September was the harshest month yet for real estate tax revenues.
According to the pandemic, the number of transactions fell and according to a report published by the New York Real Estate Council on Thursday, the city and state coffers of vital revenues were exhausted.
Overall, the city and state lost $ 755 million in tax revenue this year, down 42 percent from last year. Tax revenues are responsible for 53 percent of the city’s operating budget, making this sharp decline a major cause for concern.
The largest decline was in office sales, which fell from $ 1.5 billion in September 2019 to $ 641.9 million in September 2020 – a 56% loss, according to the report. The size of each transaction, which can easily expand to hundreds of millions of dollars, offers unexpected events in good times. But when the market shuts down, the effect is just as pronounced in the opposite direction.
The decline in residential real estate investment and sales – both down 47 percent from the same period last year – resulted in a corresponding 36 percent decline in real estate transaction tax, which is approximately $ 62 million.
The number of residential transactions fell by 52 percent in September from the same period last year, while investment sales recorded only 91 fewer transactions during the same period.
But these missed investment sales could cost the public a $ 50 million revenue loss, while a change in residential transactions represents a smaller loss of $ 12 million.
Total tax revenues from the sale of investments fell by 48 percent in September this year compared to the previous year, while sales of residential real estate fell by only 18 percent in the same period.
Apartment sales fell 31 percent over the same period, from $ 1.1 billion to $ 779.2 million.
However, transaction revenues are only one part of the real estate tax pie. Property taxes, New York’s largest single source of revenue, rose 3.9 percent to $ 16.3 billion from March to August, according to Bloomberg News.
As a result, the city’s tax revenue fell 3.5 percent from March to August compared to the same period last year, a smaller decline than expected. Meanwhile, Mayor Bill de Blasio’s office has he swore raising property taxes as a way to fill the budget gap created by the pandemic.
There is one clear point: transaction sales rose 13 percent in September from the previous month, suggesting a recovery may be under way.