Several months ago we discussed the failure of the New York State Legislature to extend the property tax abatement for co-ops and condos, says Ira Meister, president and founder of Matthew Adam Properties, Inc., a premier property management firm. Well, the good news is that earlier this year, the legislature voted to continue the abatements, though with several significant changes. However, the legislature’s action came too late to include the abatements in the 2012/13 fiscal year, so they will be applied to the 2013/14 taxes.
The legislature also failed to make permanent the abatements, which have been authorized with continuing legislation since the late 1990s, Meister notes.
The impact of the abatement is significant. “There are approximately 365,000 co-op and condo units in the city and the city estimates the abatement saves these taxpayers on average approximately $1,200 per unit,” Meister says.
Condo owners pay the property tax directly to the city. For co-op shareholders, the tax is included in the monthly maintenance charges.
The most significant change is in eligibility. To qualify, the unit must be the primary residence. If not, the abatement will be phased out and completely removed for the 2014/15 fiscal year beginning July 1, 2014. If the eligible taxpayer owns three or fewer units in the building, all are eligible for the abatement. If four or more, none are. The city’s Department of Finance is checking income tax records and other filings to ascertain whether the unit is the primary residence.
The abatement is based on the assessed valuation of the property. For fiscal year 2012/13 it is 25% for properties assessed at $50,000 or less, 22.5% for properties between $55,001 and $55,000; 20% for those assessed at $55,001-$60,000 and 17.5% for those assessed over $60,001.
The abatement increases again in the next two fiscal years for all except the highest level.
Before the extension, the abatement was 17.5% for all units valued at more than $15,000 and 25% for those assessed at $15,000 or less.
“Remember,” Meister says, “this is the assessed valuation based on a complex formula and not the market price of the unit.
“While the new legislation increases the abatement for co-op shareholders and condo owners, it still assesses them at a higher rate than owners of single-family homes,” Meister says.