Real Estate Makes Up Larger Share Of NYC's Tax Revenue Even Amid Value Reset
Real estate taxes have steadily become a larger and larger part of New York tax collections over the last eight years as the city faces a fiscal crisis.
In the financial year ending 2021, real estate-related taxes made up 54.1% of tax collections, up from an average of 51.9% between 2015 and 2018, according to a new report from the Real Estate Board of New York.
Titled The Invisible Engine, the report’s objective is to show real estate’s value to the city’s economy. REBNY said real estate taxes will account for more than $35B in the city’s adopted budget for the financial year ending in 2023 while $30B will come from all other tax sources. Residential sales, which soared last year, pushed tax collections by $1.3B — making up for the damage done to commercial properties like office and retail.
“This report is another reminder that the health of the real estate sector and the City’s finances and economy are inextricably linked,” REBNY President James Whelan said in a statement. “Even throughout the pandemic, the real estate industry has been the single most important source of revenue for New York City, a fact that will only become more pronounced in the years ahead. We look forward to our continued partnership with City and State leaders to further strengthen these ties."
The report notes that the mansion tax and new urban transit/mortgage-recording taxes introduced in 2019 contributed more than $1.3B to MTA operating expenses and the “capital lockbox” in 2021.
The city's 2023 budget of $101B is more than $10B less than the year before, according to Comptroller Brad Lander’s office, and overall tax revenues are expected to be $1B less than fiscal year 2022 because of the expectation of slower economic growth.
“[The mayor] is already telling some agencies they need to take a 30% cut at this moment,” Queens Borough President Donovan Richards in an interview with Bisnow last week. “So we [are] dealing with a crisis of great magnitude. “