The Real Deal New York

Bill would repeal mortgage tax

March 31, 2008 07:27AM
By Adam Pincus

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A freshman Staten Island assemblyman
has introduced a bill that would repeal the mortgage recording tax, which the
city relies on for more than $1 billion in annual revenue.

Albany
budget watchers say the measure had little chance of passing. The tax brought
$1.8 billion to New York City
coffers in 2007, according to state tax receipts, although revenue is expected
to fall as the economy slows this year.

Freshman Assemblyman Lou Tobacco, a Staten Island Republican, introduced the
proposal March 19. None of the bill’s co-sponsors, two Democrats and eight
Republicans, are from New York City.
The bill was sent to the Assembly’s Committee on Ways and Means, which handles
tax policy.

A legislative memorandum explaining the need for the legislation said the tax
was especially difficult for young families trying to buy a home.

“This is a burdensome tax on the people living in New
York
state and creates a disincentive for individuals who wish to
purchase a home in the state of New
York
,” the memo said.



James Parrott, deputy director and chief economist for the
nonpartisan budget watchdog Fiscal Policy Institute, said any change to the tax
would hit New York City
hardest.

He said only about $200 million of the $3.4 billion collected
by the recording tax in 2007 was used by the state government, and that was to
fund the State of New York Mortgage Agency, which helps low- and
moderate-income residents get a mortgage.

New York
state’s counties received $500 million, and regional transportation authorities
including the Metropolitan Transportation Authority (MTA) saw $800 million in
revenue in 2007, Parrott said.



“I don’t know if the sponsor and co-sponsors are aware
that the money goes to counties or directly to local government and regional
transportation and (the State of New York Mortgage Agency),” he said.
“This is not a way to put pressure on state government … (but) it would
provide a tax cut.”

Assemblyman Tobacco did not respond to requests for comment.

The MTA reported last week that receipts for the tax in
March will be $37.5 million, 19 percent below its forecast in the 2008 budget.

The mortgage recording tax charges a 2.8 percent fee on commercial loans over
$500,000. For commercial or home loans less than $500,000, the rate is 2.05 percent, while for home loans greater than $500,000 the rate is 2.175 percent.

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