From the Wall Street Journal:
The commercial-rent tax applies when any commercial tenant below 96th Street pays $250,000 or more in annual rent. The effective tax rate is 3.9% of the yearly rent. A handful of exemptions include nonprofit organizations and tenants in the World Trade Center area.
A bill co-sponsored by Council members Daniel Garodnick and Helen Rosenthal, both Manhattan Democrats, would raise the threshold at which the tax kicks in to an annual rent of $500,000. At the same time, it would raise the effective tax rate on businesses paying annual rent of $3 million or more, gradually increasing it to 4.2% when the annual rent hits $4 million.
In the 2014 tax year, there were 2,476 businesses paying rent between $250,000 and $500,000. If passed, the annual savings for a company paying rent in the middle of that range would be over $14,000. These savings will most likely be handy next year, when rent is expected to increase due to low supply. According to Cushman & Wakefield, New York City is the third most expensive city for office rent in the world, with average occupancy costs at $131 per square foot annually.
With the tax burden being shifted to those paying higher rent, this move is unlikely to net any significant job growth. The aim is to keep some of the local stores in business, rather than being replaced by national chains who can usually afford the commercial-rent tax.
The bill is planned to be introduced by the end of this month.
Cheers,
Dan B.
