The MTA needs $40 billion for long-overdue repairs to the city’s subways. Who you gonna call? State budget director Robert Mujica has an idea: hit up the absentee owners of pricey co-ops and condos in New York City.
The so-called pied-a-terre tax, which has languished in Albany for years but recently gained new life when Democrats assumed control of the General Assembly, has been singled out by Mujica as one of several possible sources of revenue that could pay to fix the city’s broken subways, Crains reports. Mujica estimates that such a tax would generate $9 billion toward the MTA’s repair costs over the next 10 years.
Additionally, Mujica says, the state could raise $15 billion for the MTA by charging autos for entering the Manhattan business district, a controversial plan known as congestion pricing; $5 billion from a sales tax on online purchases; and another $2 billion from taxes on legalized recreational marijuana. The state could pay half of the remaining $18 billion, and the city could pay its half with revenues from the pied-a-terre tax.
State Senator Brad Hoylman and Assemblywoman Deborah Glick, both of Manhattan, have for years pushed legislation that would impose a yearly surcharge of 0.5 percent to 4 percent on co-ops and condos worth more than $5 million that are not the primary residence of their owner.
The most recent New York City housing and vacancy survey found that the number of infrequently used residences soared from 55,000 in 2014 to 75,000 in 2017, as foreign investors poured money into high-end real estate during the frenzied construction boom. Though the boom has cooled and Americans have surpassed foreigners as buyers of high-end condos, the call for taxing these apartments has grown louder in recent months.
According to the Fiscal Policy Institute, the Hoylman-Glick tax would generate an estimated $665 million annually from co-ops and condos. It faces opposition from the real estate industry – and from rich absentee apartment owners who never ride the subway.
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?