Cashing in on History: Tax Breaks for Co-ops
Sept. 15, 2015 — A touch of history can pay off in a big way.
Take Dunolly Gardens. The 360-unit Queens complex earned thousands of dollars in tax credits because the property is listed in the National Register of Historic Places. The National Register is the official federal list of historically significant districts, sites, buildings, structures, and objects.
For co-op and condo boards, historic designations have often brought little beyond the honor of being recognized (usually a plaque). Owners of private property listed in the National Register are free to maintain, manage, or dispose of their property as they choose, provided that no federal money has been spent on restoration.
It can get costly, however, if the New York City Landmarks Preservation Commission (LPC) becomes involved. Costs go up as the LPC reviews and requires historically accurate repair work in LPC-designated districts or buildings (which are often, but not always, the same as properties listed in National Register districts).
So, how do you get tax credits?
"The first thing people think about when they hear about a 'historic' tax credit is a picture in the magazine Georgian Colonial of a period freestanding house," says Murray Gould, principal in Port City Preservation, a company that assists buildings in getting tax credits. But, he notes, the law has been evolving. "You've always had, on the federal level, I'll call it a historic tax credit, for commercial revitalization of historic properties."
Many states have added to that federal credit with companion or lesser state credits. One of those is the New York State Homeowners Credit, a law that became effective in 2009 that earns eligible tenant-shareholders and unit-owners of co-op and condo apartments tax credits for doing repairs to the exterior and interior of the building.
That brings us back to Dunolly Gardens. Three years ago, the co-op hired Gould to evaluate how the program would work for them and to help the property apply. Dunolly Gardens eventually became the first and largest co-op in New York State to take advantage of the homeowners tax credit — but it probably won't be the last.
Next week, we'll take a look at what the new law does and how your building might benefit.
For additional information on the New York State Homeowners Credit and whether you qualify, check out the Tax Credit Program page on the New York State Office of Parks, Recreation, and Historic Preservation. And for additional information on claiming this credit, see Form IT-237, Claim for Historic Homeownership Rehabilitation Credit, and its instructions.