Taking Advantage of Tax Benefits

It’s back, that time of year New York City homeowners dread the most: property tax season. This year, as in years past, residents of cooperatives and condominiums are seeing their assessments – and tax bills – rise. Over the past four years, assessments for co-ops and condos have risen, respectively, by an average of 7.1 percent and 12.8 percent annually. And once again the city has failed to deliver on long-promised reforms to the antiquated, opaque, unfair, and deeply unloved system of computing property taxes.

But savvy co-op and condo boards – and the residents of their buildings – know that there are ways to soften the sting of property taxes. A smorgasbord of abatements and exemptions is available; the city’s Department of Finance (DOF) is visiting properties to make sure residents are getting the breaks they’re entitled to; and it’s possible to protest an assessment and get it reduced, thus reducing the tax bite. Here’s a primer on tax relief that’s available to residents and boards of co-ops and condominiums.

Individual Benefits

There are a variety of tax benefits that residents can benefit from. To help individual shareholders and unit-owners, the city’s Department of Finance (DOF) has a staff that will visit buildings to answer questions and assist residents with the application process. “Our approach used to be educational,” says Sheila Voyard, director of outreach at DOF, who heads a staff of 8. “But in the last four years we’ve been trying to enroll more people in all the programs. We offer enrollment events in co-ops and condos, and we also attend shareholder meetings to make presentations. We can help them apply on the spot, and we welcome developments to reach out to us.” To arrange an event at your property or attend a scheduled event, call 311 or fill out the Outreach Event Request Form here: http://bit.ly/eventoutreach

Condo owners receive personal benefits in their individual property tax bills, but the way a co-op resident receives these personal exemptions is a bit circuitous. For each property, the DOF will send a schedule of shareholders, their abatement status and amount, and all their personal exemptions to the property’s managing agent. For co-ops, the property tax bill equals the buildings property tax charge less the total of all co-op tax abatements and all resident benefit amounts. While there is no set way for a management company to process this information, Ben Hawkins, controller at Orsid Realty, says his firm notifies residents who are not eligible for these benefits. If the city has the wrong information, a resident will have to fill out forms so that the managing agent can get it corrected, says Hawkins. If a resident is receives a personal benefit, that amount is debited from their account, and they will see this on their monthly statement.

The School Tax Relief (STAR) Program

There are two types of STAR benefits: Basic STAR and Enhanced STAR. Basic STAR is available to virtually all co-op and condo owners, while the Enhanced STAR exemption is for those 65 and older.

Disabled Homeowner’s Exemption (DHE)

This property tax break is for disabled New Yorkers who own co-op and condo apartments, and one-, two-, or three-family homes. Thanks to changes in city and state law, the tax break is now available to homeowners with a combined annual income of $50,000 or less (for a 50 percent exemption) and $58,400 or less (for a partial exemption). Deadline to apply this year is March 16.

“We realized it was time to revisit this exemption and the senior citizens’ exemption (below) because it was hard to find homeowners who were under the old $29,000 income cap,” says DOF spokeswoman Marcy Miranda. “We wanted to help them, but we had to work with the state legislature to make the changes.”

Senior Citizen Homeowner's Exemption (SCHE)

This property tax break is for senior citizens who co-op or condo apartments, and one-, two-, or three-family homes. The same income caps of the disabled exemption apply. Deadline to apply this year is March 16.

Alternative Veterans Tax Exemption

This tax exemption is available to eligible veterans of foreign wars, expeditionary medalists, honorable dischargees, spouses/widow(er)s of veterans, and Gold Star parents. Deadline for applying is March 16.

Property Tax and Interest Deferral (PT AID) Program

This program is for condo and one-, two-, and three-family homes when an unexpected event or hardship may make it difficult for a homeowner to pay property taxes. If those who qualify the payment of property taxes can be deferred for a fixed length of time, or for a longer period if there is chronic hardship.

There are three payment plan options: the Low-Income Senior (LIS), Fixed-Term Income-Based (FTI), and Extenuating Circumstances Income-Based (ECI) payment agreements. For details on the available plans, view http://bit.ly/NYPTAID.

Building Benefits

Green Roof Abatement

This program provides a one-time property tax abatement for properties that have green roofs. Green roofs have vegetation that absorbs rainwater, provides insulation and combats “the heat island effect,” where urban environments can have higher temperatures than surrounding areas. The city Department of Buildings (DOB) determines eligibility and approves the application, while the DOF administers the benefit. Deadline: check with DOB

Solar Roof Abatement

This benefit provides a property tax abatement to properties that use solar power. The DOB determines eligibility and approves the application, while the DOF administers the benefit. Deadline: Check with DOB.

The Co-op and Condo Tax Abatement

This is the big one. Owners of cooperative and condominium units who meet the requirements for the Cooperative and Condominium Property Tax Abatement can have their property assessments reduced on a sliding scale – from 28.1 percent to 17.5 percent – provided the apartment is the owner’s primary residence. The amount of the abatement is based on the average assessed value of the residential units in the development. The higher the assessed value, the lower the abatement.

The deadline for applying for the abatement this year is Feb. 18, and property managers usually handle the application – unlike the tax exemptions, which must be applied for by individual shareholders or unit-owners.

Many co-op boards assess shareholders an amount equal to the abatement, which means the shareholders don’t actually pocket the savings, but the co-op’s coffers are enriched without any pain to shareholders.

There are wrinkles. An apartment owned by a trust is eligible if that unit is the beneficiary’s primary residence. However, you’re ineligible if you own more than three apartments in any one development. Also ineligible: sponsor units; units owned by a business (LLC); pieds-à-terre; units being rented out; and properties already receiving certain government assistance or subsidies, such as a Housing Development Fund Corporation or a Mitchell-Lama building, among other types. And you can’t be receiving a J-51 exemption, or a 420-a, 421-b, 421-c, 421-g tax incentive.

One way to lower a tax bill is to fight the city’s assessment of the property, which comes out in mid-January. This is usually handled by specialists known as tax certiorari lawyers, who have until March 1 to file a challenge with the city’s Tax Commission, an independent agency that has the power to reduce the property’s assessment, change its tax class, or adjust exemptions.

“The single biggest expense for co-ops – and it’s rising exponentially – is real estate taxes,” says Robert Pollack, a tax certiorari lawyer at the firm Marcus & Pollack. “It’s quite staggering. Boards should not wait until the March 1 deadline to file a challenge. Most big co-ops with a professional management company protest it year after year.”

Those protests often hinge on the city’s strange way of assessing co-ops and condos. The calculation is based not on market values or recent sale prices, but on the value of “comparable” rental buildings in the neighborhood.

The tax certiorari lawyer completes the necessary paperwork, then speaks to the property manager and the board to learn of any unusual circumstances that might affect assessed value – such as a major capital project, or the building’s removal from a desirable school district and placement in a less desirable one. The lawyer will then look for flaws in the assessor’s methodology and computations, such as comparing the co-op or condo with rental buildings that are much older or much newer.

After a hearing, the Tax Commission usually issues a revised assessment within two to three weeks. If the board is not happy, it can file a petition to review the assessment with the state Supreme Court by Oct. 24.

“I always say to our young lawyers, we’re not the experts,” says Joel Marcus, a partner at Marcus & Pollack. “The managers and the people on the board who know the building, they’re the experts.”