Before you cry any more tears over those incredible shrinking real estate values on Billionaires’ Row and the city’s other nests of ultra-luxury condos, consider the flipside of the coin. Their properties might be losing value, but the super-rich are enjoying some monster breaks on their property tax bills.
Case in point: after dropping $238 million on a condo at 220 Central Park South – the most money ever paid for a residence in the history of the United States – multi-billionaire Ken Griffin will be thrilled to learn that the city’s Department of Finance has pegged its taxable value at just $9.4 million, the Wall Street Journal reports.
How is this possible? Because the city’s antiquated and unloved tax system requires all condos and co-ops to be assessed as if they were rental buildings, which tends to artificially deflate the tax bill for high-end properties. Additionally, there are caps on yearly tax increases, which has benefited residents of prime Manhattan and Brooklyn neighborhoods where real estate values have soared during the recent post-recession boom. Co-ops and condos in prime neighborhoods were valued at about 20 percent of their market value, according to the Independent Budget Office.
“It is a crazy system,” says Martha Stark, a former city finance commissioner and current policy director for Tax Equity Now New York, a diverse coalition that has filed a lawsuit seeking to reform the city’s property tax system. A mayoral commission has been holding public hearings on the issue and is expected to come forward soon with recommendations on tax reform. Meanwhile, a proposal gaining traction in the General Assembly would slap an additional tax on absentee owners of pricey pied-a-terre apartments in New York City.
The assessment on Griffin’s penthouse was determined before the purchase closed, and one expert says the rate could increase in the 2019-2020 fiscal year. But unless major reform comes, it’s unlikely the condo will be taxed at anything close to its actual value.
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