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It’s been dubbed the “world’s richest apartment building,” but residents of Park Avenue’s most exclusive co-op are enjoying more than just bragging rights — they’re also paying a pittance on their property taxes.
Thanks to a little-known quirk in the tax laws, 740 Park Ave. and other older, luxury co-ops are being assessed at a fraction of their worth.
The legendary 740 — an architectural wonder that’s housed everyone from a young Jackie Bouvier to the Rockefellers to fashion designer Vera Wang — is assessed at just $63,354,000 on the city’s tax books.
In 2007, one of the building’s 32 units sold for $23 million.
In a telling example of how out of touch the assessment system is, the city has 740 Park Ave. valued at almost the same as 333 E. 56th St., a few blocks and a million miles away in social status. That rental-apartment building — where a one-bedroom goes for $3,000 a month — is valued at $62,212,000.
There’s no such thing as a one-bedroom at 740 Park Ave., the subject of the 2005 book “740 Park: The Story of the World’s Richest Apartment Building.”
The city’s valuations are so out-of-whack that some fancy co-op buildings are assessed on the tax books as less than the cost of single unit. In 2010, the city assessed 778 Park Ave. at $25.7 million. That same year, a single unit there sold for $26 million.
The low assessments on older co-ops mean their wealthy residents — who as joint titleholders of the building divide the levies among themselves — are getting an incredible deal on their property taxes.
“There’s an inequity in the system,” said Michael Slattery, senior vice president of the Real Estate Board of New York. “Older co-ops, particularly high-end co-ops, are paying a fraction of what their market value is.”
Sale price isn’t a factor for assessing the tax bill on co-ops. Instead, the city taxes co-ops under a formula that compares them to residential apartment buildings. That formula looks at income that a rental building generates.
Since co-ops don’t bring in rental income, the city estimates how much they would have generated by comparing them to rental buildings around their age, size and location.
A state law requires the city to assess co-op buildings built before 1974 as if they were rent-stabilized buildings.
So some of the world’s richest residences are being valued like old rent-stabilized buildings — which are saddled with low-paying tenants and not generating that much money — for their tax assessment.
Meanwhile, owners of these pre-1974 luxury co-ops are paying less taxes because of the low assessment. The average luxury co-op owner is paying around $7 to $10 per square foot in taxes, while a luxury-condo owner pays about $18-$25 per square foot.