Posted by Leonard Steinberg on February 27th, 2014
In this morning’s Wall Street Journal, Josh Barbanel writes about a class-action lawsuit launched posing a constitutional challenge to New York City’s complicated property-tax system, a formula that has mystified skyscraper owners and renters for a generation.
It is charged that the system unfairly affects blacks and Hispanics who live in rental buildings that pay higher taxes than owners of co-ops, condos and single-family houses. Renters indirectly pay property taxes through rent checks, the suit said. The suit seeks to throw out much of the city’s $20 billion property-tax system set up by the state Legislature in 1981, over a gubernatorial veto. Four tax rates for different types of properties were created, with special rules to cushion owners of one- to three-family homes against rising property values…..are the owners of single family townhouses seriously disadvantaged? Hmmmmm…..
Other rules protect co-op and condo owners. An owner doesn’t pay taxes based on the amount paid for a home but instead is taxed on the estimated value of the home if it was rented out—generally a lesser amount. In addition, many co-op and condo owners get abatements to lower their taxes further. Yet the disparity between co-ops and condos is startling to say the least. Condos pay about 40% MORE than co-ops on average.
Is this the beginning of many other suits where owners of new condominiums realize that they are often paying DOUBLE (or more) the real estate taxes than neighboring condominiums and co-ops? Is the only way to resolve this grossly unfair and unjust system through lawsuits? It appears so.
In the new City of FAIRNESS, one interesting fact emerged: Park Slope, where Mayor Bill De Blasio lives, had the lowest effective tax rate of all.