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We just received a letter from our accountant and were delighted to find we received a whopping tax refund from the Town because of grievences, etc. BUT....the letter says we should only claim 4 cents per share on our tax return for a deduction!!! The shareholders did not received any refunds either in real check or on our maintenance bills. We paid the same maintenance as last year. The board will not talk to us about it. How can this be? We paid the taxes, no refund, no tax deduction??? Something smells pretty fishy here. We are talking high 6 figures and in the past we were told refunded tax $$$ cannot be spent for projects, it is to be put toward the next years taxes. Anyone have thoughts or experience with this? Thanks in advance.
Join the Conversation Comments (2)It doesn't have to be paid back or only used for the next years taxes, it can be held back, or taken back in a special assessment to defray unplanned expenses in operating or capital improvement accounts, such as: a very cold winter and big spike in heating fuel costs that take you too far beyond contingency planning, unforeseen physical plant break downs, repairs or replacements that would deplete the reserves by too large a factor, a need to rebuild a sorely depleted reserve fund etc. this is all serving as an offset to a potentially larger maintenance increase or assessment that might otherwise be needed. And the best part is you don't really feel it as you are not having to write a special check to cover it. Your just not getting it back. IF the fact that it is there, and is being put to legitimate use is still unbearable, well, I can't help you with that...!
This is a different discount than dsi is referencing - this is 1%of the total tax bill if you pay in full by July 1st. DSI is referring to the annual tax abatement. They are tow completely different things.
thank you all for your responses. The board used the money for repairs that we already have a $2Mil loan for(paying on it for 3 yrs). As for not feeling it....well when you always have a tax deduction on your taxes (around $3k) and now you have only $30.00, it hurts. Many of us will have to pay more to Uncle Sam or get less as a refund.
Hi,
You did not mention in which town. In NYC, we get a 1% discount on the 2nd, 3rd and 4th quarter Real Estate tax if we pay them early. We also save up all year for it and so we receive interest income.
If this refund could be used to pay your next year's tax early (or partially early), then the corporation benefits by having less expense. This is fiscally prudent. Your Board could be doing a great thing by following this route.
Also, if you received a tax refund, that means you received too high of a tax credit in prior years. The current lack of one just evens it out. No, tax credits do not have to be paid back to the shareholders: remember, it is the corporation that owns the building, holds the mortgage and pays the tax. It is only a quirk in the tax law that allows the passing of interest and taxes back to the owners (for example, regular shareholders of corporate stock do not receive this credit)
Sincerely,
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Usually refunds come in the form of credits. It's never cash.
That credit should be transfered to the shareholders through their maintenance bill.
You deduct from your tax return the amount of real estate taxes you paid throughout the year.
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