Despite an uptick in investment and residential sales over the last month, the drop-off in tax revenue from such deals this year has reached $1.4 billion, according to a new report from the Real Estate Board of New York (REBNY), The Real Deal reports.
In October, $4.6 billion worth of residential and investment sales were recorded, according to the report, a decline of 34% from a year ago. The transaction tax revenue from these October deals clocked in at $169.3 million, down 59% from a year ago. The dire implications for city services, which rely heavily on tax revenue generated by the real estate industry, have sparked fresh calls for help from the federal government.
Negotiations in Washington over another round of pandemic funding stalled as the election approached and there has been little progress since then. REBNY President James Whelan says the drop in the city’s real estate tax revenue underscores that a new federal aid package is crucial. “As real estate market activity remains at historic lows, the negative impacts are being felt every day by millions of New Yorkers who rely on publicly funded government services that will continue to struggle without necessary tax revenue,” Whelan said in a statement.
The vast majority of city revenue from real estate is property tax, which has remained steady. But the drop in sales activity means the city misses out on transfer taxes, which adds up. Commercial sales figure to be below average as the market figures out how to price properties as more people work from home and shop online.
Dramatic drops in tax revenue have long been an expected byproduct of the coronavirus crisis. Last month, state Comptroller Thomas DiNapoli reported that tax revenue was down $2.8 billion since April 1. The city expects to lose out on $9 billion in tax revenue over the next two years, and the state says the pandemic has shrunk its projections by $64 billion over four years.
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