Posted on 02/21/2005 9:03:47 PM PST by TBP
AFTER struggling to fix up a brownstone in Harlem for the last 16 months, Meyghan Hill, a model and actress, and her husband, Daniel Scarola, a ballroom dancing instructor, are thinking about giving up and moving out. But what may drive them away is not the neighborhood, which they have come to love, nor their four-family house, where they have painstakingly stripped a century of varnish and paint from doors and balusters, but the shock of a tax notice they received last month from the New York City Department of Finance.
The notice indicated that the taxes on their 19-foot-wide house, only $4,100 when they bought it, would be going up in July to about $23,600, a fivefold increase of $19,000 - more, they say, than they can possibly afford after paying their hefty mortgage. Right now, they have no tenants.
Like thousands of other owners of homes and small apartment buildings, they have been abruptly caught up in a new campaign by city tax officials to enforce laws that allow them to raise taxes sharply when owners file for permits for major renovations of older buildings.
These large increases are being imposed at a time when state law requires the city to slowly phase in regular assessment increases for other homeowners over years or even a decade or more in some cases.
"We are panicked and we can't afford it, and if we sell, the price will be lower because of all the taxes," Ms. Hill said. "We are being punished for fixing up the building and trying to improve the neighborhood."
It turned out that while Ms. Hill was working on her modest renovation, with $60,000 in construction funds after a second mortgage fell through, city tax assessors were busily reviewing her filing with the Department of Buildings. The filing showed that she planned to convert a single-room-occupancy building to a four-family dwelling, and using its standard construction cost guidelines, the city increased the value of her home by $370,000.
The largest tax increases were in small apartment buildings and four-family brownstones, which pay a much higher tax rate than one- to three-family homes. For every $100 of improvements, they are being charged $5.50 in extra property tax, compared with 91 cents for owners of one- to three-family houses.
In short, the couple and other brownstone owners like them have been caught up this tax season in the netherworld of New York City's property tax system, which under state law protects the low taxes of some groups of taxpayers while allowing huge increases for others.
A review of tax assessment records shows that about 460 of these four-family houses and small apartment buildings were facing tax increases because of renovations, nearly three times the number the year before, including more than 260 row houses. Taxes are scheduled to rise by $10,000 or higher in more than 200 of these buildings, including 76 row houses, an increase from 20 the year before. The figures exclude buildings with city tax exemptions.
Martha E. Stark, the city finance commissioner, confirmed that in the last few months the department had reassigned 40 assessors, mainly from the Manhattan office, to catch up with a backlog of permits from several years ago, and to impose assessments for them.
She said that she was aware of concerns that the high assessment increases might lead some homeowners to delay maintenance or renovations and allow properties to decay, but that her assessors were fairly applying existing state property tax law. "Our job is to reflect the market value in property under state law," she said. "If this is unfair, we need to work to change the law."
Town houses on the East Side, West Side and downtown also saw their taxes rise, but the greatest increases, both in numbers and percentage of tax increased, appeared to be in Harlem and in parts of Brooklyn like Bedford-Stuyvesant; both are in the midst of a wave of renovation and reinvestment in older buildings.
Considering Foxnews on H&C is reporting this, I don't think they will have to wait that long.
It'll be another two years or so before the flood gates open. And then NYC becomes a boom town the likes of which hasn't been seen since the mid-1980s.
I don't think so, given the insanely high taxes, laws and regulations where the living wage is over $80,000 dollars a year. I think NYC has long since peaked and is now over halfway down it's slow Socialist induced death spiral.
It's not that difficult to crack the $100,000 barrier in NYC for anyone with a talent who is willing to work hard. A decent "executive assistant" at a mid-level law firm can earn $75k a year and kids just out of business school are above the $100k their first year out, but that's beside the point. Once an additional several billion dollars a month start flooding through Wall Street the game changes again.
Actually, that might make things worse, because the stock traders will make an extra million, they will spend more which will drive up costs on goods (laws of supply and demand), also the greedy government raises taxes even higher, also driving up cost on goods and property and doubling the cost of living from $80,000 a year to $160,000 a year.
