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NYC's Property Tax Giants

• David (Viacheslav) Davidenko

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We explore the staggering world of NYC's top property taxpayers, revealing how Qatar's former emir pays nearly $1 million annually in property taxes while examining the racial inequalities and systemic issues within the city's outdated tax system.

• Luxury property tax bills reach astronomical heights with Qatar's former emir paying $984,000 and Ken Griffin paying over $860,000 annually
• Single-family homeowners typically pay less than 1% of property value in taxes, while multi-unit buildings face rates of nearly 4%
• Property tax rates in predominantly Black communities are almost twice as high as in majority white neighborhoods
• A 2017 lawsuit challenging NYC's property tax system has been revived by the Court of Appeals in 2024
• Manhattan's luxury real estate market shows remarkable resilience with sales jumping 30% and average prices for the top 10% hitting a record $10.3 million
• Even at the highest levels, real estate can be precarious, as shown by top broker Tal Alexander facing eviction from his luxury apartment

How will New York City value its most precious resource—its real estate—in the years to come? It's a question that impacts everyone from penthouse owners to residents of rent-stabilized apartments.

📰 Read more about this topic in our latest article:  https://sunrisecapitalgroup.com/who-are-the-highest-property-taxpayers-in-nyc/

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Speaker 1:

Ever look up at those like crazy tall buildings in New York City and wonder who on earth can afford to live in those places?

Speaker 2:

Right.

Speaker 1:

Well, today we're diving into something that's kind of related to that. We're looking at the biggest property taxpayers in NYC.

Speaker 2:

Oh, interesting.

Speaker 1:

And it's not just about seeing like huge numbers and being shocked. This is really going to give us a glimpse into how the city's tax system actually works, how the real estate market in New York is just so unique and, honestly, it raises some pretty big questions about economic inequality.

Speaker 2:

Makes sense. When you're dealing with the absolute top tier of real estate, you're going to see some pretty stark contrasts.

Speaker 1:

Exactly so. We've got some great sources for this deep dive. We're looking at recent property tax data, some reports from major real estate firms and this really fascinating study from the Community Sermon Society and the Progress and Poverty Institute.

Speaker 2:

Oh, I'm familiar with their work. They do some really in-depth analysis on economic disparities.

Speaker 1:

Exactly, and their findings are definitely going to play a big role in our discussion today.

Speaker 2:

I'm ready to dive in.

Speaker 1:

Okay, so the first thing you have to wrap your head around is just how much money we're talking about here For the 2024-2025 tax year. The figures are I mean, they're mind-blowing.

Speaker 2:

Oh yeah, the numbers get pretty astronomical when you're dealing with these ultra-luxury properties.

Speaker 1:

Like. Take Ken Griffin, the hedge fund billionaire. He's facing a property tax bill for his place at 220 Central Park South. Wait for it over $860,000.

Speaker 2:

Wow, and that's not even the highest one, right?

Speaker 1:

No, that's just to get us started. The top spot, believe it or not, goes to Qatar's former emir.

Speaker 2:

Okay, I'm intrigued. How much are we talking about here?

Speaker 1:

Brace yourself. His property on East 72nd Street just this year racked up a property tax bill of $984,000.

Speaker 2:

Almost a million dollars on just property taxes.

Speaker 1:

Just to put that into perspective, our source pointed out that if you combine the taxes from just these two properties, that money could fund the salaries of like a whole bunch of public school teachers.

Speaker 2:

Or you could probably fix a good chunk of the city's crumbling infrastructure. It really highlights the sheer scale of wealth concentrated in these properties.

Speaker 1:

Totally. I mean, it makes sense in a way Higher property value equals higher taxes, but it's still wild to think about, you know.

Speaker 2:

It is and it speaks to a whole other level of real estate ownership. The source uses this great term. They call them real estate trophies.

Speaker 1:

I like that.

Speaker 2:

Because these properties are so valuable, even though the tax bills are huge, they might actually represent a smaller percentage of the property's overall worth compared to, say, a typical family home.

Speaker 1:

That's a great point and it actually leads us to something really interesting, the source brought up. For most New Yorkers who own homes you know one to three family houses their property tax rate is surprisingly low.

Speaker 2:

Oh, that is interesting. How low are we talking?

Speaker 1:

Well, according to that study we mentioned from the Community Service Society, it's often less than one percent of the property's value.

Speaker 2:

OK, that makes sense. It's designed to be manageable for everyday homeowners, but what about larger buildings?

Speaker 1:

That's where things get a little well complicated.

Speaker 2:

I'm guessing the tax rates go up.

Speaker 1:

Yeah. So for buildings with 10 or more apartments, those multifamily developments, the tax rate jumps to almost 4 percent.

Speaker 2:

Wow, that's a significant difference.

Speaker 1:

And the source makes it clear that this higher tax burden falls on the landlords, not directly on the individual renters.

Speaker 2:

But it does make you wonder about the ripple effects. Right, If landlords are paying higher taxes, couldn't that translate into higher rents for tenants?

Speaker 1:

It's a valid concern and it raises some of the big questions the source itself asks why is a city like New York you know, a global center of finance and innovation still using a property tax system that's basically from like 50 years ago?

