I think this is in the right direction, but the cut off at $1M is interesting.
Why's there an obsession with the $1m cutoff?
The dollar has been turned to dust. $1M is not that much money, especially in housing, especially in NYC.
Why tax $1m second homes and not second homes generally? Effectively, you're going to tax almost all second homes.
So why the arbitrary cutoff?
Chicago wanted to add a "millionaire's tax" on $1m+ home sales. At least in Chicago, that isn't effectively taxing the vast majority of housing (and total value) - so there's some distinction worth having.
Read the fine article?
> While the tax seems large, experts say the city’s antiquated assessment and valuation system dramatically undervalues properties, reducing the burden. City valuations can often be 10% or less of the true market value, they said.
As TFA states, in NYC the assessed value of a home and the market value of a home are wildly different, with the assessed value being much, much lower.
This is $1mil in assessed value which would translate to roughly $5mil in market value.
In NYC $1mil market value is pretty much the starting price for a 1-bedroom condo in a gentrified area. $5mil market value, on the other hand, is a pretty luxurious place.
Below 1M in NYC it becomes unclear why you have a second home. Maybe you're not quite "wealthy" and it's really helping your family out in some way. No reason to complicate things, the cutoff actually simplifies it while sacrificing almost nothing in terms of what the tax is trying to accomplish.
The Netherlands has a 2.2% tax on secondary properties with a €50k threshold (total wealth, not per-property). So any holiday home, shed, storage locker, garage space, parking spot, bungalow, pied-a-terre, apartment for your children falls under that tax.
It's.... problematic to say the least. Say you bought a bungalow for €30k in the 2000s that you frequently visit to escape the city. You are a middle class worker, it's paid off and monthly costs are minimal. It is now worth €350k. You need to pay €7700 a year. Most people don't have that type of money so they are forced to sell.
That's a pretty low threshold, but isn't the goal of the tax to make you sell the bungalow so someone can live in it? This seems like a policy working as intended if it's really worth 350k
Due to zoning (not sure how that translates) nobody can live permanently in the bungalow. It is only for recreational use. Has to do with infrastructure, power delivery, sewage, building standards. If it was allowed to live in that bungalow it would be worth double that.
That sounds like it would be pretty reasonable if the threshold were higher.
It's symbolic for it's demographic voters
what does it symbolize?
"going after the rich", yeah? millionaire is still generally understood as an economic class by voters.
>Why's there an obsession with the $1m cutoff?
I think this is because the term "millionaire" is a catchy term. And that caught on in the 1800s.
1 million remains the hallmark of 'wealthy' (as in: not us), to the point where pop culture has started mocking the concept decades ago (See: That Austin Powers movie...)
Hardly everyone understands 'owning a house' as millionaire-level wealth. Which is why people cheer the policy on until they realize it is them who is being shaken down.
Sure, but it's only a shakedown if it's an unoccupied second home, which is hard to have sympathy for. It can easily be an occupied second home (family, renters) or a first home for those in the upper middle class paying for $1mm+ apartments in NYC. I'm not really worried about Jeff Bezos or some Hollywood actor's crash pad when they have business in nyc.
In what world is 1 million US not wealthy? Have tech salaries distorted people's opinions that much?
Owning a house where your equity in it is over a million is absolutely wealthy.
> In what world is 1 million US not wealthy?
In the US itself (?) lol
I disagree with the comment and entire existence of the person to whom you are replying, but they aren't wrong about $1m actually not being as big or watershed a number as it used to be.
A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
> A basic middle-class house in just about any part of the country that's worth living in is going to be $1m, plus or minus 200k.
Help me understand your comment. Do you think the country is only made up of like, 3 big coastal cities? Do you think the only houses worth living in are several thousand square feet in only the coolest parts of town? I want to understand what you think the country actually looks like, here.
You quoted the part that clarifies this: "worth living in"
Subjective, obviously. My view is that I wouldn't live almost anywhere outside of one of the major coastal cities in a blue state. Certainly nowhere in "flyover country".
