Council of New York Cooperatives & Condominiums
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Tax Issues

Published: Summer 1999

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The Action Committee for Reasonable Real Estate Taxes has been pressing for property tax fairness since 1990! In 1996, at the request of the City Council and the Mayor, the State legislature passed a three-year abatement program for homeowners in cooperatives and condominiums and mandated that the City produce a long-term plan for tax fairness. To date the City has not produced a long term plan, but it clearly favors continuation of the abatement until a long term proposal can be developed.

In May 1999 came a devastating blow when the State legislature abolished the commuter tax, tearing a $380 million dollar hole in the city budget. As the Mayor and the City Council hurried to craft a new budget for fiscal 2000 without revenue from commuters, CNYC learned that the abatement might be in jeopardy. We quickly asked members to tell Mayor Giuliani and your City Council representatives how important it is that the co-op/condo property tax abatement be maintained. Our appeal was heard, and the budget passed on June 7th, provides for the abatement to continue at the same rate as in fiscal 1999.

With this budget passed, three steps remain before the abatement can be distributed to qualifying homeowners in New York city cooperatives and condominiums: 1)State legislation must be passed authorizing the extension, and 2) The City Council must set the tax rate, and 3) the Department of Finance must ascertain which homeowners qualify for the abatement.

Because the fiscal year begins with the July 1, 1999 tax payment, tax bills were sent out in mid-June. The co-op/condo abatement could NOT be included because requisite State legislation was not yet enacted. For this billing, the Department of Finance applied last year’s tax rate to this year’s assessment. The July bills did reflect STAR, SCHE and veterans exemptions. January bills will be adjusted to reflect the full co-op/condo abatements.

The state School Tax Relief Program (STAR) takes effect for all New York State residents in fiscal 2000. If your cooperative or condominium is your primary residence, and if you filed the appropriate forms with the Department of Finance, you will receive the first of three years of escalating School Tax exemptions. Senior citizens with family income of $60,000 or less already received the full STAR exemption beginning last year. Property tax bills also include exemptions for the Senior Citizens Homeowner Exemption (SCHE), which requires an income of less than $27,900, and for qualifying veterans.

The City’s Home Rule Message to the State legislature should ensure passage of the requisite legislation in Albany. Assemblyman Pete Grannis’ A.4486-B had paved the way for this extension, but debate still raged as this Newsletter went to press.

Once legislation is passed by the Senate and the Assembly and signed into law by the Governor, the Department of Finance will be authorized to collect eligibility data for the fiscal 2000 abatement. In March, DOF contacted all the cooperatives that had participated in the initial abatement program to update their records for fiscal 2000. Cooperatives that filed this form by the April 15, 1999 due date are registered for the abatement; they will not be contacted again, as their information is already in the DOF computers. During the summer, H.D.F.C. cooperatives that are newly eligible for the abatement, other cooperatives which have not filed in the past, and condominiums will be given the opportunity to register for the abatement for fiscal 2000. Bills for January tax payments will be adjusted to reflect the full year of abatement.

Once the City Council fixes the tax rate, the Department of Finance will accurately calculate all exemptions and abatements and communicate them to the taxpayers. In condominiums, each unit owner will see this adjustment on the January bill. In cooperatives, where exemptions and abatements are applied to the tax bill for the entire building, the Department of Finance will send each building’s contact person (often the managing agent) a detailed unit-by-unit list of the precise dollar amount of credit due to each apartment owner (November is the target for this letter). The cooperative must distribute these amounts to the appropriate shareholders before the end of the fiscal year (June 30, 2000).

Note that both the property tax abatement and the STAR exemption go with the apartment based on its qualifying on the January 5th record date. However, the SCHE and Veterans’ benefits go with the individual; if the senior or the veteran should leave the apartment before the end of the fiscal year, the remaining dollars revert to the City. For this reason, cooperatives should be careful not to distribute the full exemption benefits too quickly.

Since co-op and condo abatements will not be reflected on the billings for the first half of the fiscal year, some lenders may seek increases in the escrow payments they collect for property taxes. Resist this increase; explain to the lender that the property tax abatement has been included in the City budged and that it will be applied to your January bill. Meanwhile, it is appropriate to acquiesce to an adjustment to meet the July and October tax bills.


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