NYC-WTC_000195490

NYC 9/11 Public Portal Document

][sr Legislation further expanded the base beginning in 1987 by including transfers of a majority interest in an entity which owns real property in New York City (the “Pan Am” tax). Only the value of the property is taxable, not the value of the entire interest. This change was enacted to prevent avoidance of the tax when a transfer takes place but formal [ownership of the property remains unchanged. Initial transfers of cooperative SU apartirient units and all transfers of cooperative apartment units used for business purposes were also made subject to the “Pan Am” tax, ) ' ' [ ' [ In August 1989, general fund revenue was increased by raising the transfer tax rate from 1.0 percent to 1.425 percent for commercial transactions of $500,000 or less apd residential transactions of more than $500,000. For commercial sales with consideration greater than $500,000, the tax rate rose from 1.0 percent to 1.625 percent., The same legislation expanded the tax base to include resales of residential cooperative I apartihents, the remaining category of untaxed cooperative transactions. ■' ' ./ ■ y ' /

Jn June of 1994, a State law was passed which provided a temporary 50 percent reduction in the rate of the real'property transfer tax for certain transfers to newly organized Real Estate Investment Trusts (REITs). This provision is now permanent. In addition, a 50 percent reduction is applicable to transfers to pre-existing si!' REITs occurring between July 13, 1996 and August 31, 2002, provided the transferor receives and retains for at least two years an ownership interest in the REIT. Starting July 1, 1997, a deduction on the real property 11! transfer tax payable on the transfer of a one- to three-family home, or an individual residential co-op or condo unit, is allowed'for the amount of any mortgage assumed by the transferee.

I' Forecast: The real property transfer tax revenue forecast has been raised $22 million to $439 million in 2001, a decline of 9.2 percent over 2000. The decline in collections is mostly attributable to a slowdown in commercial real estate activity. Collections from commercial transactions ate forecast to slow to $170 million in 2001, a decline of 18.6 percent from 2000’s record highs. This slowdown parallels the national economic slowdown and follows the increases in interest rates beginning in the third quarter of calendar year 1999 through the third quarter of calendar year 2000. Real property transfer tax revenue from residential activity is expected to reach $269 million in 2001, down only 1.8 percent from the record high levels of 2000. Collections from residential activity are expected tp fall in 2002 to $246 million, a decline 8.5 percent, and (ii: then rebound in 2003 as economic conditions stabilize and improve. Commercial real estate activity is [hi forecast to decline even further in 2002 as businesses scale back their investments in expensive commercial & real estate. Both cbmmercial and residential real estate transaction activity is expected to pick up slightly in hi 2003 as interest rates remain low and the national economy continues to improve.

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NYC-WTC_000195543