Hoboken's Current Tax Crisis Actually a Cakewalk

A major cost of carry for real estate is the property tax portion among the payables. In Hoboken, we are looking down the barrel of a bazooka! The city's fiscal irresponsibility combined with the state and federal budgetary levels is going to make the eventual assessments - over a few years - on Hoboken properties astronomical. The implication is directly fed into property price impact. Look forward (not current or behind) in assessing valuations. This issue alone will place (at least) a 15% haircut on $1 mio+ condos in the city.

I will discuss some asking price expectations at our favorite poster child for real estate in Hoboken in an upcoming blog. You will quickly discover that RE.ality is nowhere on sellers' minds. The result? Real estate agents being laid off and offices being moved or just closed outright.

Bloomberg reports that: "Wall Street's mortgage losses have grown so large that some firms may pay little or no taxes for years, widening New York City and state deficits and challenging their ability to provide services," Mayor Michael Bloomberg said.

Some companies are seeking refunds from the city on taxes they paid ahead of time, saying losses have cut their tax liability to zero. The banks pay tax on 110 percent of earnings in advance as a "safe harbor,'' protecting against penalties for underpayment.

"It will be a number of years before Wall Street starts paying taxes again,'' the mayor said at a press conference yesterday in Manhattan. "They will carry forward all of those losses.''

Financial firms posted $501 billion in writedowns and credit losses worldwide since the start of last year, a figure the World Bank predicts may rise to $1 trillion as the credit squeeze sparked by the subprime market collapse worsens. The tax drain is particularly serious in New York, where Wall Street accounts for 20 percent of state revenue and about 9 percent for the city, state Comptroller Thomas DiNapoli has said. (emphasis added).