Two new Independent Budget Office proposals are taking aim at wealthy foreign owners of condominiums and co-ops within the five boroughs, contending that the city could save $44 million annually by eliminating popular tax breaks on the pied-à-terres.
The IBO proposed Wednesday that the city nix the incentive on co-ops and condos that are not used as primary residences, and suggested a transfer tax for properties with values of $5 million or more. The moves would be a sharp departure from current Mayor Michael Bloomberg’s approach to the subject, as he has argued that wealthy foreigners pump dollars into the city economy but don’t use city services, which offsets their tax breaks.
The IBO disagreed, arguing in its latest “Budget Options for New York City” that the 421-a program facilitating the breaks is increasingly being taken advantage of by non-city residents. Because the program disproportionally benefits wealthy foreign condo owners, the IBO argued, it should be scrapped entirely.
“Tax expenditures should not be used to benefit individuals with limited economic commitment to the city,” the IBO proposal said. [Crain’s] — Julie Strickland