This week has been a bummer so far for a certain subset of NYC co-op owners regarded by the rest of the country as filthy rich, but who consider themselves tenuous members of the city's professional middle class.
First, President Obama declared his intention to let Bush-era tax cuts expire for families earning $250,000 a year or more, or individuals earning at least $200,000. The top two income tax rates would jump from 33 percent and 35 percent, to 36 percent and 39.6 percent respectively.
Then Governor Paterson announced a proposed tax of around 2% on newly originated co-op mortgages, which were previously exempt from the mortgage tax levied on condo and houses.
Paterson's proposal could extend to refi’s too. Quick math: If you’re refinancing your $500,000 mortgage, you will have to take out another $10,000 to cover the new tax.
All this unfolds during a traditionally high-anxiety period for parents with kids in private school.
Contracts for next year have begun landing in mailboxes around the city, their typical four-figure increases leading parents to re-examine whether spending $35,000+ on a sixth-grade education is worth it.
If this perfect storm of financial angst winds up driving a bumper crop of urban refugees to the suburbs this spring, Mayor Bloomberg may be asking for the Klonopin next: A recent NYC Independent Budget Office report analyzing figures between 1997-2007 found that people who moved out of the city had "substantially higher inflation-adjusted incomes than incoming tax filers in every year.”
The Budget Office also found that from 2004-2007 in boomtime New York City, the number of urban refugees declined. It will be interesting to see what happens when the Great Recession data is analyzed.
- New Yorkers on the Move (NYC Independent Budget Office)
- The bell tolls for co-ops (NY Observer)
- $100 billion increase in deficit is forecast (NY Times)
NYC property values stabilize at 25% down; tax man still in denial