The Real Deal New York

Property taxes climb despite market flux: report

February 20, 2013 01:30PM

Peter Hauspurg

One would expect that in a down market, when property values are on the decline, the city’s collection of corresponding taxes would fall as well. However, a report from Eastern Consolidated shows that the volume of real property taxes in New York City increased every year from 2005 to 2012, regardless of market conditions, Real Estate Weekly reported. For example, property tax collections increased 17 percent between 2009 and 2011, even as the market value for citywide properties fell, the report says.

Eastern Consolidated pegged this development to an expansion of the tax base, as the city added new properties, among other reasons.

“As a former tax lawyer, I am confounded by the city’s tax code,” Peter Hauspurg, Eastern Consolidated’s chairman and CEO, said in the study. “Researching these numbers was akin to a Law and Order episode — every new piece of information generated more and more questions.”

The study surveyed a total of 111 buildings, comparing non-condominium residential property tax payments per square foot on the Upper East Side, the Upper West Side and the West Village.

Of the 111 buildings, 40 of the ones examined were rentals.

In the Village, rental property owners shelled out $3.82 per square foot on average in property taxes in the 2012 tax year. However, taxes reached up to $13.41 per square foot for some properties. A total of 13 buildings in this neighborhood were surveyed.

On the Upper East Side, the average tax for a rental property ticked in at $10.23 per square foot and spanned a range from $6.46 to $14.31 per square foot. On the Upper West Side, the average was $6.22 per square foot, with a range of $3.61 to $13.64 per square foot.

In addition, multi-family property tax collections showed little relation to the buildings’ ages, location, value or size, the report says.

According to the study, co-op properties did not pay less in property taxes per square foot than rental buildings. The study says that, on average, co-op property tax collections were higher than rental properties located in the West Village and on the Upper West Side. [REW]Zachary Kussin

  • hmmm

    Peter,

    I just don’t understand your evaluation nor your conclusion “But the general assumption in New York City real estate circles that some residential prop-
    erty types are unfairly taxed more than others does not seem to be supported by the analysis above.” – You took this data – a 1,000 sq ft rental on the UES and one 1,000 sq foot coop also on the UES – Then you say it’s reasonable that the coop owner pays $10/sq foot in property taxes for his unit and that it’s reasonable for the landlord of the rental apartment (about 1/3rd of which are rent stabilized) to also pay $10/sq foot in taxes. What am I missing here. How could you conclude that such treatment is reasonable? You can’t use sq ft to compare reasonable taxes between rent stabilized apartments and coops. Clearly the per sq/ft tax-rate of a coop should be SIGNIFICANTLY higher than the per sq/ft tax-rate of a rental apartment.

    • Barbara D on behalf of Peter

      A coop owner should pay more in property taxes than a landlord of a rent stabilized property. However, the analysis in our report shows that they don’t. On the Upper East Side, a sample of 13 rental properties had higher property taxes per square foot, on average, than a sample of 11 coop buildings. On the Upper West Side and in the West Village, rentals were lower than coops. This is why we
      stated that the assumption that some property types (coops or rentals) are consistently taxed at a lower rate than others was not supported by our analysis.

  • semsem5

    My real estate taxes have been rising by 8% annually. This in the long run is going to depress Manhattan residential real estate.

    We have Mayor Bloomberg to thank.

    • AlKhalil

      How come all of a sudden you write in good English (not in Khebrew Khenglish) and you are no longer a poor Egyptian Jew who has been saved and living in the safe haven of Israhell? I guess the hasbara manual did not cover this one so you improvised and failed to cover your tracks.

    • Marcia Caballero

      @semsem5:disqus , is appreciation of value in your area going up faster than 8%?

      • semsem5

        Maybe but salaries are not.

        Good point.

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