The Lower Cost of Green Initiatives: New City, State and Federal Incentives

If your building has been considering installing a solar energy system, now is the time to put that plan in to action. Newly expanded incentives, including City property tax abatements, Federal and State accelerated depreciation, Federal tax credits, and NYSERDA grants, can make these efforts truly affordable going in, and can significantly reduce your payback period.

At one of DEPM’s managed properties, the owners were interested in the environmental benefits of installing solar panels on the roof. They also wanted to know what financial incentives were available for such a project, and what the payback of the investment would be. Management contacted Solar1, a non-profit organization promoting conservation through solar energy, who provided a free feasibility study for installing solar panels. After reviewing the results of the report, the owners decided to solicit bids, choose a contractor, and move ahead with the project.

The decision was made to install panels on several buildings in the complex. The initial cost of the installation will be reduced by over 80% after all the incentives are received, including a four-year City property tax abatement, Federal and State accelerated depreciation, and a state-funded discount on the purchase price. The complex expects to achieve payback on the investment in just three to four years

Installing solar panels will provide the owners with an estimated net savings of $1.1 million over the system’s 25-year life. The solar panels installed on these eight buildings will provide approximately 40% of the development’s common area electricity, reducing operating expenses and increasing net operating income. In addition, the installation will eliminate an estimate 5 million pounds of carbon dioxide emissions; according to the EPA, that’s the greenhouse gas equivalent to planting more than 59,000 trees!

Multifamily Solar Array

In addition to reducing operating expenses and providing tax benefits to the property and unit owners, this solar project will provide tremendous environmental benefit. Photo courtesy of Solar1

 

Co-op/Condo Tax Abatement Deadline Approaching Fast

DEPM has submitted to the NYC Dept. of Finance information on all new unit purchases that occurred in 2016 through January 5, 2017 for our co-ops and qualifying (ie: non-421a) condos. Now is the opportunity for any unit owner whose resident status has changed to primary and currently meets the requirements for the tax abatement program to update their status.
If you feel that your unit should have received the abatement in 2016 but did not, please contact your Account Executive in writing, phone or email as soon as possible and we can submit the corrected information on your behalf. The deadline for making changes to your apartment status for the 2016/17 benefits is February 15, 2017 and for 2017/18 benefits the deadline is March 31, 2017. Please visit the City’s website at nyc.gov/ccabatements for more comprehensive details on this program.
In addition, there have been some changes in the STAR abatement program. New applicants who qualify for Basic or Enhanced STAR should now register with New York State instead of applying with the NYC Dept. of Finance and will receive their STAR credit in the form of a check rather than a property tax abatement.The STAR hotline number is 518-457-2036. Or visit the City’s STAR info page at on.nyc.gov/2k9MmJZ

Are You Eligible for a Real Estate Tax Abatement?

We are beginning our annual Co-op Tax Abatement filing for 2016/2017, and are submitting data on all of our new shareholders who purchased from January 6, 2015 to January 5, 2016. This is also an opportunity for any shareholders whose resident status has changed to primary and currently meet the requirements for New York City’s co-op tax abatement program. Any shareholders who feel that the City’s Department of Finance erred in declaring their unit ineligible for the abatement can also reapply at this time. Please contact your Account Executive in writing stating that your unit is your primary residence as of January 5, 2016, and we will submit your information. The filing deadline is February 15, 2017. For more information visit http://bit.ly/cooptaxbreak
In addition, there have been some changes in the STAR abatement program. New applicants who qualify for Basic or Enhanced STAR will now register with New York State instead of applying with the tax assessor, and will receive a STAR credit in the form of a check, rather than a property tax abatement.
New applicants who qualify for Enhanced STAR do not need to register separately to receive the Enhanced benefit if already registered to receive the Basic benefit. When
registering for the STAR credit, the Tax Department will automatically review each application to determine eligibility for the Basic or Enhanced STAR. For further information on the STAR abatement program and how it could benefit you, visit http://bit.ly/STARabatement.

