Property Taxes? The Rich Get All The Breaks

In a revelation that should surprise no one, ultra rich Manhattan property owners are paying practically bupkus in property taxes compared to the average city property owner.

A report by the New York Times discovered that those who have bought the most fabulous of Manhattan properties, including a pad at 15 Central Park West sold to a Russian billionaire for $88 million dollars, pay a comparatively meager property tax rate.

The average Manhattan property owner pays an average of .78 percent of their property’s value in taxes each year, a good deal less compared to the national average of 1.14 percent. So, for a property worth $88 million, you would expect the owner to return $686,000 dollars a year in taxes. However, because of decades-old rules and regulations put in place that never considered the exploding value of Manhattan property, that Russian billionaire we mentioned only has to pay a comparably scant $59,000 a year in property taxes.

The New York Times explains how such an injustice is allowed,

These comparatively meager official values are the result of a state law dating from decades ago that requires the city to calculate the value of condominiums and co-ops by using rental buildings as comparable properties, instead of apartment sales. At the top of the market, populated by $20 million, $30 million, $40 million, even $88 million apartments, real estate experts say that truly comparable rental buildings essentially do not exist. “The highest-value ones are going to tend to be the hardest to line up,” said George Sweeting, deputy director of the city’s Independent Budget Office. Their resulting effective tax rates, he continued, “will be extremely low, even by the standards of the city.”

So… we gettin’ screwed or what?

[via MBCG]