Three Simple Steps to Help You Untangle Tax Abatements
March 1, 2016 — The New York state legislature decreed that, beginning with the 2012-2013 tax year, only primary residents of co-op and condo apartments are eligible for tax abatements. The change complicated bookkeeping for individuals, boards and property managers, especially in buildings where an assessment was levied that equaled the tax abatements. Here are three simple steps that can help your building untangle the mess of primary residency, abatements, and assessments:
• Use an affidavit. Add a procedure at sale closings in which the buyer states in an affidavit whether the apartment is a primary or non-primary residence, says attorney Eva Talel, head of the Cooperative and Condominium Board Representation Group at Stroock & Stroock & Lavan. That information should then be provided to the managing agent for future reference.
• Work on alternatives. You don’t want to knock your shareholders for a loop. If they’re not eligible for the abatement, you can structure payment plans for them to cover the assessment. “We try to spread [the payments] out over several months,” says George Hatch, director of finance at Pride Property Management.
• Solve it first, then get them to pay. In some cases where there’s a dispute between the city and a shareholder about residency status, boards are continuing to levy the assessment on the person, but leaving it on the books unpaid, with no penalty until the matter is resolved, says Michael Rogoff, senior vice president of Akam Associates. That way, if the abatement comes through, the shareholder can use it to satisfy the debt; if the city rules that the resident is non-primary, the debt remains and the co-op can enforce the payment of the assessment.