps recover more than $1.2B around the world - https://www.icij.org/investigations/panama-papers/panama-papers-helps-recover-more-than-1-2-billion-around-the-world/ https://www.icij.org/investigations/panama-papers/panama-pap... - April 3rd, 2019 https://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=panama%20papers&sort=byDate&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
  - andrewstuart2 5mo ago
    Or they can move to NY "full time", if I'm understanding correctly, which will likely also improve the city's tax revenue from more of that person's expenses incurring city taxes.
    - usefulcat 5mo ago
      Wouldn't that mean that they would then also pay NY income tax?
    - swiftcoder 5mo ago
      Not just on their expenses - if they become resident in NYC, they'll own 4% NYC income tax (on top of the 10% NY state income tax).
  - boringg 5mo ago
    Yeah not really. It generates money for the city to run their programs without raising taxes on residents. Those properties aren't being purchased by anyone who can't already get a home. I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business. Also a great marketing move by Mamdami in terms of walking his talk.
- paulddraper 5mo ago
  -
  - toomuchtodo 5mo ago
    You have described an investment property, not an unoccupied second home exposed to the pied-a-terre tax, if you rent it out (whether mortgaged or free and clear).
    - slackfan 5mo ago
      What they also have described is a dacha.
  - sunshowers 5mo ago
    Read the fine article? > While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
DocTomoe 5mo ago
[flagged]
- slackfan 5mo ago
  [flagged]
  - cactacea 5mo ago
    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.
    - dec0dedab0de 5mo ago
      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.
      - cactacea 5mo ago
        Thanks, I needed a laugh. Only on HN...
      - swiftcoder 5mo ago
        And here people gave Mitt Romney shit for saying $250k was middle class...
        DocTomoe 5mo ago
        Not middle-class, middle-income. Also, that was 14 years ago.
        swiftcoder 5mo ago
        > Not middle-class, middle-income. Unless we are claiming the middle classes live on inherited wealth, I'm not sure the distinction is meaningful? > Also, that was 14 years ago. Indeed. In that time the $250k+ club has gone from 2% to 10% of American households, so Mitt Romney might have to consider ~$350k middle-income now For a slightly more grounded perspective, Pew Research currently maintains that the middle income figure is between $60k-160k
strongpigeon 5mo ago
It's a luxury tax that only affects people wealthy enough to have a second home in NYC. These people, by virtue of not living there, aren't paying income tax and thus don't contribute as much as someone who is.
- nonethewiser 5mo ago
  >t's a luxury tax that only affects people wealthy enough to have a second home in NYC. Not exclusively though, right? Since they are revising the valuation system to not artificially depress valuations, isnt this a global tax increase? No rate changes or extra tax for someone with a primary residence but the base is increasing, right? >While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said. >Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
  - eli 5mo ago
    Those are two different things: the new tax, and fixing the broken appraisal process.
    - nonethewiser 5mo ago
      Its part of the same law. Regardless, the appraisal changes are global, right? That is, it would apply to a $200M 17th home and a $750k residence alike, right?
      - eli 5mo ago
        No, there is no global change that I'm aware of.
        5mo ago
JackFr 5mo ago
It's a revenue policy. It's effectively a wealth tax, cleverly implemented largely within the existing tax regime. Ken Griffin spend 183 days a year in Florida, so he pays no NY state or NYC income tax. He does pay ~1.8% income tax on his $238 million home though. Now he will pay significantly more. (His property is also assessed at a far lower number.)
deleted 5mo ago
[deleted]
fxd123 5mo ago
Property taxes are a type of wealth tax

deleted 5mo ago

[deleted]

Real estate cannot move. If you are wealthy enough to own a second home worth at least $1M or more, you are likely very wealthy (top 2% of US households by net worth threshold is ~$5.5 million). It is a wealth tax implemented on a real estate asset component of a high net worth human's total portfolio.