Changes to Co-op/Condo Tax Abatement Law Impacts Thousands of Apartment Owners

By Harris Bornstein,Chief Financial Officer of Douglas Elliman Property Management croppedIn January 2013, New York City’s Co-op and Condo Tax Abatement Law was extended until June, 2015. The good news is that most apartment owners in the City will continue to receive the property tax relief they’ve been getting since the “temporary” abatement was enacted in 1996. The bad news is that thousands of owners will no longer be eligible, and will see their property taxes, already grossly higher than those of one-, two- and three-family homeowners in the City, escalate by as much as 28 percent.

Addressing a Long-Term Tax Inequity

One of the City’s greatest tax inequities has been the difference in property taxation on Class One and Class Two homes. Class One homes, which include single, two-family and three-family houses, have traditionally paid about one-third the taxes that co-op and condo owners have paid on their Class Two apartments. Rather than implementing a comprehensive solution to this inequity, as originally planned, the State Legislatures has continued to extend the 1996 “temporary” statute over and over again, a few years at a time.

But with the 2013 extension, the tax abatement was amended to reduce the number of eligible homeowners to only those using their apartments as their primary residence. Those who live elsewhere more than half the year began to see their abatement fade away starting in the 2012/13 tax year. By next year, these owners will have lost their entire abatement, which is 17.5 percent for the majority of apartment owners (anyone with a unit valued at more than $60,000). Units owned in trust remain eligible as long as the apartment is the primary resident of the trustee or beneficiary.

The Department of Finance estimates that there are about 366,000 co-op and condo owners in New York City, of whom as many as one-third may no longer be eligible for the tax break. In February 2013 letters were sent to those owners, informing them that in order to continue to receive the lower tax rate, they would need to prove that their apartment was their primary residence.

Failure to File the Paperwork Can Cost You

Now that the higher tax bills are appearing, many of these owners have realized that they missed the deadline and failed to secure their tax eligibility. As a result, property managers throughout the City have been getting calls and emails from residents trying to rectify the situation.

Unfortunately, if a resident failed to return the proof of primary residence form by the deadline, they will have to apply for corrected ownership status for the next tax year. However, the change in status will not be retroactive, so do not expect a refund. Those who find themselves in this predicament should contact their property management Account Executive in order to file the proper paperwork and obtain future tax benefits. The change forms must be submitted by February 15, 2015. For those who are not full-time primary residents, the higher tax rate is unavoidable unless the law is changed some time in the future.

Our biggest problem has been validating eligibility pertaining to the primary residency rule. The City has put property managers in the difficult position of being the “Primary Resident Police”. Douglas Elliman has been proactive in this area since the law was passed in early 2013, and have added a box on our closing statements which designates whether a new shareholder is a primary resident or not. This information will be extremely helpful once the 2014/15 benefit reports are published, as we will be able to validate new purchasers’ eligibility with the information in our database and will not need to guess or contact shareholders via letters to document their residency status. By instituting these internal controls and by following up on the loud and clear responses from shareholders who have been incorrectly phased out, we are hoping that our main objective—securing full abatement status for all those deserving it—will be met.

You May Be Eligible for Other Tax Relief

By the end of June 2015, the extension of the tax abatement is set to expire yet again. Will the City find a long-term solution to the property tax inequity between apartment owners and homeowners before then? Let’s hope so, but if the past is any indication, it appears unlikely.

If you have any doubt about your eligibility, contact the Account Executive at your Managing Agent, or visit the City’s website at nyc.gov/ccabatements. Whether or not you remain eligible for the co-op and condo property tax abatement, you may be eligible for other property tax abatements, such as Basic or Enhanced School Tax Relief (STAR), Disabled Homeowner, Senior Citizen Homeowner and Veterans. Applications for these exemptions are due by March 15 and are the responsibility of the resident.