Council of New York Cooperatives & Condominiums
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Tax Issues

Published: Autumn 1997


At the September 24, 1997, meeting of the Action Committee for Reasonable Real Estate Taxes, chairman Martin Karp welcomed New York City Deputy Finance Commissioner Martin Oestreicher, who spoke of the property tax abatements that were credited to qualifying cooperative and condominium units on their July tax bills. He answered questions about the distribution of this credit and outlined the way in which the Department of Finance will be collecting data for the third year of this abatement.The deputy commissioner also gave insights into how the Department will qualify people for the veterans' tax abatements that will begin in July of 1998, as well as for the State School Tax Relief Program (STAR), which applies to homes that are primary residences of their owners.The STAR program begins in July 1998 for senior citizens with family incomes of $60,000 or less, and in July 1999 for all other qualifying homeowners.

In July, qualifying cooperatives and condominiums paid lower property tax bills as a result of the abatement, which was enacted as Chapter 273 of the Laws of 1996. The lower bills reflected the full first year of the three-year property tax abatement and the first portion of the tax abatement for this fiscal year. However, because the tax rate for fiscal 1998 had not yet been established at that time, we knew that adjustments would have to be made.

In the case of condominiums, where each unit owner receives an individual bill, January bills will reflect the appropriate adjustment. The situation is different for cooperatives. To help cooperatives distribute accurate amounts to qualifying shareholders, the Department of Finance had calculated the precise dollar amounts attributable to each qualifying unit and had sent this information to cooperatives early in September. This enabled many cooperatives to begin crediting these abatements on shareholders' October or November maintenance bills.

Cooperatives have considerable discretion in selecting how and when they distribute the abatement, but the money cannot be absorbed into buildings' general funds. The law requires that the cooperative distribute the abatement to the qualifying units in the course of the year in which the abatement is granted. This means that the 1997 credit -- 2% on taxes in cooperatives with average assessments of $15,000 or less and 1.25% on the taxes of cooperatives with assessments averaging more than $15,000 per unit -- should be distributed immediately. The fiscal 1998 abatement -- 16% on taxes of cooperatives with average assessments of $15,000 or less and 10.75% on taxes in cooperatives with assessments that average $15,000 or more per unit -- must be distributed by the end of June 1998. Commissioner Oestreicher explained that the abatement goes with the unit and, therefore, if the shareholder who was in place on the January 5th qualifying date has subsequently sold the apartment, there is no need to track down that prior shareholder: The abatement is to be credited to the apartment.

In third year, the abatement jumps to 25% on taxes in cooperatives with assessments that average $15,000 or less per unit and 17.5% on taxes in cooperatives with assessments that average $15,000 or more. For those cooperatives and condominiums where units were among the 261,000 that filed with the Department of Finance for prior-year abatements, the DOF will soon send a full listing of all data presently in its computers to the designated contact person (generally the managing agent). Missing information about square footage or number of bedrooms, which was excused for the 1997 and 1998 abatements, must be supplied this time. If apartments have changed ownership, full data will be required for the new owners, and sales prices will also be required on all new sales.

The DOF is sending this information out in November so that there is ample time for you to provide all missing data. However, it will not be possible to file the forms until after January 5, 1998, as this is the record date for determining which units qualify. You are encouraged to file well before the April 1, 1998, deadline, so that there will be time to correct any errors. Cooperatives or condominiums that did not file for the 1997 or 1998 abatements can contact the Department of Finance after December 1, 1997, for forms to describe all the units and to provide appropriate information about their owners.

Chapter 273 required that the city develop a long-range plan to continue progress toward tax fairness for homeowners in cooperatives and condominiums. Mr. Karp and Commissioner Oestreicher reported that, while this plan is now overdue, the Department of Finance and the City Council Finance Division have been working on the plan and have reached out to various industry groups for input, including CNYC and the Action Committee. Both Mr. Karp and Commissioner Oestreicher expressed optimism that a satisfactory plan can be developed in the next several months and presented to the legislature for enactment in the spring of 1998.


Two tax exemption programs were passed this year that affect many homeowners in co-ops and condos. Thanks to the perseverance of the Federation of New York Housing Cooperatives and to Assemblyman Ivan Lafayette, legislation was signed this spring bringing homeowners' tax benefits to those veterans making their homes in cooperatives, who would have received these benefits if they lived in private homes or in condos. Veterans who served in time of war qualify for these benefits (as do their surviving spouses), with additional levels of benefits for those who served in combat or are disabled. Forms are already available at borough offices of the Department of Finance and must be filed by the individual veteran by March 15, 1998. The DOF is also sending sample forms to co-ops for duplication and distribution to veterans in their buildings. This exemption will begin in July 1998. Like the homeowners' property tax abatement, this amount will have to be distributed to veterans by co-ops in a timely manner.

Governor Pataki's School Tax Relief (STAR) Program was passed in July. Over the next four years it will phase in reductions in the school taxes paid by homeowners whose primary residence is in New York State. Of these, senior citizens with a family income of $60,000 or less can begin to benefit from this program starting in July 1998. Other homeowners will begin in July 1999.
To implement the STAR Program, the Department of Finance must gather specific information on every homeowner. DOF will send individual letters in December to each person whose name was listed as the shareowner of the cooperative units that qualified for the property tax abatements. Owners of condominium units and private homes will also receive letters and forms requesting information about the owner.

You will be asked to complete these forms and return them quickly to the DOF so that it can begin the enormous task of integrating all needed information into its data files. You will be asked to confirm that this apartment is your primary residence (a precise definition will be provided). For cooperatives that did not participate in the abatement program, the DOF does not have names of individual owners. It will send the forms to the board or the manager and require that they be distributed to all the owners in the cooperative. For senior citizens to claim additional benefits, they will have to provide information including date of birth and proof that family income does not exceed $60,000.

The STAR program will be phased in over a four-year period for qualifying seniors and over three years for other primary homeowners, so that full abatement will be received by all in fiscal 2002.


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