Even disregarding the fact that your description here still doesn't meet the $1M bar you set in the original comment, you are using the general term "worth living in" to describe places you would live, which is way more elitist than is typical of HN.
I too would only live in a small subset of the country (a different, but not opposite, subset from you). But I would never do something as petty/hostile as describe those places as "the only places worth living."
Zero sympathy. The people who live in those places routinely complain about unfairness to them, while then voting based on bigotry and ignorance, jubilating in ICE's cruelty, etc. They have done worse than simply issued harsh words, and they deserve worse in recompense.
> you are using the general term "worth living in" to describe places you would live,
In general, anyone who uses the phrase is going to mean it subjectively.
But--there is a somewhat objective measure: property prices :)
And they are all higher in blue state coastal cities than in buttfuck Trump-loving nowhere.
"that's worth living" is doing some Herculean lifting there. I'm sorry to inform you that only the wealthy can live in the places you deem "worth living". You are not using the phrase "middle-class" correctly.
I'm not coming at this from a rural perspective. I live in the greater NYC area. I have friends in NYC. They make a lot of money and live very close to Grand Central, and even they don't live in $1M properties.
I will generally concede to you, sure lol
I have lived in both NYC and Southern California, and I was mostly thinking about SoCal, where in general one assumes a basic middle-class house in a reasonably decent area is going to cost $1m. Do they always? Not necessarily, but even fairly modest houses like my parents house now exceed $1m in value easily.
Out of curiosity, do your friends own condos? Doesn't even a studio condo on the UES cost at least like $600k base (i.e. not counting any fees related to the sale, nor any ongoing HOA)?
> Owning a house where your equity in it is over a million is absolutely wealthy.
Only ~30% of home owners own their outright.
~60% own 40% of the house or less.
I'd argue that you can't own more than ~92% of a home, because it costs a lot to sell a house...
The "average" homeowner moves every ~7 years in the US, and this is heavily skewed to people with less equity - the people who outright own typically have stayed put 20+ years.
So "owning" a million dollar home means anything from: you put 3.5% down, and you're currently underwater cause prices went down in a lot of the US (i.e. you are literally own NEGATIVE equity)... to you actually have $1m in equity.
I "own" a $1.2m home. I really only own about $425k of it. If I had to sell it, that typically costs close to 9% - so I'd be lucky to get $300k.
The person underwater who put 3.5% down on a home could easily have -$250k if they had to sell... So the idea that everyone who "owns" a $1m house is "rich" is a bit strange...
I mean, in general, people who "own" $1m houses are not destitutely poor, but that's about as far as you can extrapolate.
I agree that owning an expensive house where you have negative equity is not wealthy (at least based on that data point itself; maybe you have a 401k or something else that makes you wealthy)
You are confusing owning a house with having paid off a mortgage. I can go get a mortgage for $1 million tomorrow, but that does not make me a millionaire. It makes me an debtor with a house I can't afford.
Most Americans cannot get a mortgage for $1M.
Ummmm.... It depends where you live.
You can put 3.5% down for a $1m house in places where ~50% of the population lives.
At current interest rates, no, you can't qualify, but at interest rates where people bought most of these houses... Yes, the median person could afford it (in those areas).
Yes, that’s more to the point.
Almost nobody casually owns a second home in New York worth $1m or more. What a dumb comment (like pretty much every comment criticizing this tax--just stupid and immoral).
I agree and I’d prefer to see apartments excluded from this. Apartments are what I want second-homeowners to own rather than hoarding valuable land.
Wouldn't excluding apartments therefore exclude Ken Griffin's 238 million dollar penthouse? That seems like exactly the kind of 2nd home that this should be targeting.
NYC is filled with apartments dedicated to the wealthy with token poor-doors for access to a few mandatory low income units in each building. All housing has to be subject to taxation for this to work.
> The bill exempts the following categories:
> The primary residence of at least one owner.
> The primary residence of a parent or child of at least one owner.
> Cooperative and condominium units that are appraised at less than $5 million in the previous three years.
> Properties and dwelling units that are rented to a NYC primary resident.
(https://comptroller.nyc.gov/reports/the-pied-a-terre-tax-and...)