The recently passed tax abatement law is both good and bad news for co-op and condo owners. NY1's Real Estate reporter Jill Urban filed the following report.
Last year, the fate of the city's co-op and condo tax abatement was uncertain. Apartment dwellers had a 17.5-percent abatement to help offset a disparity that charges a higher tax rate for co-op and condos than stand along homes.
It was at first at risk when it expired, and then an extension was granted. Now, a new law is officially on the books, but with some changes.
Eva Talel, an attorney in Stroock & Stroock & Lavan who specializes in co-ops and condos, breaks down the changes for NY1.
"The new co-op and condo tax abatement law has now be adopted by the state Legislature and signed by the governor and it’s got good news and bad news," Talel says.
The good news is that the abatement has been passed and most owners will still be afforded the 17.5 percent as hoped. Some will even see a bigger break
"For those people who’s apartments are less expensive and therefore assessed for a lower tax value, they could get abatements ranging from 21.5 to 25 percent," says Talel.
The bad news is those who do not use their homes as a primary residence will no longer be eligible for an abatement, such as pied-a-terre owners or those with multiple residences. Their eligibility will be phased out over the next two years. That took effect retroactively, so it could make things messy for this year.
"One messy aspect of this new legislation is that it takes effect retroactively. So it takes effect starting July 1, 2012, but buildings have already paid the first half of their 2012 bill and that was calculated based on the old law," Talel says. "Someone will have to be giving money back."
Condo owners will receive an increased tax bill directly, but it could be a touchy issue for co-ops who will now have to either bill direct shareholders for the difference or take the money out of the building’s pot.
In the coming weeks, those whose residency is questionable will be hearing from the city and will have a chance to prove if the unit is a primary home.
One should note that the new law also has an expiration date of June 2015, so this issue could be up in the air again soon.