The Mystery of the Missing Abatement

This mystery started simply enough. After living in a small Manhattan co-op for two years, a pair of shareholders were surprised to learn they were ineligible for an annual tax abatement granted to co-ops by the city. “Please see the attached co-op tax benefits for 2017/18,” the board wrote to them. “The listing indicates your new ownership but indicates that your unit is not eligible to receive the co-op tax abatement because it does not appear to be a primary residence.”

This was a problem because the co-op, as is customary in New York City, assessed each unit in the building for about the amount of the abatement, which meant no net loss or gain for most shareholders. If the couple didn’t receive the abatement, however, they would be paying their maintenance and the assessment, which seemed unfair. But, as the board explained, “We must assess all shareholders equally.”

Seeking a possible explanation for their ineligibility, the board noted, “If you own other property and reside in the co-op part-time, you may be ineligible. However, if the unit is your only residence, then please contact the city. Our accountant has indicated that if your name appears as an owner on the listing, then it is your responsibility to follow up on this in order to receive the tax abatement… .” The shareholders duly contacted the Department of Finance and also went on the website to find out why the unit was listed as ineligible for the abatement despite its being the shareholders’ primary residence and only property for two years. They spoke with someone named Teresa.

“She was basically reading information that could be found online,” said one of the shareholders in an email before speculating: “Were our tax ID numbers or Social Security numbers included on the submitted form? If not, maybe they were required. Or maybe for some reason we needed to submit two separate changes, in different rows (one for the change in owners and one for the change in primary residence). We will call back this afternoon to find out what specifically is needed from the board or manager to register a new shareholder for the co-op abatement.” Teresa had provided a form for the board to fill out.

“The form you referenced was completed last year,” the board replied in an email. “If the form had not been changed, then you, as the new owner, would not appear on the listing (the previous owner would appear). Since your name is there as owner, that means that the city was notified of the purchase, as well as the fact that this is your primary residence. So it’s not clear why you are not receiving the abatement.”

Finally, the board contacted Paul Korngold, a partner at Tuchman, Korngold, Weiss, Liebman & Lindemann and the attorney who handles the building’s tax challenges every year. Another six weeks passed before Korngold found the solution.
“I spoke this evening to a representative from the Department of Finance who did the research and discovered that you are correct and that the Department of Finance incorrectly dropped the unit in question from the co-op abatement,” he wrote the board in an email. “She is adding back the credits, but unfortunately this unit will not be added to their batch run until late June or early July. She will send at that time a notification to the managing agent confirming the credits and how they were applied.”

In other words, the mystery of the missing tax abatement was more Laurel and Hardy than Sherlock Holmes. But it did have one lesson for everyone: perseverance pays off – and it helps if you have a good lawyer.