NYC 'man$ions' get a new tax

It just got more expensive to be a millionaire in Manhattan.

The 2020 New York state budget includes higher taxes on million-dollar-apartment sales in the city. Governor Andrew Cuomo, the New York state Senate and Assembly all agreed on the tax on March 31.

The revised "mansion tax" will slap a one-time fee of 1 percent on luxury real estate valued at $1 million, 1.25 percent on homes of $2 million to $3 million and tops out at 4.15 percent on properties valued at $25 million and up.

It will be combined with a one-time transfer tax — which already exists in New York City and New York state — that will go up from 0.4 percent to 0.65 percent on properties worth $3 million and above.

The new taxes are predicted to raise $365 million to help repair the city's subway system.

It's widely believed that talk of the new tax surfaced after billionaire hedge fund boss Ken Griffin purchased a $238 million penthouse condo in Manhattan — the most expensive home ever sold in the US.

Griffin, who has a net worth of $9.9 billion, made $870 million last year. He bought the 24,000 square-foot condo overlooking Central Park South in January.

Shortly after the purchase, a spokesman for Citadel, the Chicago-based hedge fund that Griffin started in 1990, said that it would be a place for him to stay while he works in New York City.

The fact that Griffin would not be using the apartment as his primary residence sparked a backlash among state legislators.

"Enough," New York City Council Speaker Corey Johnson tweeted after the sale was announced. "It's time for a pied-à-terre tax. We should tax luxury non-primary residences like this one likely will be."

In 2017, there were 75,000 pieds-à-terre in New York City, up from 55,000 in 2014, according to a New York City Housing and Vacancy survey.

The real estate industry lobbied against the pied-à-terre tax, saying it could affect an already weak luxury market, but the mansion tax got the go-ahead.

Gea Elika, principal broker at Elika Real Estate, an agency that represents high net-worth buyers in New York, told China Daily that the luxury market has cooled, and more penalties on the rich could make things worse.

"If you look at the high end, which is what we categorize as $10 million and above, that segment is incredibly weak because of numerous things. A strong US dollar, tariffs, sanctions, LLC disclosures, oversupply, all have weakened the demand and the capital inflows," Elika said.

"Ken Griffin is a trophy hunter, he buys the best real estate available," said Donna Olshan, president of Olshan Realty Inc, another high-end broker.

Despite taxes and penalties being heaped on the wealthy, Olshan says that from her vantage point, the million-dollar real estate market is still buoyant.

"Right now, in New York the average apartment sale price is $2.4 million, and the median price, which is more logical, is $1.1 million. For that money you get a two-bedroom."