Unit owners can breathe a sigh of (tax) relief

New York State Capitol in Albany (Flickr photo by Jimmy Emerson)

Although there was little doubt that lawmakers would act, it is nice to know that the New York State Assembly finally passed an Omnibus Housing Bill on Monday following Senate action last week.

The legislation restores for three years the expired tax abatement that was created to equalize the tax burdens between single-family homeowners and owners of co-ops and condos.

It also extends for the same period the J-51 program, which provides a tax benefit for the renovation of existing housing.

However, the legislation eliminates benefits for the conversion of commercial space to residential use and limits the eligibility for condominium and cooperative buildings with units that have an average assessed value per unit is  greater than $30,000.  Excepted are projects that receive “substantial” government assistance.

Certain provisions of the 421a program were amended as well so as to encourage new residential development in  some high-density areas of Midtown and Downtown Manhattan.

“In the modification to the program in 2007, the renewal of this separate provision was accidentally omitted,” the Real Estate Board of New York (REBNY) observed in an e-mail to members on Tuesday.  The organization said the bill further restores “flexibility in the completion of construction provisions that are crucial to the resumption of stalled housing projects.”

As for the tax measure for co-op and condo owners, Assemblyman Edward C. Braunstein noted in a statement quoted by Habitat magazine that the new legislation is especially helpful to owner occupants of apartments.  Said he:

This progressive legislation ends the tax abatement for investors and those who are not using their properties as their primary residence, and transfers the cost savings to our middle-class families and seniors so that they can afford to stay in their homes.

Specifically, the apartment must be the primary residence of the unit owner to be eligible for the abatement.  A unit owner may still receive an abatement for up to three units, provided they are in the same building and one of the units is the owner’s primary residence, according to REBNY.

Also modified were thresholds for the abatement.  They range in the 2012 fiscal year from 25 percent for up to $50,000 to 17.5 percent for more than $60,000.  In FY 2014, the range is 28.1 percent to the maximum 17.5 percent.

For non-primary residence coops/condos where the unit received an abatement in the 2011 fiscal year, the benefit will phase out from 12.5 percent for units up to $15,000 and 8.75 percent for those more than $15,000 in FY 2012 to zero in 2014.

The bill was left hanging when the legislature adjourned last year without a vote amid every indication that the bill would be enacted upon its return.  The measure was sent Tuesday to Gov. Andrew Cuomo, who is expected to sign the measure into law.

Feb. 1 update: Cuomo signed bill today.

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Malcolm Carter
Licensed Associate Real Estate Broker
Senior Vice President
Charles Rutenberg Realty
127 E. 56th Street
New York, NY 10022

M: 347-886-0248
F: 347-438-3201

Malcolm@ServiceYouCanTrust.com
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