Realtors rail against ‘mansion tax’

A delegation of Westchester County real estate brokers will troop to Albany this week to lobby for a change in the state”™s so-called “mansion tax” and other legislation that could help boost a slumping housing market.

Westchester County Board of Realtors CEO P. Gilbert Mercurio called the 1 percent tax on sales of homes priced at $1 million and up “a particularly egregious example of a state-imposed expense that makes housing much more expensive than it has to be.”

Real estate professionals from across the state also will lobby Tuesday for the elimination of another state-imposed expense for homebuyers ”“ the mortgage recording tax on refinancings. And they will urge lawmakers to adopt a bill that would allow annual deposits of up to $10,000 for couples and $5,000 for individuals into designated first-time homebuyer accounts to be deducted from state income taxes.

“Not immediately, but it will kind of help out with this housing crisis,” Devin I. Willacy, senior associate broker at Fortunato Realty Group in Yonkers and chairman of the Westchester Realtors board”™s Legislative, Political and Legal Issues Council, said of the deductible savings plan. “This will give the first-time homebuyers incentive to save up some money for a down payment,” thus replacing with homeowner”™s equity the no-money-down “exotic” mortgages that have triggered the housing crisis, Willacy said.

One in Westchester County”™s lawmaking delegation in Albany, Assemblyman George S. Latimer, D-91^st District, introduced a bill in this legislative session that would raise the sale-price threshold for the 1-percent tax on homebuyers from the current $1 million to $2 million.

Enacted in 1989, the tax then applied to the rich who could afford to pay $1 million or more for residences that truly were mansions. But that taxing threshold is outdated, according to Latimer and lobbying real estate professionals.

“When that tax was first put in place, $1 million sales constituted the top 2 percent of all sales” in Westchester County, said Mercurio, who heads the 26-member delegation from White Plains that will ascend upon the state Capitol to join in a larger lobbying effort by the New York State Association of Realtors.

 

“Now they”™re running anywhere from 24 to 31 percent of sales, depending on what season of the year it is,” he said. “It”™s a lot like the alternative minimum tax. It”™s affecting more and more people that it wasn”™t intended to affect. At this rate, it won”™t be long before it”™s half of sales” in Westchester to which the current mansion tax will apply.

In the county this year, 100 homes have sold for $2 million or more, representing 7.5 percent of the total number of sales to date. There were 323 sales of homes priced at $1 million or more, representing 24.3 percent of total sales this year, Mercurio said.

If the mansion tax applied only to the top 2 percent of sales of single-family houses ”“ as it did in Westchester when implemented in 1989 ”“ the threshold would be $3.4 million, based on sales for the first four months of this year, Mercurio noted.

Mercurio said his group would like to see the mansion tax eliminated eventually. “Still, we”™re happy to see it (the threshold) increased at least to the $2 million level.”

In Albany last week, Assemblyman Latimer said the $2 million threshold “was the number we thought we could sell it at” in the Assembly and Senate. Still, “It”™s going to be a hard lift to get passed this year,” he said.

Latimer said raising the threshold will result in a loss of revenue to the state. He said an actuarial review of the fiscal impact of his proposed legislation is needed. “There”™s an argument to be made in which we get greater activity” in the housing market “when we relieve ourselves of a tax burden, Latimer said, “There might be an offsetting revenue” for the state.

“We”™re not trying to kill the tax,” Willacy said. “We”™re just trying to raise the threshold.” Still, he said its passage does not seem likely in the legislative session that ends this month.

“From what we can see from the legislators, they understand the gravity of what we”™re talking about. But it may just come to a matter of budgetary issues.”