Nearly a year ago, the New York Post declared that “house-flipping is destroying NYC neighborhoods.” The story was based on a report from the Center for NYC Neighborhoods, which presented data showing that unrestrained house flipping and speculation was causing numerous problems in working-class and middle-class communities, particularly in the outer boroughs. The report found that such practices both made it difficult for nonprofessional buyers to purchase homes and often led to the displacement of renters with low and moderate incomes.
Within a few weeks of the story, however, the issue was put on the proverbial back burner of the news cycle. There it remained until February 1, 2019. when State Senator Julia Salazar (D-Dist. 18) introduced S3060, which, if enacted, would impose a flip tax on all properties sold within two years of purchase. The bill specifies that it would create “an additional 15% tax on properties sold within one year and [a] 10% tax on properties sold after one year but less than two years after purchase in an effort [to] deter property speculation and flipping in vulnerable neighborhoods.”
S3060 does include several caveats that would allow owners to avoid paying the tax. The following persons would be exempt:
- Owners deeding property to family members;
- Owners who are facing financial hardships that justify their need to sell the property within two years of purchase.
The following properties would be exempt:
- Properties that are being sold within a year of the death of the owner on record;
- Properties being sold as new housing;
- Properties being sold for less than or equal to the consideration or value of such property at the time it was purchased by the current owner.
The bill is still in committee, so it is far too early to consider how likely passage is. After all, thousands of bills are introduced in each legislative session, and not all of them make it to the floor of the Senate. Given that this bill has not received much attention from the press, it’s possible that it could be forgotten and that it will fade into obscurity as the newly elected Democratic majority in the Senate focuses on other aspects of their legislative agenda.
However, it is also possible that Sen. Salazar’s flip tax could get lumped in with some of the proposed changes to the city and state’s housing laws. If that’s the case, it will be very likely that S3060 will become law.