The wealthy have lots of good reasons to invest their money in New York’s residential real estate market, panoramic views and strong returns among them.
But another perk, incredibly low taxes for some penthouse buyers, have people furious.
The latest, most egregious example is the penthouse at ultra-luxury highrise One57, which just sold for a record $US100.5 million. That apartment will receive a 95% tax cut, saving the mystery buyer an estimated $US360,000 in taxes annually, according to The New York Times.
The tax cut comes from a controversial housing program known as 421-a. It offers huge tax breaks for luxury properties that can last up to 25 years as long as the developers also build affordable and moderate-income apartments.
But the 44-year-old program has been criticised for only stimulating the luxury market, costing the city billions in lost taxes, and allowing developers to “double-dip” by receiving benefits for future luxury projects with previously-built affordable housing units.
In fact, the tax cuts are so extreme that US Attorney Preet Bharara launched an investigation into the 421-a program after a state investigation on whether developers were receiving tax breaks in exchange for political contributions was abruptly shut down by Governor Andrew Cuomo.
The investigation is said to be focused on Extell Development and One57, which has tax abatements worth at least $US35 million.
Though it’s always been a source of contention, the debate is heating up surrounding 421-a since the housing program is up for renewal this June. Current New York City Mayor Bill de Blasio is expected to revise the program to only offer tax benefits to towers that set aside affordable units within the building, according to the Times.
The de Blasio administration pledged to build 80,000 units of affordable housing over the next 10 years.
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