Former President Donald Trump has decamped to Mar-a-Lago in Florida to winter, but his 58-floor Fifth Avenue skyscraper in Manhattan is facing financial struggles, according to a new report.
"At Trump Tower, he had to pay $11.8 million in property taxes last year—more than twice the amount he was paying a decade ago," Dan Alexander reported for Forbes magazine. "What happened? Trump’s tax breaks ran out."
The report noted Trump refinanced in 2012, but that his tax bill since has changed significantly.
"For more than a decade, Trump had benefitted from an exemption meant for fixed-up industrial and commercial properties," Forbes reported. "That tax break, scheduled to last 12 years, started burning off at a rate of 20% annually right around the time Trump refinanced his property. As the exemption faded away, Trump’s tax bill jumped, eventually decreasing annual profits by about $2.1 million."
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The report noted that Trump's tax bill jumped higher than underwriters anticipated after its valuation was upgraded.
"From 2010 to 2012, New York City nearly doubled its estimate of Trump Tower’s value from $119 million to $232 million," the reported noted. "Like the exemption expiration, that change was scheduled to be phased into the property tax calculation over a five-year period, meaning the full effect would not take hold until 2017. The underwriters analyzing Trump Tower for the 2012 loan apparently did not factor in the increased assessment, even though it was publicly known at the time of the refinance. In 2017, Trump’s property taxes hit $10.6 million, and, according to lending records, his annual operating expenses reached $19.5 million, 59% higher than the underwriters had predicted."
The report noted Trump's profits fell from $19 million in 2014 but had fallen enough it was still under $15 million in 2020, the most recent year for which data is available.
Alexander noted Trump "refinanced the 2012 loan with San Diego-based Axos Bank to secure a fresh $100 million in February. Assuming Axos is charging a reasonable interest rate, Trump should still be making more than enough to cover his debt payments on the new loan. The future of Trump Tower, however, does not look as bright as it once did. It’s one more reason the former president might want to stay in Florida."
In her civil lawsuit against the Trump Organization, New York Attorney General Letitia James' civil lawsuit alleged, "Mr. Trump’s own triplex apartment in Trump Tower was valued as being 30,000 square feet when it was 10,996 square feet. As a result, in 2015 the apartment was valued at $327 million in total, or $29,738 per square foot. That price was absurd given the fact that at that point only one apartment in New York City had ever sold for even $100 million, at a price per square foot of less than $10,000, and that sale was in a newly built, ultra-tall tower. In 30 year-old Trump Tower, the record sale at that time was a mere $16.5 million at a price of less than $4,500 per square foot."
Read the full report.