New York Real Estate Tax Update
While pending New York real estate tax legislation has been featured in the media recently, it’s important to note that none of the proposed changes have been adopted and there is no immediate impact for condominiums and cooperatives. This advisory includes the information available to us, outlines some of the proposed changes, and includes information on how you can respond to the proposals.
Co-op Condo Tax Abatement
Gov. Andrew Cuomo recently declined to sign, and therefore vetoed a bill that would have required any co-op or condo with an average assessed value greater than $60,000 per unit to pay “prevailing wage” to its employees as a condition of receiving the co-op/condo tax abatement. “Prevailing wage” is the wage and benefit rate set by the New York City Comptroller for each industry, and is a standard frequently required when the government contracts with private companies. It is increasingly finding its way into housing benefits legislation. The change would have had little effect on buildings with union employees, since building service employee union wages would almost certainly be deemed the prevailing wage. However, the impact on buildings with non-union staff, where wage rates are typically lower, would have been significant.
Real Property Tax Reform
In recent weeks, there have been reports about proposed changes to the way real estate taxes are imposed on cooperatives and condominiums. Currently, real property taxes are assessed against all co-ops and condos as if they were rental properties, with their assessed valuation based on the market value of “comparable” rental buildings. The proposed changes are pending with the New York state legislature and the New York City Advisory Commission on Property Tax Reform.
New York State – A recently introduced bill in Albany would, if it became law, tax all co-ops and condos based on the collective market value of their apartments. The legislation was introduced by a single senator, and as of this writing he has no co-sponsors on the bill. Additionally, no similar bill (often referred to as a “same as”) has been introduced in the Assembly. The bill was referred to committee and no hearings have been scheduled.
New York City – In 2018, the Advisory Commission on Property Tax Reform was appointed to examine the real estate tax system in New York City and recommend reforms. On Jan. 31, 2020, the Commission issued a preliminary report, which will now be the subject of hearings in all five boroughs. The report makes a number of recommendations to change the taxation of co-ops and condos, which could have a significant impact on the real estate taxes they pay. At this time, though, no calculation of the likely impact has been published. You can download a copy of the report from the Commission’s website. The website explains how you can submit testimony and will contain the hearing schedule (it is not yet posted). The website of the Council of New York Cooperatives and Condominiums will also contain the hearing schedule when available.
While no changes are imminent, we will continue to monitor the situation and keep you informed. We also urge you to contact your City Councilmember and let your views be known.