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

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.

 

New Tax Law May Affect You

On February 1st, Governor Cuomo signed legislation extending the Co-op and Condo Property Tax Abatement Program. This abatement program, which is administered by New York State legislature, is applied in the form of a reduction to a condo’s tax bill or to a co-op’s real estate tax invoice, which is, by law, passed on to all eligible shareholders of the co-op as a credit. Many co-op buildings also implement a capital assessment at the same time the abatement is given; in this way money is raised “painlessly” for the operation of the building or for building improvements.

While the extension is great news for apartment owners, there are important changes to this law that may affect your taxes. The new law states that apartments not used as a primary residence are no longer eligible for the abatement. The law also treats apartments held in Trusts, by an LLC or Corporation as non-primary residences, and therefore not eligible for the abatement. If your apartment falls into either category, your abatement will be phased out over the next two years.

If you received a letter from the NYC Department of Finance (DOF), stating that your apartment is no longer eligible, you may respond to the City if they are in error. Otherwise you will begin to see your tax abatement gradually reduced over the
next few tax periods.

SUMMARY
A. It is important that you review and consider contesting any DOF findings concerning your alleged ineligibility to receive an abatement directly with the DOF. DEPM cannot undertake this task for any resident.
B. For co-ops, DEPM will be posting the tax credits for tax year 2012/2013 in May 2013 following the unit by unit report which we received from the DOF.
C. We will be billing back ineligible credits for co-op units for 2012/2013 pursuant to DOF directives as soon as that information is received. Condo unit owners will have their July 2013 bills directly adjusted by the DOF.
D. The City will phase out the abatement of any Resident who was sent a DOF eligibility application and did not respond to contest the DOF’s ownership
records.
For more information, dial 311 or visit http://www.nyc.gov/html/dof/html/property/coop_condo_abatement.shtml

Image

The newly extended co-op and condo tax abatement applies only to apartments used as primary residence.

Co-op/Condo Tax Abatement Renewed

On February 1st, Governor Cuomo signed legislation extending the Co-op and Condo property tax abatement program. Since 1997, this legislation, which expired last July, was put in place to address the inequities in property taxes between co-ops and condos, which are Class 2 properties in NYC, and single-family homes, townhouses and two-story condominiums, which are Class 1 properties and thus subject to much lower property tax rates.

Only those co-ops and condos used as primary residences are eligible for tax abatements under the new ruling, and abatement amounts vary depending on the assessed valuation of your apartment. Apartments with assessed values of $60,000 (market value of about $600,000) or less will receive that largest tax abatement. The majority of co-op and condo owners will receive a 17.5% abatement on their property taxes. These changes will be reflected on the July, 2013 tax bills.

“I am pleased that this legislation will cut taxes for the vast majority of condo and co-op owners who pay a disproportionate share of the city’s property tax burden,” said Assembly Speaker Sheldon Silver (D-Manhattan).

“While more comprehensive reform is still necessary, this legislation helps to ensure that co-op property taxes are comparable to those of single-family residences,” said Assemblyman Edward C. Braunstein (D-Bayside).

According to Mayor Bloomberg, “This is a relief for more than 360,000 New Yorkers who have been anxious for action since the benefit expired in July. The new and improved program will include more co-op and condo residents, including 98 percent of co-op and condo owners outside of Manhattan, and increase the maximum benefit amount available.”

The benefits are as follows:

Fiscal Year Average Assessed Value of Units Abatement
2012-2013
Less than or equal to $50,000 (market value approx. $500,000) 25.0%
More than $50,000 but less than or equal to $55,000 22.5%
More than $55,000 but less than or equal $60,000 20.0%
More than $60,000 17.5%
2013-2014
Less than or equal to $50,000 26.5%
More than $50,000 but less than or equal to $55,000 23.8%
More than $55,000 but less than or equal $60,000 21.2%
More than $60,000 17.5%
2014-2015
Less than or equal to $50,000 28.1%
More than $50,000 but less than or equal to $55,000 25.2%
More than $55,000 but less than or equal $60,000 22.5%
More than $60,000 17.5%