A proposed “mansion tax” on New York City home sales has gained the backing of the Real Estate Board of New York (REBNY), even though some prominent real estate brokers worry that it could do more harm than good, The Wall Street Journal reports.
The proposal, part of a larger plan to boost affordable housing, would institute a 1 percent tax on the sale of one- to three-family homes, co-ops and condominiums worth more than $1.75 million, and a 1.5 percent tax for properties of the same groups that sell for more than $5 million.
Revenues generated by the tax would go toward the construction or preservation of affordable housing. The tax would affect 10 percent of residential sales in New York City, according to Mayor Bill de Blasio’s office.
REBNY, whose membership includes property developers, owners and real estate agents, did not respond to a request for comment on the tax.
But Steven Spinola, president of REBNY, told WSJ that, even though the tax “is not what we would have recommended,” the real estate group supports the larger housing plan under which the tax would be implemented because it would create more inventory.
But some REBNY members aren’t so hot on the idea, worrying that the tax could curtail home sales.
“I think it could really cool the market … We are already at a point where prices are high and there is a limited amount people will want to pay,” Pamela Liebman, CEO of New York City-based The Corcoran Group, told WSJ.
Robert Reffkin, CEO of Compass, another New York City brokerage, laid out a scenario where the tax could backfire.
“If the ‘mansion tax’ raises the percentage collected per sale but lowers the total tax revenues collected because it suppresses sales activity, it could hurt, not help,” he told Inman.