Speaker 2:

It's a bit of a head scratcher, isn't it? And you have to wonder about the impact of that system on housing affordability, especially for people in lower income communities.

Speaker 1:

Totally. And then there's another layer to this whole thing, something that really jumped out at me from the study.

Speaker 2:

What's that?

Speaker 1:

The issue of racial inequality in property tax rates.

Speaker 2:

Oh, wow.

Speaker 1:

Yeah, the study found that, on average, property tax rates in predominantly black communities are almost twice as high as in majority white communities.

Speaker 2:

That's a huge disparity.

Speaker 1:

It's shocking, honestly, and it suggests there might be some really deeply rooted problems within the city's assessment and taxation system. You know historical factors that have led to this imbalance.

Speaker 2:

It definitely raises concerns about systemic bias and its impact on communities of color.

Speaker 1:

And it's not something people are just ignoring. The source mentioned a lawsuit from back in 2017 that's challenging the entire structure of NYC's property tax system.

Speaker 2:

Hmm Interesting.

Speaker 1:

And get this. The Court of Appeals just revived that lawsuit this year, in 2024.

Speaker 2:

So it's still very much a live issue. What are the main arguments in the case?

Speaker 1:

Well, the lawsuit is basically saying that the current system is unfairly hurting minority homeowners, and the fact that the court is allowing this to move forward, it suggests that there could be some major changes coming.

Speaker 2:

That's a significant development. Legal challenges like this can really force a city to reevaluate its policies.

Speaker 1:

For sure, ok, ok. So let's shift gears a bit, but we're still in the world of high end real estate. One thing the source highlighted is how resilient the luxury market in New York City is.

Speaker 2:

Oh yeah, it seems like no matter what's happening in the rest of the economy, the top end of the Manhattan market just keeps chugging along.

Speaker 1:

Exactly, it's like its own little world. Even when other sectors might be struggling, you still see these crazy deals happening at the very top.

Speaker 2:

Yeah, like Billionaire's Row never seems to slow down.

Speaker 1:

No kidding, the source gave a couple of recent examples. There was this penthouse at 111 West 57th Street, one of those super tall, skinny buildings. It just sold for $56 million. Wow, sold for $56 million, wow. And then, almost right after that, another penthouse in the same building they're calling it a Sky Mansion went on the market for $110 million.

Speaker 2:

Four stories in the sky.

Speaker 1:

I can't even imagine. Right, and it's not just anecdotes. The data backs this up. A report from Douglas Elliman and Miller Samuel, these big real estate firms show that luxury home sales in Manhattan jumped by 30 percent in the fourth quarter compared to the year before.

Speaker 2:

That's a big increase.

Speaker 1:

And the average price for the top 10 percent of the market. Are you ready for this? It hit a record high for the borough 10.3 million dollars.

Speaker 2:

So on one hand, you have this ongoing concern about housing affordability for most New Yorkers and on the other hand, you have this like parallel universe of extreme wealth where people are dropping tens of millions on apartments.

Speaker 1:

It's wild, right, it's like two totally different realities existing in the same city. But here's where it gets really interesting. The source throws in this cautionary tale a reminder that even at the very top of the real estate ladder, things aren't always what they seem.

Speaker 2:

Oh, I'm intrigued. Who are we talking about?

Speaker 1:

This guy Tell Alexander, he was the top real estate broker lived at 432 Park Avenue, another one of those super luxury buildings.

Speaker 2:

Oh, I know that building.

Speaker 1:

Yeah, well, he actually ended up facing eviction from his unit.

Speaker 2:

Really Wow. Even at that level things can fall apart.

Speaker 1:

Exactly. It shows you how fragile that image of ultimate real estate success can be. And now that same apartment is up for rent for get this $55,000 a month $55,000 a month.

Speaker 2:

That's more than some people make in a year.

Speaker 1:

It's mind-boggling and it brings us back to the whole issue of the property tax system in NYC. With these crazy high bills at the top, the disparities across different types of properties and these legal challenges, it seems like the whole system is under a microscope right now.

Speaker 2:

It's definitely at a crossroads.

Speaker 1:

For sure. So our deep dive today started with this seemingly simple question who pays the most property taxes in NYC?

Speaker 2:

Right.

Speaker 1:

But we ended up going so much deeper, talking about wealth, inequality and the very foundations of how this city operates.

Speaker 2:

Absolutely. It's a topic that touches on so many aspects of life in New York.

Speaker 1:

Totally, and it leaves us with some big questions. Will the city actually change its property tax code? What will happen with these lawsuits, and how long can this boom at the very top of the market really last?

Speaker 2:

And maybe the biggest question of all thinking about all these disparities and the way things are going, how will New York City value its real estate in the future?

Speaker 1:

That's something for everyone listening to ponder. How will this city, with all its complexities and contradictions, define the value of its most precious resource in the years to come?

Speaker 2:

It's a question that impacts all of us who call this city home, from the penthouses to the brownstones, to the rent-stabilized apartments.

Speaker 1:

It's the story of New York, always evolving, always in flux.

Speaker 2:

And it'll be fascinating to see how it all unfolds.

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David (Viacheslav) Davidenko

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