Tax revenue from NYC property sales plunges $1.4B
REBNY report shows missing money has hit 10 figures
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.