From my experience, boards are required to pass these credits on to shareholders.

However, many boards have not factored these credits into their annual budgets.

Therefore, they must assess for the amount of the credits on a per share basis.

In order to allow these credits to flow through to shareholders, without need for assessment, maintenance would have to be raised to cover the amount of these credits.

1) No. The tax abatement is done on a per share bases:

Abatements are determined based on the value of the entire cooperative. For condominiums this total value is allocated among the eligible units and the assessed value of the property is reflected on the quarterly Statement of Account (SOA). For a cooperative development, the assessed value of the unit is calculated by: 1) dividing the entire development's assessment by its total number of shares and then 2) multiplying each unit's number of shares by that factor. The abatement is only granted to the shares of eligible residential units.

http://www.nyc.gov/html/dof/html/property/property_tax_reduc_coop_condo.shtml

The STAR Credit is not determined on a per share basis. This year it is something like $197 for basic STAR, and moe if you qualify


2) There are different ways of calculating the assessment but it must be done on a per share basis.

1 way of calculating the assessment is to take the amount of abatement received by the building, dividing by the number of shares, and making that the assessment.

Another way to do it would be to use the per share amount of the abatement used by finance and asses that

Note the 2 are similar but not the same. In the later method the assessment will be higher in a building where there are still sponsor held units

Each coop receives a list from the city detailing the amount of the coop/condo tax abatement and various STAR rebates each shareholder is to receive.
As explained on the Dept of Finance web site,it is possible for two shareholders with the same number of shares to receive different abatements, depending on the STAR rebates they receive. The STAR rebates are considered by the city to affect the pro-rata tax basis of the apartment and thus the tax abatement the apartment receives.
For most shareholders who receive the minimum STAR rebate the difference will be minimal, but for those who receive enhanced STAR rebates there can be more of an effect.

Another two cents worth:

RE STAR: shareholders all receive the same STAR exemption (about $200); this amount would only differ if an ENHANCED STAR exemption had been granted. (STAR, by the way, is an exemption -- not an abatement. It was introduced as far back as 1997 by Governor Pataki but there still seems to be quite a few people who don't realize they have to put in a one-time application to qualify for it. Only the enhanced exemption needs repeated applications since it's based on the tax payer's income).

RE THE CO-OPERATIVE ABATEMENT: This abatement is calculated as a percentage of the tax due from the building -- 25% or 17.5% depending on the per unit assessed value. However, sponsors and their successors don't qualify for the abatement; nor do any shareholders who own more than 3 apartments in the building. So if any of the apartments in the building are owned by shareholders who fall into the two excluded categories, then the building actually receives less. For example, if there are 10 apartments and 2 are sponsor apartments, then the building would receive only 8/10ths of the abatement.

SHAREHOLDERS who qualify for the abatement receive a proportion of the total abatement according to the number of shares they hold. If two shareholders have exactly the same number of shares and both also receive a standard STAR exemption, they should both receive exactly the same credit on their monthly maintenance bill.

HOWEVER, THERE ARE OTHER EXEMPTIONS. If a shareholder qualifies for other exemptions -- such as a VETERAN's exemption -- then this would add to the amount that the shareholder would receive .

THE ABATEMENT HAS TO BE DISTRIBUTED TO ELIGIBLE SHAREHOLDERS -- by June 30th, at the latest. But there is often no money in the budget to allow for that distribution because many co-ops opt to budget for the lower tax figure -- that is, AFTER deducting for the abatement. That's known as the 'net' figure. (They should really budget for the 'gross' figure BEFORE deducting the abatement amount -- because the abatement doesn't belong to the co-op. It's one of the few things that actually belongs to the individual shareholders!)

THE CO-OP ASSESSMENT. So that's why it's become fairly general for co-ops to ASSESS their shareholders for the amount that has to be distributed. That is, they credit shareholders with the abatement and, at the same time, debit them for an assessment. Boards like to do this because it's a more or less painless way of adding some money to the kitty. Shareholders see hardly any change in their maintenance for that month, even though they've been assessed.

ENHANCED COLLECTION.... Now , this is where it get interesting. If you still have sponsor apartments in your building, those apartments (see above) don't qualify for the abatement so you don't have to credit them with anything. But you DO get to debit them with the same per-share amount as every other shareholder (equal treatment for every share). So in those cases, the co-op is getting free and clear money which could be added to reserves.

THE GOOD NEWS IS ... the co-op abatements are getting bigger and bigger every year.

THE BAD NEWS IS .... the abatements are only getting bigger because they're calculated as a percentage of our tax bills that, every year, are getting bigger and bigger .... and bigger ... and...

Thank You for the detailed response, its much appreciated. I have a question: We are a small co-op 60 apartments, with 52% still owned by the sponser.
The question is - We received the abatment for some and not all resident shareholders, seems like the ones that didnt recieve the abatment credit were owners that purchased from the sponser.
Will this money be forthcoming once the paperwork is updated or will we have missed the boat per se for this year and need to realocate the credits?
FYI - My apartment was one of the three that didnt not receive the abatement and we are wondering how to proceed.

One possibility if you didn’t receive an abatement is that your purchase of the apartment from the sponsor was recent and the apartment status has not yet been changed. The Dept of Finance sends a detailed statement to a co-op’s managing agent listing the abatements and exemptions due to every apartment so you should be able to ask your management to tell you whether your apartment qualifies for an abatement in the 2008-09 tax year and, if so, exactly how much it is. Alternatively, you could phone the DOF abatement ‘hot-line’ directly at 1212 361 7099.

If your co-op is already receiving the co-op abatement, you can, individually, submit a new claim for your apartment. You can do that on-line at the DOF web site (see below). This has to be submitted by Jan 5 to qualify for abatements in the tax year starting July 1. (The city’s fiscal year starts in July whereas most people work with a fiscal year starting in January.) But, generally, management is responsible for updating information on the status of apartments; you are only responsible for applying for the various exemptions, like STAR.

If an apartment is sold to another shareholder during the tax year, then each shareholder should get a pro rata amount of the abatement because the apartment, itself, was already eligible for the abatement. However, if you buy a SPONSOR apartment, there is no pro rating. Sponsor apartment do not qualify for the abatement and the eligibility of the apartment is determined by the prior owner’s abatement status as of Jan 5 for the tax year starting July 1.

One other possibility to look at is that you received an abatement credit but the total amount of your maintenance didn’t reflect that because you also had debits.


http://www.nyc.gov/html/dof/html/pdf/05pdf/exemption_abatement.pdf