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I'm waiting for the Queens foreclosures in 2021, so far good opportunities are coming up but I'm waiting for better.
One thing though is I'd like the NY real estate experts to weigh in here.
What sort of property tax increases are we probably looking at? A lot of the rich people are leaving Manhattan. This may mean without a significant federal bailout Queens which has the high home ownership may be on the hook for a bigger contribution.
I may be able to pay cash but I don't want to buy if I'm going to be paying as much in rent on property tax, HOA, insurance and maintenance/carrying charges as I would on rent. That'd sort of be pointless.
Meanwhile due to lower demand as a tenant for the next 10 years I'd have more flexibility and options to move around and my rent won't go up by much.
Thoughts?
My main objective for buying property in cash is to not pay nearly $2k a month down the drain, but sounds like that might happen either way. Instead I could put that money to work in lower maintenance investments like Gold, Crypto and Stocks or REITs which are more hands off.
The question is why in the hell would you buy a house in Queens or anywhere in or around NYC? Even in craphole neighborhoods, you're paying an exuberant amount of money to live in a spiraling city in a downward trend on so many levels. Quality of life, taxes, filth, crime, 3rd world illegal aliens and covid which ain't ever leaving Queens regardless of how many mutts get vaccinated.
Now if you're buying to rent for income, that's a different story!
The assessed value for Class 1 (One to three family homes) cannot increase more than 6% per year. And over 5 years the limit is 20% The net effect is 4% per year. The assessment ratio which is the assessed value divided by the market value is 6%. This causes one to three family homes to be favored by the system. In fact, a person that helped write S7000A about 40 years ago said that coop and condo which did not exist in great numbers were simply overlooked.
For Coops and Condos, they are treated very differently. Their "market value" is not a true market value. It is based on the income and expenses of the equivalent rental building. The assessment ratio is 45% much higher than the 6% for class 1 property. Coops and Condos are included with rental buildings and are called class 2 property. In fact, there is even a "Coop and Condo Abatement" program that slashes 20 to 30% off the property tax bill and the condo owner simply fills out a form saying that property is their primary residence. But even with this abatement, condos usually pay much more than three family homes.
The example people usually give is Park Slope. You can own a 3 family brownstone and pay $5000 a year in property tax. You could live there and even collect rent from the other units in the building and the condo nearby will probably pay $10,000 or more in property tax, even with the condo abatement applied.
Why? Well, that goes back to S7000A. The law limits the growth in assessed values. Brownstones in Park Slope in 1980 had very low assessed values. Even with 4% to 6% growth, a small number such as $500 takes a very long time to reach a large number. $500 property tax bill in 1980 even 40 years later is only $5,142.86 but after 100 years it is $169,651.04 which is why the NYC system will have to change.
Of course, there are other limits such as the market value. And the assessment ratio limit of 6% (not to be confused with the assessment increase limit of 6%)
Basically, the best deal in NYC currently is 2 and 3 family homes. They get the best property tax treatment. Plus the owner can make income from them.
This is easier seen on a map that rates every property because every property in NYC is it's own special case.
Five years ago my quarterly property tax bill was $1500. It’s now $2,000. That’s a 33% increase in only five years and yet nobody even discusses how some neighborhoods are being affected this way.
For 1 family property in many neighborhoods, the value has appreciated more than 30% over the past 5 years, so 30% increase in property tax seems reasonable. In addition, there was cap in the percentage increase of property tax, so the property tax increase lags the property value increase.
@martinjsxx If you post the rounded numbers here or email me at ralph@tidalforce.org I can give the exact details.
@wiseben1979 It is true that market values have gone up in some areas. But the law S7000A does not allow assessments to increase more that 20% over a 5 year period. Of course, we'd have to see the details.
The increases are usually Year 1 = 6%, Year 2 = 6%, Year 3 = 6%, Year 4 = ~2%, Year 5 = 0%, etc.
I do not see how it could increase more than 20% in a five year period.
This is independent of market value increases. The market value can only limit the assessment increase by dropping.
If you are at the 6% assessment ratio then the assessment and tax will stop increasing.
A simple example,
assessed value=$6,000
market value = $100,000
assessment ratio = 6%
tax cannot increase
But each year the NYC Finance seems to increase the market value and then they can increase the assessed value which will increase your tax.
Buying a property to live here is a waste of money. Paying a high cost to live in NYC, few LLs actually live on NYC property. They all put them up for rent and they themselves live somewhere far out or rent somewhere.
The 2020-21 NYC property taxes on my 1-family ranch-style house on SI were $5,869.76, for 2021-22 the city estimates on my 2021-22 Notice of Property Value that my 2021-22 taxes will be $5915.75. I won't know till my next property tax bill what my actual 2021-22 taxes will be.
The city estimates the the 2021-22 market value of my house at $560K, which is surprisingly accurate. NYC property taxes are a convoluted mess. There are 2-family brownstones in Park Slope worth millions paying about what I'm paying, or even much less, in NYC property taxes.
I'm waiting for the Queens foreclosures in 2021, so far good opportunities are coming up but I'm waiting for better.
One thing though is I'd like the NY real estate experts to weigh in here.
What sort of property tax increases are we probably looking at? A lot of the rich people are leaving Manhattan. This may mean without a significant federal bailout Queens which has the high home ownership may be on the hook for a bigger contribution.
I may be able to pay cash but I don't want to buy if I'm going to be paying as much in rent on property tax, HOA, insurance and maintenance/carrying charges as I would on rent. That'd sort of be pointless.
Meanwhile due to lower demand as a tenant for the next 10 years I'd have more flexibility and options to move around and my rent won't go up by much.
Thoughts?
My main objective for buying property in cash is to not pay nearly $2k a month down the drain, but sounds like that might happen either way. Instead I could put that money to work in lower maintenance investments like Gold, Crypto and Stocks or REITs which are more hands off.
Excerpt: My main objective for buying property in cash is to not pay nearly $2k a month down the drain
Response: Opinion
If you worry so much by a lesser value home.
On a 1/2 to 3/4 million dollar single family home you'll be dropping at least $1K a month " down the drain ".
A multifamily will offset that loss ...that is... if you don't mind tenants.......................
Only other suggestion is go rural..............by land ..............pitch a tent.......................
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