"Landmark" Co-op and Condo Tax Reform Clears First Hurdle

The State Senate passed a bill on Wednesday that seeks to end the preferential tax treatment small homeowners receive over co-ops and condos. Sponsored by state Sen. Tony Avella of Queens, bill S893B would shift co-ops and condos from tax Class 2 into Class 1, with one- to three-family homes. Instead of having their real estate tax bill assessed on the basis of comparable rental properties, co-ops and condos would now be assessed based on comparable sales.

These changes would lower taxes for middle-income buildings while raising taxes for luxury buildings. Also, abatements for co-ops and condos valued at less than $650,000 would rise from 28.2 percent to 33.2 percent, while abatements for apartments valued between $1.5 million and $5 million would decrease. Abatements would be eliminated for apartments worth more than $5 million.

“It’s landmark legislation,” says attorney Geoffrey Mazel, a partner at Hankin & Mazel. “Taxes on co-ops are through the roof, and this could be the answer to the injustices in co-op taxes. What this bill does is shift some of the taxes to higher-valued units.”

The bill now goes to the state Assembly, where it faces an uncertain fate. If passed there, it will need the signature of Gov. Andrew Cuomo to become law.