On the Money: Are You Eligible for the New York State Homeowners Credit?
Is your building in a state historical district or a designated state landmark? If so, you might be able to take advantage of the New York State Homeowners Credit, a law that became effective in 2009 that earns eligible tenant-shareholders and unit-owners of co-op and condo apartments tax credits for doing repairs to the exterior and interior of the building.
To qualify, the building must be an owner-occupied residential structure — sublet units are not eligible — listed with either the State Historic Preservation Office or the National Register of Historic Places, or located in a state or nationally registered historic district and certified as being of historic significance to the district. Designation by the New York City Landmarks Preservation Commission (LPC) doesn't determine eligibility for the credit, but the LPC does has oversight over the scope of the work.
To further qualify:
- You must own and reside in the historic home in New York State in the year for which you claim the credit.
- Qualifying rehabilitation costs for the project must be $5,000 or more of which at five percent must be for exterior work.
- You must receive preliminary approval and a Certificate of Completion from the New York State Office of Parks, Recreation, and Historic Preservation.
The home must also be located in:
- a federal qualified census tract or area of chronic economic distress, or
- a census tract that is at 50 percent or below the state family median income level.
There are thousands of census tracts in New York City, explains Murray Gould, principal in Port City Preservation, a company that assists buildings in getting tax credits. So when you call up to see if you are eligible to receive the tax credit, your address gets checked against a master list of all those census tracts to see if you meet the qualification requirements.
The credit is then allocated among the shareholders or unit-owners of the building based on their ownership percentage. For example, if you have 20 shareholders in a co-op and each of them owns five percent of the shares in the corporation, then each of those individual shareholders would get an allocation of five percent of $200,000.
“Let's say you did a $100,000 rehabilitation, you will have earned a $20,000 tax credit,” notes Gould. “But you might only be paying $5,000 a year in New York State taxes. The credit is a dollar-for-dollar offset against your personal income taxes. If the gross income of the shareholder is $60,000 or less, then any unused credit would be fully refundable. And if it’s not, then it’s carried forward to the following year.”
In applying for the credit, it is crucial to remember that co-ops and condos are fundamentally different from single-family homes. In condos, the association only owns the common areas and the facades; the unit-owners own their apartments outright. Similarly, a co-op shareholder is responsible for any construction or renovations within the apartment.
Why is that important? Simple: one benefit of the law is that unit-owners and shareholders can apply for a personal tax credit on renovation work they do inside their units — but only if it is done at the same time as any exterior work.
According to Gould, this is how it works: “If you have 60 shareholders in 60 units, and 20 of them decide they're going to do interior work, each would have to then file a separate application for the interior work, and it would be coordinated with the fact that the building did an umbrella application for the whole project.”
The homeowner and commercial state credits will be available until December 31, 2019.
For additional information on the New York State Homeowners Credit and whether you qualify, check out the Tax Credit Program page on the New York State Office of Parks, Recreation, and Historic Preservation. And for additional information on claiming this credit, see Form IT-237, Claim for Historic Homeownership Rehabilitation Credit, and its instructions, Form IT-237-I.