Columbia University Libraries Digital Collections: The Real Estate Record

Real estate record and builders' guide: [v. 92, no. 2370]: August 16, 1913

Text version:

AND NEW YORK, AUGUST 1(),1913 illllillllllllllillilllllilillliiililillllllllillilllllililll^^^^^^^^ FOR TRUE CONSIDERATION IN TITLE DEEDS m The President of the Tax Board Says Concealment of Actual Prices Operates to Detriment of the Business of Real Estate Brokerage—Tax Exemption Evils Bilillillllllllillllillliliiiililliliii lilKjSiliiliilllllllllB^^^^^^^^^^ » WHEN land is overvalued by the Ta.x Department it is generally be¬ cause of a downward change of the con¬ ditions of the neighborhood, in the view of President Lawson Purdy of the board of commissioners. For example, he re¬ fers to a change which has come over Broadway north of Duane street. "Even in this section it is believed by competent real estate men that the depreciation of the section is largely due to the failure of owners to replace their obsolete buildings with modern improvements," says Mr. Purdy. "Thc tenants of this district were induced to move by the better accommodations offered them elsewhere. In such a case any complaint is general notice to the department that the whole section needs careful scrutiny and that reduction in the particular case will involve reduc¬ tion in many adjoining cases. "Consideration of this subject would not be complete without mentioning the fact that when assessments are compared with actual values, or with prices, the assessments are, as a rule, fully a year old and were based on the evidence of the preceding year." True Consideration. In the annual report of the Tax De¬ partment just issued, and to which some reference was made last week in the Record and Guide, the difficulty of set¬ ting a true value upon real estate is used as an argument in favor of a law that would require a statement of the true consideration in deeds: During the last twenty-five years the practice of inserting a nominal consid¬ eration in deeds has become so universal that only about one deed in twenty con¬ tains the actual consideration for trans¬ fer. This custom conceals ninety-five per cent, of the best evidence of the value of real property; it operates, as is claimed, to hurt the business of real estate brokerage, by causing a well-J grounded fear on the part of investors that they will be deceived as to the value of real estate. Any practice which checks the diffusion of real estate own¬ ership is a detriment to the community. Concealment of Prices. The concealment of the actual prices paid for real estate forces the depart¬ ment to waste much valuable time in a hunt for what ought to be a matter of record. Sometimes deputies are de¬ ceived and suppose that the considera¬ tion was greater or less than it really was. If they had all the considerations for actual sales, those that were at pe¬ culiarly high or low prices would stand out from the rest and would be discredi- ited as evidence of value. It is rather an extraordinary fact that whereas the price of real estate is the most important price to know from the standpoint of taxation it is the most in- HON. LAWSON PURDY. President Board of Tax Commissioners. accessible price to obtain. Stocks and bonds are quoted daily on the Stock Ex¬ change. On the Produce Exchange we have daily quotations of all kinds, of produce; the IVIetal Exchanges give us the prices of metals. Inquiry at any retail store gives actual prices of every conceivable kind of goods. Practically the only price that is today concealed is the price paid for real estate. Real Estate Men Favor It. In 1911 and 1912 the New York State Conferences on Taxation recommended a bill to require an affidavit setting forth the true consideration for every trans¬ fer of real estate. In 1913 a bill having the same object was introduced in the Legislature, which attempted the same result by penalizing the record of a deed which does not contain a state¬ ment of the actual consideration. The principle of these bills was endorsed by Judges Giidersleeve, Brady and Ford. Also by Mr. Seth Lov/ and Mr. James L. Wells, a former president of the Tax Department under Mayor Low; by Mr. Feitner, another president of the Tax Department, and by Mr. William R. Will¬ cox, recently president of the Public Service Commission, and by the late Mr. Edward M. Shepard. Men well known for their knowledge of real es¬ tate have given their hearty approval of the form and principle of tlie bill, among tlicm being Charles S. Brown, Robert E. Dowling, Francis E. Ward, John L. Parish, Joseph P. Day and Seth B. Robinson. City officials charged with the duty of acquirinjr property for the city have ap¬ proved thc bill, namely, former Comp¬ troller Herman A. Metz and Mr. Coler. former President of the Borough of Brooklyn. Bills have been introduced to carry out the principle contained in this bill in the states of Wisconsin, Illinois, Con¬ necticut, Colorado, Arizona, Pennsyl¬ vania and the District of Columbia. Ta.x commissioners approve of the measure on sight. The ta.x commission of Vir¬ ginia, including among its members the Governor and the Lieutenant-Governor, recommended the passage of a similar bill to the one introduced into the New York Legislature, as has the royal com¬ mission on ta.xation of British Columbia. Exempt Real Estate. A table is presented in the annual re¬ port analyzing the assessed value of all exempt real estate into about fifty sep¬ arate classes, with a comparison of the years 1910, 1911, 1912 and 1913. This table shows the assessed value for 1913 in the aggregate as follows: United States ............ $65,957,400 State of New York........ 3,955,075 City of New York......... 1,355,164,450 Educational, religious and other exempt institutions. 371,543,528 Total .................$1,796,620,453 Commenting on the foregoing. Com¬ missioner Purdy says: "From time to time persons who ought to know better get very much ex¬ cited over the fact that in the city of New York there is exempt from taxation eighteen hundred million dollars' worth of real estate. The fact is that only about one-fifth of this amount is prop¬ erty not belonging to the city, state or nation. The total exemption for re¬ ligious, charitable and other like pur¬ poses is $371,543,528. There is room for reform of the section of the law which confers these exemptions, and we would welcome thc day when intelligent people will seriously undertake this re¬ form. Full of Difficulties. "Wlicn they do undertake it they will find that the whole subject bristles with difficulties. They will probably conclude that thc repeal of all such exemptions would be unwise and grossly unfair, be¬ cause for one reason religious, charitable and educational institutions have been built up with the confidence that their real property would be exempt from taxation. In some cases contributions have been made to them upon condition that the real property should be exempt from taxation. To deprive all such in¬ stitutions at one sweep of the exemption to which they have been accustomed would produce wreck and ruin that very few persons could contemplate with any satisfaction. Practically every critic of exemptions of this character makes ex¬ ceptions when he contemplates thc repeal of exemptions. "In the course of years abuses have crept into the statute which do in fact call for amendment. Let no one, how-