Loopholes let billionaires duck NYC property tax

The rules for tax on NYC condos is so sinister and stultifyingly boring that it's not really surprising that they disguise a raft of loopholes that let the richest New Yorkers duck the property taxes that keep the city running.

The contradictions are especially piquant in the starchitect mega-towers where single-family residences can cost north of $90 million, but whose owners pay about half as much tax as families with household incomes of $25K.

Another standard set a de facto limit on the assessed value of any individual condo unit: The sum of the assessed values of the condos within a building could not exceed the assessed value of the whole building as a single parcel. So, if there are 50 units in a $50 million building, the cap on assessment for each unit is $1 million, no matter the views, location, or design—full stop.

"That's the letter of the law: 'You must value these things as though they are not these things,'" Propheteer says. "That's the best evidence that currently exists for the legislative intent of the law."

The overarching sentiment behind property-tax reform in the 1970s was understandable: Homeowners were fleeing New York City, and lawmakers at the city and state level had to do something to stop the bleeding.

New York City has since rebounded, of course. And as a result, the property-tax burden has shifted from owners to renters, and from the wealthier to the poorer. The higher taxes assessed for apartment buildings are passed from landlord to tenant. A system of caps, phase-ins, exemptions, and abatements rewards rising neighborhoods and punishes failing ones. The results look like a chapter from Capital in the Twenty-First Century.

Why Billionaires Don't Pay Property Taxes in New York [Kriston Capps/Citylab]