New York's Cooperative and Condominium Community

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The “Secret” Tax Refund

It’s the refund that many don’t know about. Attorney James Samson, a partner at Samson, Fink & Dubow, says it “a great program, but it’s a well-kept secret.”

Called “Claim for Additional Mortgage Recording Tax Credit,” it’s a tax refund boards can obtain from New York State when they are refinancing their buildings’ underlying mortgages. “There’s a certain portion – not the whole mortgage recording tax but a certain portion of it, which is called the ‘additional mortgage recording tax’ – that you are allowed to take a credit for on your New York State tax returns,” notes accountant Carl M. Cesarano, a principal at Cesarano & Khan. It applies to any tax year beginning on or after January 1, 2004. (Residential mortgages in some New York counties may be ineligible.)

The credit applies to the full amount of the recording tax paid or 0.25 percent of the total new money loan amount. If the amount of the credit exceeds your tax for the tax year, you can carry over the amount of credit to the following year (or years). Or you may elect to the treat the unused amount of tax credit as an overpayment of tax to be credited or refunded.

A board can apply for the refund if its property “got hit with an additional mortgage recording tax on the refi,” explains Cesarano. “I had a mortgage of a million, and I borrowed a million five. I would typically [be taxed] on the extra five. In most cases, you’re paying the tax based on a computation of capital, four-tenths of a percent.”

So, why is the “Claim for Additional Mortgage Recording Tax Credit” relatively unheralded among boards and their CPAs? For one thing, Cesarano says that you apply for it only when you refinance, and he theorizes: “In co-ops, the question is, does this refund apply to residential mortgages? A lot of accountants are of the opinion that this only applies to commercial space.” But Cesarano disagrees, noting that he has gotten refunds under this program for co-ops that have refinanced their underlying mortgages, and “we’ve never been denied on one yet.”

To obtain an application form and more information, go to:

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