With ‘flip tax,’ a push to save affordable homeownership
Homeowners united with housing advocates and local officials on the steps of Brooklyn Supreme Court this week to unveil a set of principles aimed at preserving affordable homeownership, including a measure that would tax any investor looking to make a quick buck on the borough’s booming real estate market.
“The Homeowner Bill of Rights” was unveiled on Tuesday by the Coalition for Affordable Homes. It calls for state passage of legislation including the Small Home Anti-Speculation Tax — which imposes a 15 to 20 percent tax on property that is transferred to a new owner within two years of ownership. The revenue that is raised through this tax will then be used to finance affordable housing efforts through the state’s Homes and Community Renewal program.
“We really want to emphasize how important it is for real people in neighborhoods to own homes in New York. Our homes and communities are for families and not investors,” said Christie Peale of Center for NYC Neighborhoods. “We are calling on the state and city electeds to make sure that our communities are for long-term investment by families and not short-term extraction by investors.”
The legislation aims to temper the sweeping gentrification that is running rampant through traditionally black and Latinx communities. In Brooklyn, that wave has hit seniors in the Central Brooklyn neighborhoods of Bedford-Stuyvesant, Flatbush and East New York the hardest.
“If they are going to flip property in our neighborhoods, well then flip that money back into our community. I just heard of a senior citizen in Bushwick who was tricked into signing over her property for $500,000 get her property flipped for a million,” said Al Scott, chairman and CEO of The Homeowners Association Inc. and an East New York homeowner. “Today we are taking a stand in protecting generational wealth. We are fighting to stay and remain.”
Advocates are hoping the tax will preserve homeownership for local residents who can become financially unstable when property values skyrocket at a faster pace than their incomes. This can lead many to fall into foreclosure or into the city’s embattled Third Party Transfer program, which seizes property for unpaid city taxes.
Tax rates change every year and are calculated as part of the assessed value of a building. The state’s property tax system has been scrutinized in recent years and months for its inequities and imbalance across neighborhoods. Nearly a third of the city’s annual revenue comes from real property levies, according to Gotham Gazette.
The speculation tax was first introduced in 2017 by Assemblymember Erik Dilan, who represents parts of Bedford-Stuyvesant, Bushwick, Cypress Hills and East New York, a majority black and Latinx community.
“Let’s take these guys right out of business so that our people can have a place to own and our people will have a place to live,” said Dilan at a recent rally. “I’ve fought hard every year for the ‘flip tax’ … I want to see it passed this year.”
A city commission is currently looking at possible reforms to the outdated property tax system. The commission, which launched in 2018, is examining how property values are assessed to provide relief for vulnerable homeowners and soliciting input from the public and specialists on changes to the system.
Earlier this year, the state passed a collection of tenant protections in a bid to shield for renters across the state. But the package left out homeowners struggling to keep hold of their small family buildings.
“We haven’t forgotten homeowners,” said State Sen. Brian Kavanagh, chair of the senate housing committee. “We want to make sure homeowners are a very important part of our affordable and stable communities.”
Update (Nov. 14 at 10:20 a.m.): This article has been updated to reflect the correct spelling of Christie Peale’s name.
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