nemomarx 5mo ago
It affects wealth, but the owner can also sell the property to someone who'll live in it and then they won't be taxed despite owning expensive property. So it's more targeted than a general wealth tax would be and I think the intent is to free up housing supply a bit.
- toomuchtodo 5mo ago
  I think it is unlikely anyone with a second home at these price levels is going to sell to avoid this (immaterial to them) tax. But certainly, if they do sell to someone who will occupy as primary residence, that's also a win, regardless of the coin flip (heads, wealth tax, tails, more housing for those who actively live in the city). Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly.
  - DocTomoe 5mo ago
    In reality, they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home - while itself being owned by the original owner. Problem solved significantly cheaper than this new tax. In fact, I would not be surprised if they have already done that four months ago, when the law was being discussed. The ones who will be hit are those who do not have the legal frameworks in place to erect such structures - Joe Homeowner who inherits grandmas city house, both worth slightly above the magic 7 figures.
    - ndiddy 5mo ago
      Isn't that a good thing? It would encourage Joe Homeowner to sell the house to someone who could use it as a primary residence rather than leaving it empty and speculating on the real estate value.
      - DocTomoe 5mo ago
        Joe Homeowner already is incentivized to sell grandma's home. Homes need upkeep. No-one keeps an old home around to rot and fall down - that tends to bee bad for the evaluation. The issue is that those who can't finance a primary residence now won't be able to finance a primary residence then.
    - usefulcat 5mo ago
      > they will now just create a company in Singapore or Mongolia or another such place, which will then own the second home How will that help to avoid a tax on secondary residences? Are they somehow going to claim that these properties are the primary residence of a company? Seems nonsensical.
      - DocTomoe 5mo ago
        No. The residence becomes an 'asset', and the original owner (and now owner of your friendly Mongolian NYC-condo-operations company [MNYCCOC]) now pays rent to the very same MNYCCOC as the landlord. They could even consider the condo to be a very exclusive one-suite hotel and pay by day, and deduct hotel costs for living in said condo as 'necessary business expenses'. In the meantime, the MNYCCOC is a good citizen, and pays taxes but only after ... and deducts everything necessary for upkeep, from dripping faucets to elevator repair to housemaids ('janitorial staff'), making them essentially free. It's accountancy that makes the world go round round round...
    - jmye 5mo ago
      Why is this mythical "everyman" you've concocted for empathy points not selling a property he doesn't need that happens to be worth a "magic 7 figures"?
  - cucumber3732842 5mo ago
    >Edit: You start somewhere and keep tightening the policy ratchet as loopholes or other policy leakage are detected. You've found a clever hack? Congrats! The law is updated accordingly. God I hate this sort of armchair despot type thinking. People are not stupid. They're only ok with the absurd attitude given to the government to tax and regulate insofar as it's mostly kept it out of the grubby mitts of those who'll abuse it. Like yeah, you absolutely could strictly enforce the speed limit and use the clean water act to regulate people's lawns but if you did that someone would get elected on promises to depose you and change the law to prevent that in the future. This is the same reason the NSA doesn't go around using zero days on movie pirates and the FBI doesn't go around bringing RICO charges on everyone who ever ran a scummy business. The power is more useful to have on hand to use surgically. If you abuse it you'll lose it.
    - toomuchtodo 5mo ago
      The scope of my comment you cite is the usual "extremely wealthy people using loopholes to avoid taxes while burdening your average joe with them instead". This is not "your math is slightly off and we're going to be punitive." This is defending against tax evasion strategies by those with the wealth and power to attempt them. If you don't believe in taxes, or don't believe the wealthy should have the majority of the burden, certainly, we will not find common ground. My mental model is "You are very wealthy because you are very lucky. The cost to you for the societal socioeconomic system enabling this wealth is higher tax rates than those who work. Please pay your taxes due for a system that enabled your accumulation of wealth, and permission to keep it during your lifetime. If you attempt to evade the system, we will improve the system accordingly." One owes taxes on a lottery ticket, this is no different, just a different form of lottery ticket that paid out. If you’re so smart, why aren’t you rich? Turns out it’s just chance. - https://www.technologyreview.com/2018/03/01/144958/if-youre-so-smart-why-arent-you-rich-turns-out-its-just-chance/ https://www.technologyreview.com/2018/03/01/144958/if-youre-... - March 1st, 2018 Ref: arxiv.org/abs/1802.07068 : Talent vs. Luck: The Role of Randomness in Success and Failure https://arxiv.org/abs/1802.07068 https://arxiv.org/abs/1802.07068 Tax evasion by millionaires and billionaires tops $150 billion a year, says IRS chief - https://www.cnbc.com/2024/02/22/tax-evasion-by-wealthiest-americans-tops-150-billion-a-year-irs.html https://www.cnbc.com/2024/02/22/tax-evasion-by-wealthiest-am... - February 22nd, 2024 Panama Papers helps recover more than $1.2B around the world - https://www.icij.org/investigations/panama-papers/panama-papers-helps-recover-more-than-1-2-billion-around-the-world/ https://www.icij.org/investigations/panama-papers/panama-pap... - April 3rd, 2019 https://en.wikipedia.org/wiki/Panama_Papers https://en.wikipedia.org/wiki/Panama_Papers https://hn.algolia.com/?dateRange=all&page=0&prefix=false&query=panama%20papers&sort=byDate&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
- andrewstuart2 5mo ago
  Or they can move to NY "full time", if I'm understanding correctly, which will likely also improve the city's tax revenue from more of that person's expenses incurring city taxes.
  - usefulcat 5mo ago
    Wouldn't that mean that they would then also pay NY income tax?
  - swiftcoder 5mo ago
    Not just on their expenses - if they become resident in NYC, they'll own 4% NYC income tax (on top of the 10% NY state income tax).
- boringg 5mo ago
  Yeah not really. It generates money for the city to run their programs without raising taxes on residents. Those properties aren't being purchased by anyone who can't already get a home. I think the revenue is probably overstated in the long run as people will find a way to offload the properties except for a select few who will consider a cost of doing business. Also a great marketing move by Mamdami in terms of walking his talk.
paulddraper 5mo ago
-
- toomuchtodo 5mo ago
  You have described an investment property, not an unoccupied second home exposed to the pied-a-terre tax, if you rent it out (whether mortgaged or free and clear).
  - slackfan 5mo ago
    What they also have described is a dacha.
- sunshowers 5mo ago
  Read the fine article? > While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.

