New York City Council Header
File #: Res 0690-2015    Version: * Name: Raise the minimum threshold for imposition of the “Mansion Tax”.
Type: Resolution Status: Filed (End of Session)
Committee: Committee on Finance
On agenda: 5/14/2015
Enactment date: Law number:
Title: Resolution calling upon the New York State Legislature to introduce and pass, and the Governor to sign, legislation amending Section 1402-a of the New York State Tax Law to raise the minimum threshold for imposition of the "Mansion Tax" from $1,000,000 to $1,750,000 and to assess an additional one-half percent tax on all sales over $5,000,000
Sponsors: Corey D. Johnson, Margaret S. Chin, Rosie Mendez, Donovan J. Richards, Vincent J. Gentile, Helen K. Rosenthal
Council Member Sponsors: 6
Attachments: 1. May 14, 2015 - Stated Meeting Agenda with Links to Files
Res. No. 690
 
 
Resolution calling upon the New York State Legislature to introduce and pass, and the Governor to sign, legislation amending Section 1402-a of the New York State Tax Law to raise the minimum threshold for imposition of the "Mansion Tax" from $1,000,000 to $1,750,000 and to assess an additional one-half percent tax on all sales over $5,000,000
 
 
By Council Members Johnson, Chin, Mendez, Richards, Gentile and Rosenthal
 
Whereas, Section 1402-a of the New York State Tax Law, passed in 1989 and commonly referred to as the "Mansion Tax," levies a one percent tax on residential properties that sell for $1,000,000 or more; and
Whereas, The $1,000,000 threshold has not changed since the law was approved in 1989; and
Whereas, The original law was intended to impose an additional tax on purchasers of luxury properties, however it currently is a burden on the purchaser of the average home in New York City; and
Whereas, A $1,000,000 property in today's market is no longer certainly equivalent to a luxury property; and
Whereas, According to Bureau of Labor Statistic's Consumer Price Index Inflation Calculator, the purchasing power of $1,000,000 in 1989 is different from the purchasing power of $1,000,000 in 2014 and vice versa; and
Whereas, $1,000,000 in 1989 is equivalent to $1,904,443.55 in 2014, and conversely $1,000,000 in 2014, adjusted for inflation, is equivalent to $523,790 in 1989; and
Whereas, According to the Real Estate Board of New York's ("REBNY") Fourth Quarter Report on New York City Residential Sales, the average sales price of a home in New York City in the fourth quarter of 2014, which includes all condominiums, cooperatives, and one- to three-family dwellings, was $841,000; and
Whereas, According to REBNY's report, excluding one- to three-family dwellings which is the least commonly sold dwelling type in New York City, the average sales price of an apartment in New York City was $1,001,000;
Whereas, It has become apparent that the Mansion Tax is out of touch with the current economic condition and no longer applies only to luxury residential real estate sales; and
Whereas, Because this additional tax burden is now being applied to the average New York City homebuyer, it is making it more financially difficult to purchase a home; and
Whereas, Additionally, some argue that the Mansion Tax's $1,000,000 threshold is causing the volume of sales around that threshold to decrease; and
Whereas, In "Transfer Taxes and the Real Estate Market," a working paper published by Columbia University in 2014, the authors found that the Mansion Tax created a "notch" in the $1,000,000 market and opined that as many as 2,800 sales of residential properties at or over $1,000,000 did not take place between 2003 and 2011 because potential buyers wanted to avoid the Mansion Tax; and
Whereas, By keeping the tax at the $1,000,000 threshold, prospective buyers of the average New York City apartment are missing out on the opportunity to buy a home; and
Whereas, Increasing the threshold to $1,750,000 would reflect the economic changes of the past twenty-five years, more accurately reflect the current New York City real estate market, and align the law with its original intention; and  
Whereas, In today's real estate market, residential property sales of $5,000,000 or more are generally considered super-luxury properties; and
Whereas, Assessing an additional one-half percent tax on these sales would also conform with the original intention of the legislation to impose an additional tax on the sales of high-value properties; and
Whereas, The additional one-half percent tax would also help offset the forgone revenue caused by the increase of the minimum threshold from $1,000,000 to $1,750,000; now, therefore, be it
Resolved, That the Council of the City of New York calls upon the New York State Legislature to introduce and pass, and the Governor to sign, legislation amending Section 1402-a of the New York State Tax Law to raise the minimum threshold for imposition of the "Mansion Tax" from $1,000,000 to $1,750,000 and to assess an additional one-half percent tax on all sales over $5,000,000.    
 
JF/RC 4/20/15
LS#3453