Although legislation has been drafted to extended tax abatements for apartment owners, there are changes that residents may not have been expecting.
It has been widely reported that the legislature is expected to go into special session later this year to vote on the co-op/condo abatement, the J-51 program and a technical amendment for 421a tax benefits, which are aimed at encouraging new residential development in high-density districts in Midtown as well as in downtown Manhattan.
But only when I received an e-mail from the Real Estate Board of New York (REBNY) did I notice details that affect many residents of the Big Apple. It is painful reading, so hold on for the ride.
Enacted in 1996 as a temporary measure, the co-op/condo abatement provides partial property tax relief to primary residents. It is expected that the measure will be extended for three years. Details:
- Draft legislation retains 17.5 percent reduction (to achieve original goal of reducing tax disparity between apartment dwellers and single-family homeowners);
- Assessed value for eligibility for a 25 percent abatement rises to $50,000;
- For each $5,000 increase in assessed value in FY2012 up to $60,000, the benefit goes down by 2.5 percent;
- For units assessed at more than $60,000, the percentage remains at 17.5 percent
- The abatement increases in the 2013 and 2014 fiscal years for apartments assessed at $60,000 or less between a maximum of 28.1 percent at the low end and 22.5 percent up to $60,000;
- If the assessed value is greater than $15,000, owners who do not primarily reside in the city and who enjoyed abatements in FY 2011, the tax benefit drops to 8.75 percent in FY2012, 4.375 percent FY2013 and zero the following fiscal year.
The J-51 program, which encourages the renovation of existing multifamily housing, also would be extended for three years.
However, the legislation would eliminate the benefit for the conversion of commercial space to residential use unless the projects receive “substantial government assistance” in the form of city, state or federal loans or grants.. Considering all the repurposed buildings in the city — for example, warehouses, manufacturing facilities and office spaces — that change is not a small one.
The legislation for J-51 conversions also would limit the eligibility of condominiums and co-operatives in which the average assessed value per unit is below $30,000, again with the exception for recipients of government assistance.
Noting that J-51 was created in the 1950s to enable owners to upgrade tenements that did not have central heating, central hot water or sometimes even indoor plumbing, REBNY President Steven Spinola asserted:
It deserves to be renewed now as owners of our aging housing inventory must renovate their buildings to meet the new energy standards and heating system requirements imposed by local law.
With respect to 421a, REBNY says the draft bill will correct partially “an oversight to an important new housing development program.” That oversight occurred when the program was changed in 2007.
The legislature and local elected officials “accidentally” left out renewal of tax benefits that had been in place since 1993, REBNY says.
Tomorrow: Buildings and the Bill of Rights
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