When Bill de Blasio takes office in January, Russian billionaires with New York City pied-à-terres could find themselves on the receiving end of a tax hike, if the mayor-elect embraces proposals released Wednesday by the Independent Budget Office.
The IBO ideas take aim at wealthy non-residents who maintain pricey apartments within the five boroughs.
The IBO said Wednesday that the city could generate savings by ending a much-used property tax break on co-ops and condos that are not being used as primary residences. The IBO also suggested a transfer tax for properties valued at $5 million or more. The two proposals could save $44 million annually.
Mayor Michael Bloomberg has made it abundantly clear that he is loath to place wealthy homeowners in that position, regardless of their passport.
“Wouldn’t it be great if we could get all the Russian billionaires to move here?” he asked rhetorically earlier this year. He argues that wealthy foreigners spend into the city economy but don’t use city services, offsetting tax revenue lost through their exemption from the tax rolls.
The IBO, in its latest “Budget Options for New York City” on Wednesday, argues that the 421-a program is tailor-made to attract a maximum amount of billionaires from Russia or anywhere else, and should therefore be scrapped entirely.
The 421-a program was created to promote housing development citywide by offering temporary tax exemptions on newly built apartments. But purchases in new co-op and condo construction–especially in Manhattan–are being increasingly made by non-city residents, and the IBO projects that the number could rise to nearly half of all purchases in the coming years.