Establishes the end toxic home flipping act; imposes a tax on the transfer of certain residential properties which are sold within two years of the prior conveyance of such property; exempts certain purchases of residential properties from mortgage recording taxes; imposes a tax on the transfer of certain properties in the city of New York which are sold for one million dollars or more.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A1023A
SPONSOR: Cruz
 
TITLE OF BILL:
An act to amend the administrative code of the city of New York, in
relation to the imposition of tax on the transfer of certain properties
in the city of New York
 
PURPOSE OR GENERAL IDEA OF BILL: This bill seeks to create more
opportunity and equity in the New York City housing market for first-
time homebuyers by taxing home flipping.
 
SUMMARY OF PROVISIONS:
Section 1 provides that the title of this Act is the "protect our homes
and communities, stop predatory housing speculation act of 2023"
Section 2 amends the administrative code of the city of New York by
adding a new section 11-2120 establishing, in regard to residential
property of one to three units sold within two years of purchase, an
addition to the existing tax imposed by section 11-2102, of sixty-five
percent of the difference between the current sale price and the sale
price of the prior conveyance if the time since the prior conveyance is
less than one year, and fifty percent of the difference if the time
since the prior conveyance is greater than or equal to one year but less
than two years. No additional tax is imposed if the time since the prior
conveyance is two years or more. This section further provides that the
following persons shall be exempt from the tax imposed by this section:
(i) property owners conveying property to a family member and (ii) prop-
erty owners who can demonstrate a financial hardship which justifies a
conveyance of property is less than or equal to two years. This section
further provides that the following properties shall be exempt from the
tax imposed by this section:
(i) property conveyed following the death of the property owner, (ii)
property being sold as new housing, (iii) property for which the consid-
eration or value conveyed is less than or equal to ten percent more than
the value of the property conveyed at the time of the prior conveyance,
(iv) property conveyed to a mortgagee pursuant to a foreclosure sale,
(v) property otherwise exempt from payment of real property tax.
Section 3 is a severability provision.
Section 4 establishes the effective date of the act as 90 days after
enactment.
 
JUSTIFICATION:
New York City is facing an enormous housing crisis, fueled by COVID-19
and exacerbated by aggressive speculative investment. The pandemic has
made it especially difficult for working, low-, and moderate-income New
Yorkers to maintain housing stability as hundreds of thousands of work-
ers have lost income and are struggling to pay their rent and mortgages.
While New Ycrk families are struggling to stay afloat, real estate
investors are amassing funds in preparation for the coming land grab
when distressed properties hit the market. This bill seeks to create
more opportunity and equity in the housing market for first-time home-
buyers by taxing home flipping. Property flipping, where an investor
purchases a home and resells it for a quick profit, drives prices up for
would-be homeowners, increases property taxes, and provokes harassment
of homeowners, who are overwhelmingly :Black and Latino, in rapidly
gentrifying neighborhoods.
Flipping is lucrative for investors, who target financially vulnerable
homeowners (often seniors) and seek to dislodge them from their valuable
homes at low prices. These unwanted and sometimes deceptive solicita-
tions of homeowners are an annoyance at best, but can also involve
outright fraud, and result in the displacement of longtime homeowners.
When low-income homeowners are bought out and leave the neighborhoods,
there is a ripple effect on renters as the often affordable rents in
these properties are increased by investors looking to maximize profit.
Flipping is not the only form that speculative investment takes in New
York's small home neighborhoods: cash buyers are able to beat out
first-time homebuyers pushing even the most modestly priced homes out of
reach for families with limited financial resources.
 
PRIOR LEGISLATIVE HISTORY:
A6574 of 2021-2022. Died in Ways and Means Committee.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
This act will create revenue for the state and local governments.
 
EFFECTIVE DATE:
Ninetieth day after it becomes law.
STATE OF NEW YORK
________________________________________________________________________
1023--A
2023-2024 Regular Sessions
IN ASSEMBLY
January 13, 2023
___________
Introduced by M. of A. CRUZ, MITAYNES, MAMDANI, GALLAGHER, REYES, SIMON,
EPSTEIN, L. ROSENTHAL, RAGA, ARDILA, WALKER, FORREST -- read once and
referred to the Committee on Ways and Means -- recommitted to the
Committee on Ways and Means in accordance with Assembly Rule 3, sec. 2
-- committee discharged, bill amended, ordered reprinted as amended
and recommitted to said committee
AN ACT to amend the administrative code of the city of New York, in
relation to the imposition of tax on the transfer of certain proper-
ties in the city of New York
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. This act shall be known and may be cited as the "end toxic
2 home flipping act".
3 § 2. The administrative code of the city of New York is amended by
4 adding a new section 11-2120 to read as follows:
5 § 11-2120 Residential real property sold within two years. a. In addi-
6 tion to the tax imposed by section 11-2102 of this chapter, there is
7 hereby imposed on each deed, instrument or transaction at the time of
8 transfer whereby any properties of one to three residential units are
9 transferred by a grantor to a grantee, and such transfer is made within
10 two years from the prior conveyance of the property, including but not
11 limited to transfers which are all cash transactions and transfers of
12 property which have been rented out during such time period. The tax
13 which shall be paid by the grantor shall be at the rate of:
14 (1) sixty-five percent of the difference between the current sales
15 price and the sales price of the prior conveyance when the time since
16 the prior conveyance of the property is less than one year; and
17 (2) fifty percent of the difference between the current sales price
18 and the sales price of the prior conveyance when the time since the
19 prior conveyance of the property is greater than or equal to one year
20 but less than two years.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD00494-04-4
A. 1023--A 2
1 b. The tax defined in subdivision a of this section shall expire when
2 the time since the prior conveyance of the property is two years.
3 c. (1) The following qualified persons shall be exempt from the
4 payment of the tax imposed by this section:
5 (i) Property owners conveying property to a family member.
6 (ii) Property owners who can demonstrate a financial hardship which
7 justifies a conveyance of property in less than or equal to two years.
8 (2) The following properties shall be exempt from the payment of the
9 tax imposed by this section:
10 (i) Property which was conveyed following the death of the property
11 owner.
12 (ii) Property being sold as new housing.
13 (iii) Property which the consideration or value conveyed, which is
14 otherwise subject to the tax imposed in this section, is less than or
15 equal to ten percent more than the consideration or value of such prop-
16 erty conveyed at the time of the prior conveyance of property.
17 (iv) Property which was conveyed to a mortgagee or an affiliate agent
18 thereof by a mortgagor be deed in lieu of foreclosure or in satisfaction
19 of the mortgage debt.
20 (v) Property which was conveyed to a mortgagee or an affiliate agent
21 thereof pursuant to a foreclosure sale that follows a default in the
22 satisfaction of an obligation that is secured by a mortgage.
23 (vi) Property which is otherwise exempt from payment of a real proper-
24 ty transfer tax pursuant to this chapter.
25 § 3. Severability. If any clause, sentence, paragraph, section or part
26 of this act shall be adjudged by any court of competent jurisdiction to
27 be invalid, such judgment shall not affect, impair or invalidate the
28 remainder thereof, but shall be confined in its operation to the clause,
29 sentence, paragraph, section or part thereof directly involved in the
30 controversy in which such judgment shall have been rendered.
31 § 4. This act shall take effect on the ninetieth day after it shall
32 have become a law.