Transferring To a Real Estate Transfer Tax

April 2, 2019.This article discusses New York State lawmakers’ reluctance to implement a pied-a-terre tax and preference for a real estate transfer tax on high value sales instead. The author notes that the pied-a-terre tax was proposed as a way to generate revenue to help fund the Metropolitan Transportation Authority in New York City. The article goes on to discuss that lawmakers plan to target the same people with a real estate transfer tax, specifically those with condos and co-ops valued at over $5 million. According to the article a real estate transfer tax is a one-time fee imposed on the transfer of property, usually paid by the seller.

By all appearances, a pied-a-terre tax on second homes is out, and a real estate transfer tax on high-value sales is in.

In the midst of state budget negotiations, Gov. Andrew Cuomo indicated in a radio interview on Tuesday that lawmakers were moving away from pied-a-terre in favor of a transfer tax on the purchase of real estate valued at over $5 million, a measure aimed at helping to fund the Metropolitan Transportation Authority. In the Assembly’s budget resolution, the tax is proposed statewide for any high-dollar real estate sales, rather than for just New York City. However, state lawmakers said recently a transfer tax would apply to the same targets as the pied-a-terre tax: condos and co-ops.

Ron Deutsch, executive director of the left-leaning fiscal policy institute, disagreed with naysayers, saying that anyone who has the money to buy luxury apartments and condos likely won’t be deterred by the prospect of a relatively small new tax. “When you’re at that income level, I really don’t think you’re too worried about the taxes that you’re going to pay on a $238 million property,” Deutsch said, referencing the property recently bought by Kenneth Griffin that reignited debate about pieds-a-terre. He also does not believe the volatility of a transfer tax would have much of an effect an annual revenue. Deutsch added, though, that while he thinks both taxes should pass, if the state only does one, pied-a-terre would be better as it explicitly targets non-residents who are not contributing to the local economy as much as residents are.

Click here for the full article from City & State New York.

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