Reactionary taxes like this have a tendency to be ill-considered and have unintended side effects.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.
You're comparing the wrong numbers. The question is what 1% of the purchase price does to the amount you need for your down payment and fees. On a 10% down payment an extra 1% increases the amount you need by 10%. Remember that while a million dollar home sounds extravagant, it's first time buyers who often have just barely enough who are trying to buy these.
Even in worse case scenario, which this isn't, the affected persons would at most try to cheat the system. This proposal is really narrow to non-primary residences, that are also very valuable. None of which will affect 99.999% of the population.
they way to “handle” this is to stop viewing housing as “investment” - especially short-term investment. once you do that, you are good. when you buy you will consider all the implications of that decision and then you can live with it when you need different housing
whether something is an investment or not is not a subjective opinion, but an objective fact.
If it takes effort, capital and time/labour to create, it's an investment, because such resources have alternative uses.
Just because this cost have been paid as a lump sum in the past (for constructing a building and/or buying the land etc), doesn't mean that cost is now sunk and is "lost" - it is, and must be, recouped in the future, otherwise the initial cost will not make sense to have been spent, and said investment would not be made and the world would now have one less of it.
Food is obviously not comparable (you must consume it and only s*t is left over).
Cars depreciate quickly becase they wear out in the timespan of a couple decades. You can keep them going longer but it's a labor of love, not really economically worthwhile.
Housing is completely different. Absent some disaster (fire, earthquakes) it will last centuries with just basic routine maintenance. Given that inflation is a perpetual constant, something that lasts that long can't possibly not appreciate, it inevitably must.
With all due respect I am not sure how you can write this with a straight face. You premise is that "something that last long can't possibly not appreciate"?? I am sure you can find myriad of examples where this simply does not hold water.
The housing is artificially inflated and you are one administration away (e.g. see current one for the kind of power we experience in 'democracy') from having your "investment" worth a lot less than you think it is. Why do you think you and I are able to deduct mortgage interest but when I charge my credit card for gambling, hookers and cocaine (a lot more enjoyable than housing) I am unable to deduct my 29.99% interest on my Visa?! What about "villas for 1 euro" that you can buy throughout say Italy? some of them are older than our country is and I am not sure you'd be happy with your "investment" if you bought it in 1999 but you know, "something that last that long can't possibly not appreciate, right?!"
> You premise is that "something that last long can't possibly not appreciate"??
Not "something", housing. A pebble may last billions of years and not appreciate, but we're talking housing.
Yes housing which last a very long time cannot help but appreciate because we always have inflation. The only exception is what you identified, if the town has an economic collapse. Then, sure, nobody wants to live there. Detroit of the past being the typical USA example.
Looking at records my house cost ~$90/sqft to build. Today the exact same house on the exact same lot would cost about ~$500/sqft to build on the low end if you can find the labor, but probably closer to ~$650/sqft if you want to get it done this year.
So of course the older equivalent houses in the neighborhood will match in price to the new construction. Anything else would be impossible.
If you disagree, explain by what mechanism the old house wouldn't do that?
the investment for a car is in the manufacturing facility, similarly with food. While there's a consumption component to both, it's the same as a house - it's an investment to build it, and it produces shelter (which would be the equivalent of the food from the investment in a farm).
Golly gee willikers, not the spooky potential for possible side effects! Wouldn't want any of those when we could have gigantic sucker-punch scarcity-amid-plenty instead!
Taxes = theft is one of the most tired, low-brow, and intellectually lazy viewpoints ever.
We all understand the concept of commons. We all understand the concept of money pooling. Don't pretend it doesn't make sense or it's evil when most people pay for private insurance anyway or even fucking Claude Code subscription plans which follow the same concept.
meanwhile they’re scheming against you to see how much you’re willing to pay before you can’t afford to eat anymore just to buy that extra home. it’s an absolutely beautiful thing. they deserve it all and rightfully so!
This kind of talking point is reiterated ad nauseam, but never justified or backed by any empirical research.
I'll state one simple thing: if America is unable to raise taxes on second homes over $5M in Manhattan by 1% then this country is well and utterly fucked. The 1% are paying less taxes than anyone else in this country while hoarding the majority of the wealth. Homelessness is skyrocketing, debt levels are through the roof, but god forbid we raise the tax on second homes over $5M by 1%.
NY also has a 1% penalty on paying more than $1 million for housing, which was probably enacted to proletariat applause when $1 million was still considered a lot of money. Now it distorts the value of entry level housing in NYC, where you'll have a hard time finding anything more than a studio apartment for $1 million. High closing costs and similar distortions mean people tend to lose money on housing in NYC unless it's held for many years.
$5 million is expensive enough that this probably won't add much housing stock in the short term. Still, politicians never seem to think through the consequences of headline-grabbing tax policies.