Tax revenue from NYC property sales plunges $1.4B

REBNY report shows missing money has hit 10 figures

New York /
Nov.November 12, 2020 04:10 PM
REBNY president James Whelan (Whelan by Evan Gutierrez)

REBNY president James Whelan (Whelan by Evan Gutierrez)

Despite an uptick in investment and residential sales over the last month, the drop-off in tax revenue from such deals this year has reached $1.4 billion, a new report found.

In October, $4.6 billion worth of residential and investment sales were recorded, according to the report, by the Real Estate Board of New York. That was up 33 percent from September but down 34 percent from a year ago.

The transaction tax revenue from these October deals clocked in at $169.3 million, or 59 percent off the October 2019 total, though up 57 percent from September 2020.

Negotiations in Washington over another round of pandemic funding stalled as the election approached and there has been little progress since then. REBNY President James Whelan said the drop in the city’s real estate tax revenue underscores that a new federal aid package is crucial.

“As real estate market activity remains at historic lows, the negative impacts are being felt every day by millions of New Yorkers who rely on publicly funded government services that will continue to struggle without necessary tax revenue,” he said in a statement.

The vast majority of city revenue from real estate is property tax, which has remained steady. But the drop in activity means the city misses out on transfer taxes, which adds up. Commercial sales figure to be below average as the market figures out how to price properties as more people work from home and shop online.

Much of the increase in October came from residential sales. Deal volume was $2.88 billion for the month, rising 61 percent from September but declining 14 percent year-over-year. The deals resulted in $73.6 million in tax revenue, which was just a 4 percent drop from the same time last year but a 94 percent jump from September.

The one-month change in investment sales volume was more modest: a 4 percent increase, to $1.7 billion, which was still down 52 percent from a year ago. Tax revenue from October’s deals totaled $95.6 million, down 72 percent year-over-year and up 37 percent from September.

Dramatic drops in tax revenue have long been an expected byproduct of the coronavirus crisis. Last month, state Comptroller Thomas DiNapoli reported that tax revenue was down $2.8 billion since April 1. The city expects to lose out on $9 billion in tax revenue over the next two years, and the state says the pandemic has shrunk its projections by $64 billion over four years.





    Related Articles

    arrow_forward_ios
    John Banks
    High expectations: A look at John Banks’ 4 years at REBNY
    High expectations: A look at John Banks’ 4 years at REBNY
    John Banks
    John Banks to step down as REBNY president
    John Banks to step down as REBNY president
    REBNY Awards
    Newmark Knight Frank wins REBNY retail award for Alamo Drafthouse deal in FiDi
    Newmark Knight Frank wins REBNY retail award for Alamo Drafthouse deal in FiDi
    Mayor Bill de Blasio and Gov. Andrew Cuomo (Getty; iStock)
    Investment sales fell by half in December to finish year down 48%
    Investment sales fell by half in December to finish year down 48%
    Compass CEO Robert Reffkin and REBNY president James Whelan (Getty; Whelan by Anuja Shakya; iStock)
    REBNY slaps Compass with $250K fine
    REBNY slaps Compass with $250K fine
    Manhattan Council Carlina Rivera and Brooklyn Council Brad Lander sponsored the bills. (Getty, Carlina Rivera)
    City Council mulls bill giving nonprofits first crack at buying resi buildings
    City Council mulls bill giving nonprofits first crack at buying resi buildings
    Photo illustration of Sen. Brad Hoylman, who championed the pied-à-terre tax. (Getty)
    Pied-à-terre tax revenue estimate slashed by 41%
    Pied-à-terre tax revenue estimate slashed by 41%
    Andrew Cuomo wants NYC workers to return to otherwise empty office buildings. (Getty)
    Cuomo announces plan to get workers back to offices
    Cuomo announces plan to get workers back to offices
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...