NYC-WTC_000195490

NYC 9/11 Public Portal Document

within the MTA region. In addition, the credit provision was altered to allow taxpayers to take payments as a I deduction against taxable income rather than as a credit against liability.

The New York City mortgage recording tax dates from 1971, when the rate was set at 0.5 percent on the amount of the mortgage. In 1982, the tax was increased for mortgages securing a debt of $500,000 or more. For these large mortgages, the rate on one-, two- and three-family homes was increased to 0.625 percent; on ! / other large mortgages, the rate was increased to 1.25 percent. Half of the collections from large nonresidential mortgages were paid to the City’s general fund, and the other half was dedicated to the New York City Transit 1 Authority (NYCTA), the City paratransit system and certain private bus operators franchised by the City. f if. Effective July 1, 1989, several “loophole-closing” provisions were enacted with regard to the City and State mortgage recording taxes. The provisions: (1) permit the aggregation of related mortgages for the purpose of determining whether the higher rates apply; (2) require payment of the City’s tax if the lien of a Is mortgage recorded outside the City is “spread” to realty located in the City; (3) treat an assignment of rents,

I I"' given as security for an indebtedness, as a mortgage for purposes of the tax; (4) eliminate the practice of securing new debt under a previously recorded, but since repaid, mortgage by requiring that a certificate of discharge be issued when a mortgage has been repaid; (5) limit the “condominium credit” to initial sales of condominium units only if the first unit in the project is sold within two years from the recording date of the construction or blanket mortgage, or if the proceeds of a blanket mortgage were used to purchase the condominiuin property or, if the purchase occurred no more than two years before the declaration of the

rij t condominium; and (6) increase the rate of interest payable on underpayments and overpayments and increase nonpay ment^penalties. '1 ' S:Nf Effective August 1, 1990, the New York City mortgage recording tax was raised across-the-board by 0.5 percent. Total revenue dedicated to the general fund from both State and City mortgage taxes is based on a tax rate of 1.5 percent for mortgages under $500,000 and 1.625 percent for all mortgages of $500,000 or more. The combined City and State mortgage recording tax rates for mortgages recorded in New York City are 2.0 h,ii percent for mortgages under $500,000, 2.125 percent for residential mortgages of $500,000 or more, and 2.75 percent for large commercial mortgages. \ 1 Beginning in 1996; credit line mortgages (i.e. mortgages which allow a series of advances, repayments, i\ and readvances) under! $3 million are not subject to additional mortgage recording taxes. Previously, this

I advantage was available only to credit line mortgages on owner-occupied one- to six-family homes. Readvances under other mortgages remain taxable. ;

Forecast; The mortgage recording tax revenue forecast has been raised $44 million to $366 million in 2001, a decline of 9.3 percent from the near record collections seen in 2000 when residential real estate activity and refinancings peaked during the first quarter of calendar year 2000. As interest rates rose illliii significantly through the year, collections from such activity further slowed. Dramatic reductions in interest rates in calendar year 2001 thus far have led to an increase in refinancings. Despite this, the continuing Pi'i economic slowdown is expected to keep collections from residential transactions below the high levels seen in 1999 and 2000. Collections are forecast to continue declining through 2002 as the national slowdown is felt locally. Residential activity is forecast to rebound in 2003 through 2005, with growth of 10.0 percent, 4.7

fh percent, and 5.9 percent, respectively, as economic recovery coupled with low interest rates stimulates demand for residential mortgages.

New York City witnessed record high commercial real estate activity in 1999 and 2000. As the commercial market slows in tandem; with the national economy, collections from commercial mortgages are forecast to decline 5.3 percent in 2001. Mortgage recording tax receipts in 2002 are expected to decline 16.2 percent to $135 million as investors delay large real estate transactions until the economy resumes growth. Commercial activity is forecast to rebound in 2004, resulting in average growth in commercial mortgage recording tax collections of 5.0 percent through 2005. ; ' ! ! ' '

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NYC-WTC_000195541