The latest data and new legislation in the works shows NY landlords are being put under even more financial pressure. Policy makers seem intent on crushing property owners in the Empire State. It’s all the more reason owners of all types need to make challenging their property tax bills a top priority this year.
A Permanent Eviction Ban?
Some analysts have likened the newest NY rent control proposal to a permanent eviction ban. The ‘no good cause eviction’ plan has been accused of making it almost impossible to get non-performing occupants out. That is after over a year of flat out eviction bans.
This new legislation would also cap rent increases at 3% per year. Even though taxes are being raised at double and even over 10x that.
While government hopes this will save them from paying for housing the homeless and providing affordable housing, if landlords can’t afford it, it is only a matter of time before everyone pays the price in far higher taxes to maintain all of these properties as public housing projects.
Capital Gains Tax Hikes
The new white house administration is also proposing a new capital gains tax hike. To a new level not seen since right before the Great Depression. A nearly doubling of capital gains tax would put the effective rate near 44% for many on a national level. NY1 reports that in New York state the effective rate will be over 54%, and almost 60% in NYC.
This presents a serious dilemma for landlords. The choice to hold on to assets longer to lower taxes at long term capital gains tax rates, versus short term gains rates. Some could roll over investments into new buildings, but property taxes are rising too. In some cases by over 50%.
It will be interesting to see the impact of driving out the good landlords from NY, and the effects of bankrupting them. Though it probably is going to hurt renters the most.
Whether you are holding long term or are selling NY real estate in the near future challenging those property taxes is going to be an incredibly important part of the puzzle.