DocTomoe 5mo ago

[flagged]

slackfan 5mo ago
[flagged]
- cactacea 5mo ago
  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.
  - dec0dedab0de 5mo ago
    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.
    - cactacea 5mo ago
      Thanks, I needed a laugh. Only on HN...
    - swiftcoder 5mo ago
      And here people gave Mitt Romney shit for saying $250k was middle class...
      - DocTomoe 5mo ago
        Not middle-class, middle-income. Also, that was 14 years ago.
        swiftcoder 5mo ago
        > Not middle-class, middle-income. Unless we are claiming the middle classes live on inherited wealth, I'm not sure the distinction is meaningful? > Also, that was 14 years ago. Indeed. In that time the $250k+ club has gone from 2% to 10% of American households, so Mitt Romney might have to consider ~$350k middle-income now For a slightly more grounded perspective, Pew Research currently maintains that the middle income figure is between $60k-160k

strongpigeon 5mo ago

It's a luxury tax that only affects people wealthy enough to have a second home in NYC. These people, by virtue of not living there, aren't paying income tax and thus don't contribute as much as someone who is.

nonethewiser 5mo ago
>t's a luxury tax that only affects people wealthy enough to have a second home in NYC. Not exclusively though, right? Since they are revising the valuation system to not artificially depress valuations, isnt this a global tax increase? No rate changes or extra tax for someone with a primary residence but the base is increasing, right? >While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said. >Rather than overhaul the system immediately, the city will gradually update valuations – and the tax – according to the budget documents. Starting in the 2028-2029 tax year, the property values will be based on comparable sales. Since valuations will skyrocket, the tax rates will fall to compensate.
- eli 5mo ago
  Those are two different things: the new tax, and fixing the broken appraisal process.
  - nonethewiser 5mo ago
    Its part of the same law. Regardless, the appraisal changes are global, right? That is, it would apply to a $200M 17th home and a $750k residence alike, right?
    - eli 5mo ago
      No, there is no global change that I'm aware of.
      - 5mo ago

JackFr 5mo ago

It's a revenue policy. It's effectively a wealth tax, cleverly implemented largely within the existing tax regime. Ken Griffin spend 183 days a year in Florida, so he pays no NY state or NYC income tax. He does pay ~1.8% income tax on his $238 million home though. Now he will pay significantly more. (His property is also assessed at a far lower number.)

deleted 5mo ago

[deleted]

fxd123 5mo ago

Property taxes are a type of wealth tax