Second-home tax would be “multiples worse” than Amazon loss: Howard Lorber

The proposed tax pied-à-terre tax, which reared its head last year, could make a comeback in Albany

Mar.March 20, 2020 09:45 AM

Douglas Elliman executive chairman Howard Lorber warns that a tax on second homes for the rich could be “multiples worse” than Amazon’s exit from New York City.

In an interview on CNBC’s Squawk Box, Lorber said a pied-à-terre tax would “be a disaster, not just for real estate, but for the economy in New York.”

But the market in New York overall is “not so bad,” Lorber said, and even the state searches for additional sources of revenue ahead of the April 1 budget deadline, the chances of such a tax being implemented are slim.

“I don’t think it’s going to happen,” Lorber said. “I think the governor is a smart man and will come to his senses.”

Part of what Lorber takes issue with is the proposed floor for residences that would be taxed: second apartments more than $5 million would be taxed between 0.5 percent and 4 percent. That would be “punitive,” argued Lorber, and those who buy apartments for $7 million or $8 million in New York City still worry how to pay the bills.

“If they’re bankers, they’re worried about their bonus, if they’re hedge fund guys, they’re worried about their performance, they’re worried about how the [state and local tax deduction] is going to affect them,” Lorber said. “But when you go over $20 to 25 million, they’re not worried about anything — the only thing they worry about is they still want a discount, because they know the market is down. They don’t want to overpay for something. But they’ll buy all day.” [CNBC] — Georgia Kromrei

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