Taxes. They can be a beast, especially if you own property here in New York City. Luckily, there’s one reprieve for condos and co-ops: tax abatements.
What's the NYC co-op and condo tax abatement?
Introduced in 1996, the NYC tax abatement levels the playing field with single to three-family homes (taxed at significantly lower rates) by reducing property taxes for qualifying NYC apartment owners/shareholders.
Due on February 15 of each year, qualified buildings can reduce their property taxes anywhere from 17.5% to 28.1% based on the average assessed value (not to be mistaken with market value). For example, own a 1,000-square-foot condo in Chelsea with an average assessed value of $121,000? You’d qualify for 17.5%.
Here are the percentages, neatly calculated for you. And you can learn more here.
Average assessed value: Abatement percentage:
$50,000 or less 28.1%
$50,001 to $55,000 25.2%
$55,001 to 60,000 22.5%
$60,001 or more 17.1%
Who qualifies for the tax abatement?
Does your unit check all the boxes? Get that money!
- You use your unit as your primary residence (in other words, investment properties don’t count)
- You own fewer than four units in the building
- Your unit isn’t owned by a business, sponsor, or trust
- You purchased the unit before January 5th, 2022
- New condo owner? Be sure you file a real property transfer tax (RPTT) form or deed with the Division of Land Records at www.nyc.gov/acris
- Your building submits a prevailing wage affidavit with the abatement application
What's a prevailing wage affidavit?
In 2022, the city changed the game by making every condo and co-op looking to leverage NYC’s tax abatement provide a prevailing wage affidavit. This certificate is proof your building’s paying its building employees the prevailing wage, the annual wage and benefit rate set by the city comptroller (not to be mistaken for minimum wage).
- What buildings qualify: Buildings with 30 or more residential units and an average assessed unit value of more than $60,000 or buildings with less than 30 residential units and an average assessed unit value of more than $100,000
- Who constitutes as a building employee: Anyone who’s regularly employed to take care of your building eight hours or more each week, including supers, cleaners/porters, door persons, elevator operators, and more
- What do you submit: Submit this form alongside your tax abatement application
Can a building not qualify for the tax abatement?
Short answer: yes.
Buildings that already participate in these programs won’t qualify for the co-op and condo tax abatement:
- Urban Development Action Area Program (UDAAP)
- Housing Development Fund Corporation (HDFC)
- Mitchell-Lama buildings
- Buildings in the Division of Alternative Management Programs (DAMP)
Buildings receiving these abatements won’t qualify, either:
- J-51 exemption
- 420c, 421a, 421b, or 421g
- Clergy property tax exemption (click here if you'd rather receive this abatement than the clergy exemption)
Your building qualifies - congrats! Now what?
Your co-op/condo board is responsible for submitting the tax abatement application for the entire building. Here are a few things to note:
- Confirm the number of units in your building that qualify (check the checklist above) to ensure you receive the highest reduction
- File your application by February 15 of each year through the co-op/condo abatement portal (and don’t forget the prevailing wage affidavit!)
- Keep an eye out for tax benefit letters mailed out every December
- Part of a co-op? Look into a co-op tax abatement assessment to collect and use these tax savings toward maintenance and improvements without having to directly charge your shareholders more money
As stated at top of this article, taxes can be a *insert your preferred word*. But, tax abatements do provide a little ray of sunshine, for those who qualify.
Have questions or need some guidance on taxes, tax abatements, prevailing wages, or more? At Daisy, our team financial experts are always here to pick up your call.