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The co-op apartment on New York’s exclusive Park Avenue at 70th Street is fit for a billionaire: 14 rooms with five maids’ rooms and a 37-foot gallery.
According to The New York Times, city assessors value the palace at a minuscule $750,000.
Worse, says the Times in an article this past Sunday: While property tax assessments across the city rose more than 9% over the past year, assessors cut 12% from the official market value of the building housing the co-op, 720 Park Avenue.
According to the Times, some people who own dinky houses near Kennedy Airport pay three times the effective tax rate of some people on Park Avenue.
Unjust assessments aren’t just a New York City problem, of course. Most of the time, wherever they occur, they’re the outcome of an imbalance in political power. In the case of 720 Park Avenue, the New York state Legislature tried to keep taxes on co-ops and condos low by requiring that they be taxed as if they were rental buildings. (And “comparable” rental buildings near 720 Park Avenue have low taxes.) Then it went one better by giving individual co-op and condo owners an abatement of 17.5% to 25% off their tax bills.
This is how the rich get richer.
BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.