Background: In 2018, the Trump administration capped state and local deductions on federal tax returns. According to IRS data, Manhattan homeowners previously deducted more than $25,000 on average, $15,000 more than the cap and the highest in the US. Now, in addition to being able to deduct less, New Yorkers are facing more local property taxes.
What’s going on: An NYC commission has issued a preliminary report with 10 recommendations to overhaul how NYC property taxes are calculated. The idea is to base taxes on the market value of homes rather than on outdated formulas so that people who own expensive properties pay more and those who own less expensive properties pay less. This would substantially increase taxes for homes in areas of the city, like in Manhattan and Brooklyn, that have seen vast price appreciation. Tax increases would be both phased in to soften the shock to homeowners’ pockets and include options for land-rich but income-light homeowners to seek refuge.
What you need to know: Despite the $10K deduction cap, the City wants to advance property tax reform as, according to the commission’s report, “Today, the chorus of voices decrying the system as inequitable has multiplied.” For anything to happen, City Hall and Albany will need to agree. So, don’t expect anything soon, but if the threat of increased taxes grows, expect it to weigh on the real estate market.
Learn more:
Battle Lines Quickly Form Over Radical Property Tax Proposal [NYT]
Mayor Commission Wants to Raise Taxes on Brooklyn Brownstones [Brownstoner]
Here’s why your property tax bill might be cut in the coming years [SI Live]
The ‘winners and losers’ of NYC’s proposed property tax plan [NY Post]
New York City Property Tax System Background [Blocks & Lots]
