Council of New York Cooperatives & Condominiums
Article Archive
Tax Issues

Published: Summer 1998

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The Action Committee for Reasonable Real Estate Taxes was established by CNYC early in 1990 to work for a fair and affordable property tax structure for New York City. In 1996, City Council Speaker Peter Vallone and Mayor Giuliani proposed a three-year tax abatement for homeowners in cooperatives and condominiums. Assemblyman Pete Grannis and State Senator Roy Goodman sponsored the 1996 State legislation that established the abatement program; this law also required the City to develop a long-term plan to continue the process toward tax fairness.

The third and final year of the abatement program began on July 1, 1998. Qualifying homeowners in cooperatives and condominiums where assessments average $15,000 or less receive a 25% abatement of their taxes, and those in buildings with higher assessments receive a 17.5% abatement. Tax bills sent in June for the first tax payment of fiscal 1998/99 included the abatement to the extent that this was possible, but individual homeowners will not learn precisely what their savings will be until November. Bills for January 1999 tax payments will contain appropriate rate adjustments (in our case, this will mean lower tax payments). The reasons for this are described below.

As this Newsletter goes to press, no long-term plan has yet been proposed, but the Department of Finance has repeatedly assured CNYC that work is in progress on this plan. To insure against a gap in tax relief, Assemblyman Grannis introduced A.11074 in the spring of 1998 to extend the abatement at its present rate for an additional year and to reiterate the requirement of a long-term plan. Passed unanimously by the Assembly, this bill was languishing in the Senate Rules Committee when the Legislature recessed in June. It could still be passed if the lawmakers reconvene in the fall.

CNYC and the Action Committee continue to push for timely progress on the Grannis bill and the long-term plan. We urge you to bring tax fairness to the attention of all candidates for the State Legislature and to join us at the Action Committee meeting on Wednesday, September 16, 1998. Since our current tax abatement ends on June 30, 1999, we must mobilize to push hard for its continuation.

New York City's complex property tax system includes four classes of taxpayers and formulas for the distribution of the taxes among them. No class can have an increase of more than 5% in its share of the taxes from one year to the next. But, State legislation is required if the increase is to be capped at a lower point.

Based strictly on the assessments, the tax share of Class 1 (one-, two- and three-family homeowners) should have had a substantial increase in tax share. Class 2 (multiple dwellings, including cooperatives and condominiums) should have had a modest decrease in share and Class 4 (commercial property) should have had a substantial reduction. But government tends to shield Class 1 homeowners from increases. Thus the Mayor and the City Council each requested Albany legislation to cap class share increases at 2.5%; however, they had differing views on how the amount above 2.5% shaved from Class 1 should be distributed among the other classes. Albany appropriately passed the 2.5% cap, but left it to the City to decide on distribution among the classes.

In July, the City Council passed a bill establishing the class shares and moving all the increases above 2.5% from Class 1 to Class 4. Barring a veto by the Mayor, the City Council was scheduled to set the tax rates for the four property tax classes in late August. This would produce a tax rate for Class 2 that is reduced slightly from last year's rate. January tax bills will be adjusted to reflect the new rate.
Only after the 1998/99 tax rates are fixed, will the Department of Finance be able to accurately calculate the dollar amounts of exemptions due to senior citizens under the State's enhanced STAR program and to qualifying veterans and the property tax abatements for each qualifying homeowner in cooperatives and condominiums.

Condominium owners who pay taxes individually on their own units will simply receive adjusted tax bills in January. Because cooperatives receive these exemptions and abatements on the property taxes for the whole building and pass them on to the qualifying shareholders, the Department of Finance will send each participating cooperative a detailed list of all shareholders and the dollar amount due to each one. This information is scheduled to be sent out in October (the “Halloween Letter”). Upon receipt of this information, management should be able to begin crediting abatements and exemptions on shareholders' December maintenance bills.


In August, as a final verification of the tax abatement information, the Department of Finance wrote to the designated contact (often the managing agent) of each qualifying cooperative, enclosing a complete list of apartments and stating whether each unit is eligible or not -- and if not, why not. If errors were found, this was the final opportunity to contact DOF with corrections.


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