Property Tax Reform
Seeking Equity for Co-ops and Condos
The City Council has made protection of homeownersincluding co-op and condo
ownersone of its highest priorities. We do this because we understand that home ownership fosters a sense of pride in home, community and city.
Property owners are also a vital part of the city's tax base, but they are not all taxed equally. Since 1981, one-, two- and three-family units have been cate-gorized as Class I property. Co-ops, condos and rentals are grouped toge-ther in Class II. Class III prop-erties are owned by utilities and Class IV con-sists of com-mercial property.
Each year, the New York State Board of Real Property Services determines the share of the total real estate tax that the city must levy on each class. Currently, Class II buildings, including co-ops and condos, are taxed at twice the rate of Class I homeowners.
During this year's budget negotiations, I made a proposal that would give Class II co-op and condo owners a break by closing a loophole in Class I.
Right now houses owned by absentee landlords are taxed the same as owner-occupied homes. I would like to see a separate classification established for owners who rent out their income-producing properties. Absentee landlords would pay taxes that are higher than Class I but below Class II, which includes larger apartment buildings.
A Council investigation shows that there are approximately 100,000 of these properties. Adoption of this proposal, which requires ap-proval from the State Legisla-ture, could raise $80 million in additional rev-enue.
We could then reduce the tax rate of co-op and condo owners, using the $80 million to cover any loss in-curred by the reduction. That amounts to a zero-sum proposal, not a tax hike.
This proposal is fair. It acknowledges that absentee owners have income-producing properties and should be brought more into parity with landlords. It would also have another important benefit. I have long felt that higher-taxed co-op and condo owners should be brought closer to parity with single-family home owners. This proposal could help facilitate our efforts to give a tax break to co-op and condo owners, who should rightfully be treated as Class I homeowners.
Mr. Vallone is Speaker of the New York City Council.