Deadlines Looming for Co-op and Condo Tax Abatements

It's that time of year again, when co-op and condo managers need to file for New York City's Cooperative and Condominium Tax Abatement Program. The program was designed, however imperfectly, to try to equalize the property-tax burden between "Class 1" residences (one- to three-family homes) and higher-taxed "Class 2" (co-ops, condos and rental buildings).

What's new this year is that building managers – or, in the case of self-managed buildings, other designated individuals – can fill out the forms online, rather than having to print them out and mail them. In fact, there's a User's Guide explaining the new method at the Department of Finance website.

So what are the filing deadlines, and just who is eligible?

For the 2016-17 tax year – which runs from July 1, 2016 to June 30, 2017 – the form must be emailed, postmarked or submitted online by Feb. 15, 2017. And for the 2017-18 tax year, the deadline isn't next February, as one might think, but rather March 31, 2017.

Note that if your cooperative or condominium development is newly constructed or converted and you're filing for the first time, that deadline is March 1, 2017.

To be eligible for the abatement, your co-op or condo unit must be your primary residence. In fact, even a unit owned by a trust is eligible if that unit is the beneficiary's primary residence. However, you can't own more than three apartments in any one development – and one of those, naturally, must be your primary residence.

What's not eligible? Sponsor units; units owned by a business (LLC); and properties already receiving certain government assistance or subsidies, such as a Housing Development Fund Corporation (HDFC) or a Mitchell-Lama building, among other types. And you can't be receiving either a J-51 exemption or a 420a, 421b, 421c, or 421g tax incentive.

What do the forms do? Basically, they tell the city if a given apartment still has the same owner-occupant as in the previous year. "If someone moves out, the city needs to know they're no longer there, since they're no longer entitled to the benefit" for that apartment, explains Steven Birbach, president of Vanderbilt Property Management. "We have to notify the city who the new owner is and if they're a resident, so they can get the benefit next time around."

The amount of the abatement is based on the average assessed value of the apartments in your cooperative or condominium. The average assessed value is not the market value, but a figure the city derives through a complicated formula for tax-assessment purposes only. If the average assessed value is $60,001 or more, the abatement is 17.5 percent, increasing in increments to 28.1 percent for apartments with assessed values of $50,000 or less. The city’s erratic method of arriving at assessments is a political hot potato that has defied reform efforts for years.

Just because you’re eligible for the abatement doesn't mean you're getting it directly. Many, if not most, cooperative and condominium boards levy an assessment equal to the amount of the abatement, in order to raise needed revenue for the building.

Finally, this abatement is separate from the New York State School Tax Relief (STAR) program and senior citizens’ Enhanced School Tax Relief (ESTAR) program, which eligible homeowners must fill out themselves. That deadline is March 15, 2017, and you don't have to reapply if you got the STAR exemption for the 2015-2016 tax year.

There are also abatements for eligible military veterans, disabled homeowners, disabled crime victims and others. Go here for more information on those.

But in the meantime, Feb. 15 is fast approaching. Your managing agent will certainly be on top of it, but boards should be aware of it as well. It's one deadline you can’t afford to miss.