Co-op and Condo Property Tax Abatement Extended for Two Years

Gov. Andrew M. Cuomo has signed into law a two-year extension of property tax abatements for co-op and condominium apartments that are the owner’s primary residence.

While expected, the passage of the law was cheered by co-op and condo advocates. “It’s great news,” says Geoffrey Mazel, a partner at the law firm Hankin & Mazel and legal adviser to the Presidents Co-op and Condo Council, which represents more than 100,000 residents in New York City. “In past years the extensions were not automatic. This year there was no controversy; it sailed through both houses of the Legislature. We take that as a good sign that there wasn’t any resistance.”

The two bills that led to the extension of the abatement until June 30, 2023 were sponsored by Sen. John Liu, a Queens Democrat, and Assemblyman Dan Quart, a Manhattan Democrat.

“Co-ops and condos are a pathway to homeownership for working families and the middle class,” Liu tells Habitat. “The last thing we want to do is make this path more difficult or cut it off entirely. For many people, owning a co-op or condo would not have been possible without the tax abatements.”

The co-op and condo tax abatement, which ranges from 17.5% to 28.1% of the property tax bill depending on the value of the apartment, was instituted in 1996 as a way of equalizing taxes between Class 2 co-ops and condos and Class 1 one- to three-family homes. It has been renewed several times since then, and in recent years provisions were added that co-op shareholders and condo unit-owners have to use the apartment as their primary residence in order to qualify for the abatement. The resulting need to verify primary residency has significantly increased the work load for property managers. One management executive called the verification process “an extraordinary expense, a waste of everyone’s time and money.”

Mitch Unger, the controller at the Lovett Group, is no fan of the rule. “We have to update any changes in primary residency every year,” he says. “If there’s a mistake, the city doesn’t allow us to retroactively collect the abatement.”

Other factors complicate who’s eligible for the abatement. An apartment 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. Also not eligible: sponsor units; units owned by a business (LLC); pieds-à-terre; units being rented out; and properties already receiving certain government assistance or subsidies, such as a Housing Development Fund Corporation or a Mitchell-Lama building, among other types. And you can’t be receiving a J-51 exemption, or a 420a, 421b, 421c, 421g tax incentive. 

The abatements are particularly prized by co-op boards, which usually assess shareholders for their portion of corporation’s abatement. While individual shareholders don’t touch the money, the co-op’s budget gets an infusion, theoretically to the benefit of all shareholders. Since condo unit-owners pay their property taxes individually, condo associations don’t benefit from the abatement. 

“It’s prized,” Mazel says, “because it’s income for the co-op corporation.”