I've seen this before. The prices spiral up for awhile, then level off. It's not the portfolio managers who make the $3mil bonus at the end of the year, but the army of people the brokerage houses hire that'll fuel the boom -- it'll be all those $100k graphic artists to produce brochures, the limo drivers, copywriters and IT guys. It'll be the ad agencies and video production houses. All of that money passes through local restaurants, bars, car dealerships, clothing stores, etc. etc. etc.
Admittedly, I did not review this in detail, but I saw the woman on H&C last night. She said they paid $850k for the property and put $60k plus their labor into it.
A tax of $23,000 on something probably worth about $900k is about 2.6%, which is probably not unreasonably for a super-high tax area.
My question is why the taxes were low to begin with.
And, what should the taxes be on a million dollar, income producing property?
This is just a surcharge for the privelege of living in Harlem and accessing their diversity.
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A myth? A three bed - two bath on the Queens side of Floral Park will pay less than $2k in taxes. The same house two blocks away in Nassau will pay $8k.
The codes in NYC change for four family buildings. But owning one makes you a landlord, not just a homeowner. The rent roll in just one of those apartments will cover the taxes.
Exactly. And this woman could find another place to live, as could her $2,500/month tenants or whomever else ends up living there.
Or, she could just leave the occupancy regulations on the building the way they were before, and pay $4,100/year in taxes but forego $120,000 per year in rental income.
I'm not asking for any sympathy here -- I'm just explaining why I have none.
One reason the cost of living is cheaper in the Poconos is that those deals that sounded too good to be true turned out to be just that. The quality of construction of so many of those homes is absolute sh!t.
That's a good point. It's easy to forget that an "assessed value" and a "market value" are two different things. I have no idea how New York's tax assessment system works -- since this $900,000 home was apparently assessed at $370,000.
Surely you've seen some of the threads complaining about the highway robbery they call property taxes in Texas.
Remembering this makes the buy vs. rent equation a lot easier to untangle, especially in areas like New York and California where prices have run way ahead of rents and your monthly mortgage/tax/insurance bill comes out to about twice the rental rate. As long as the government favors renters and punishes owners, the answer is easy.
And as for the old saw about making your landlord rich...well, today buying in an overheated, liberal-governed market, just makes some mortgage broker (and worse, some local government) twice as rich. Rent, stay flexible, buy investment property when appropriate, and don't be fooled by all this "American Dream" nonsense. It's the greatest method ever devised for parting fools from their money. ;)
Blame Bloomberg all you want, but the scheme for taxing real property in NYC comes not from Bloomberg, but from state statute passed years ago in Albany. Perhaps Bloomberg is guilty for enforcing the law as written, and perhaps the best way to change bad law is to experience the harsh reality of the law when enforced.
With that said, residential real property tax rates in NYC are relatively low compared to what we pay in the burbs with limited services. Read the real estate section in Saturday's New York Post or Sunday's New York Slimes, and you will see real property taxes in the $2,000 to $6,000 range on properties selling from $500,000 to $3 million in some of the hottest neighborhoods in NYC. Compare that to the burbs where we pay $10,000 or more on properties selling at $500,000, and NYC taxes are a bargain. Oh, and BTW, the $10,000 a year that we pay in the suburbs buys us a part-time volunteer fire department, an overweight, underworked, and totally unnecessary police department, and some of the worse public schools in the country. And on top of the $10,000 per year, we still have to pay for our own sanitation and private school tuition,
Good points. It IS the city of opportunity. I just got finished commuting between Charlotte and NYC. NYC still has good jobs, if you are in finance or media and entertainment- insurance etc.
And it still pays to live here. Charlottee, Boston and DC dont compare in these fields.
BUT. Miami, Charlotte and the northern VA suburbs could still pass NYC. What another city is a signature draw- like privately made metro or the tallest building in the country.
But NYC could be passed just the way Philly was with the building of the canals....
you are right on 66.
From where I sit, yes. 960 sq ft and 8K. Condo. I have also seen properties in blooklyn with similiar rates.
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