Jan. 5 (Bloomberg) -- New York City’s real estate market has been so volatile that taxes on property sales dropped to $982 million in 2010 from $3.3 billion in 2007, making it difficult for city and transit officials to plan for future revenue, the Independent Budget Office said.
Revenue from so-called transfer taxes increased during the real estate boom from 2000 through 2007, helping to create budget surpluses for the city and the Metropolitan Transportation Authority, the nonpartisan public budget office in a report today. Those surpluses became deficits in the past few years as property values and sales plummeted, the IBO said.
“The sale of commercial property, which includes rental apartment buildings with four or more units under the city’s property transfer tax rules, has been a key to the boom and bust in transfer-tax revenues,” the report found.
Budget officials and regional transit planners have cited the trend as a driver of deficits that have forced personnel and service cuts in the city and the MTA, which has also raised fares on its subways, buses and commuter rail operations.
“Even if the economy enters into a vigorous recovery, it is unlikely that the market will support the levels of prices that were observed during the peak,” the report concluded.
--Editors: Mark Schoifet, Stephen Merelman
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