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Tax Issues

PROPERTY TAX ABATEMENTS
CREDITED ON JULY TAX BILL

Property taxes are lower this year for homeowners in New York cooperatives and condominiums. This is due in large part to the 1996 tax abatement legislation for which CNYC and the Action Committee for Reasonable Real Estate Taxes worked so hard. In addition, the tax rate for fiscal 1998 is slightly lower than last year's rate. Intricacies of our legislative system have brought a certain amount of vagueness to this issue, but clarity is now beginning to emerge.

Last year, thanks to the efforts of CNYC and the Action Committee for Reasonable Real Estate Taxes, and to dedicated legislators committed to tax fairness for homeowners in cooperatives and condominiums, Chapter 273 of the Laws of 1996 was enacted requiring tax abatements to these homeowners for fiscal 1997, 1998 and 1999.

To determine which units qualified for the abatement, the Department of Finance devised forms asking for details about apartments and their owners. Board members and building managers spent many hours amassing the necessary data, some on computer disk, some on color-coded forms – green for condominiums and purple for cooperatives. Those wishing to qualify for the abatement for fiscal 1997 had to complete their filing by October 15, 1996. To qualify or requalify for fiscal 1998, boards were required to file another form by April 1, 1997.

The Department of Finance spent months processing this data, and it began crediting buildings with the abatement in June as tax bills were sent out for fiscal 1998. The Department credited the full abatement for fiscal 1997 on all July tax bills. Homeowners in buildings where unit assessments averaged $15,000 or less received a 2% abatement, and those in buildings where unit assessments averaged more than $15,000 received a 1.25% abatement.

1998 TAX BILLS PRECEDED 1997/98 TAX-FIXING

The July property tax bills also included an approximation of the fiscal 1998 abatement, either for the first quarter or the first half of year, depending on the particular building's payment schedule. Homeowners in buildings where unit assessments average $15,000 or less are entitled to a 16.5% abatement this year and those in buildings where unit assessments average more than $15,000 are due a 10.75% abatement. Because the City sent out tax bills in mid June, long before the City Council could set this year's tax rates, taxes were calculated based on this year's assessment and last year's rate. The City had to wait for appropriate Albany legislation before it could set the tax rate.

Albany was the scene of a very different legislative session this year. Debate over rent regulations dominated the entire spring, delaying consideration of other measures and postponing passage of the State budget for more than 100 days. Among the laws that had to wait for the budget was one affecting the distribution of tax shares among the four classes of property in New York City. Senator Goodman's bill, which capped increases for any class at 2.5%, was finally passed right after the budget. Only with this law in place was the City Council able to set tax rates at its August 26th meeting. For Class 2 properties, which include all cooperatives and most condominiums, the rate is modestly reduced from 11.056% to 11.046%.

ABATEMENT SPECIFICS SENT TO EVERY COOPERATIVE

With a tax rate finally set, the Department of Finance computer was put to work crunching final detail numbers for every one of the more than 250,000 apartment units that qualified for the abatement, forwarding a specific dollar breakdown by apartment to the designated contact for each cooperative shortly after Labor Day. Because condo unit owners each receive their own tax bills, the Department of Finance will make appropriate adjustments on the next regular tax bill.

Chapter 273 of the Laws of 1996 makes it perfectly clear that the abatement must be credited to the units that qualify. In the Spring 1997 issue of this Newsletter, CNYC made suggestions about the distribution of the abatement. We suggested waiting for October maintenance bills in order to have the Department of Finance figures for each apartment. We further suggested that cooperatives may want to divide the abatement into monthly amounts to credit on the maintenance bills of each qualifying unit. Since the abatement goes with the unit, there is no need to seek out individuals who have moved from an apartment.

ACTION COMMITTEE MEETING WILL ANSWER QUESTIONS

To facilitate the distribution of the abatement, and bring answers to all questions that cooperatives and their managers may have, the Action Committee for Reasonable Real Estate Taxes is holding a meeting on the evening of September 24th at 2 West 64th Street. Assistant Commissioner Martin Oestreicher and CNYC treasurer Mark B. Shernicoff will provide answers to your questions. See Coming Events for details about this important meeting.

LAW PROVIDES FOR THIRD ABATEMENT YEAR

The law provides for a third year of abatements. Homeowners in cooperatives and condominiums where unit assessments average $15,000 in fiscal 1999 can qualify for a 25% abatement, and those in buildings where unit assessments average more than $15,000 will be eligible for a 17.5% abatement. Forms will have to be filed by April 1, 1998. The Department of Finance will make these forms available in the fall.

Buildings that are already benefiting from the abatement will simply have to register any apartments where changes of ownership have taken place. Those cooperatives and condominiums that have not previously qualified for the abatement will now have months of time to compile and file the forms for the final abatement year.

LONG-TERM PLAN STILL "IN THE WORKS"

With the massive data processing now under control and the first two years' abatements identified, the Department of Finance is concentrating on complying with the second phase mandated by the legislation – namely, to propose a long-term plan to eliminate the disparity in taxation between cooperatives and condominiums and other homeowners. CNYC and the Action Committee for Reasonable Real Estate Taxes will continue to monitor the development of the long-term plan to ensure that it meets the criterion of tax fairness. Once such a plan exists, we will reach out for support in working for its enactment into law. An update will be provided at the September 24th meeting of the Action Committee for Reasonable Real Estate Taxes.

 
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