New York Legislature Update: Taxes

By
Real Estate Agent with Compass

The New York State legislature with strong support from REBNY (Real Estate Board of New York) has passed and the Governor has signed a bill (A10688/ S07714) that extends the coop and condo real property tax abatement for four years. The passage of this legislation extends the 17.5% reduction in a property's assessed value (25% for properties assessed at less than $15,000).

In these difficult economic times, with financing more difficult and rising prices, this continued significant reduction in property taxes is needed more than ever.

The Governor also at REBNY's urging signed a bill (A11114/S7066) that would permit multi-year tax exempt financing for at least four 80/20 projects, (80% market rate 20% affordable) that will result in hundreds of millions of dollars of investment and will create much needed market rate and low income residential rental apartments.

The legislature also approved City tax credits for installing solar panels on homes and businesses - encouraging private property owners to join the growing movement toward the use of renewable power. Another bill, also passed, allows those who generate renewable power to sell what is unused back to the system, an incentive for individuals and businesses to install technology like solar panels.

New York City will also extend a 7 per cent property tax cut and $400 rebate to home owners for one more year.

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Rainer
8,372
Scott Ingalls
Nothnagle Realtors - Rochester, NY

Glad to hear that NYS has done something nice for the City, now if we can only get Shelly Silver and Joe Bruno to do the same for Upstate....(tax caps come to mind).

Jun 24, 2008 01:09 AM #1
Rainmaker
597,761
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Scott, I just saw in the paper this morning Bruno is retiring. There is so much grid lock in Albany.

Jun 24, 2008 01:21 AM #2
Ambassador
2,737,237
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

Now that's what I call progressive.  The secret to a viable real estate market is sending less and less to the governments and keeping more and more in the hands of property owners and investors.

 

Jun 24, 2008 02:19 AM #3
Rainer
130,162
Rich Dansereau
Positive Real Estate Professionals - Knoxville, TN

I love that the city is backing the use of renewable energy through tax credits and that they can sell the excess back to the grid! More cities should do this!

Jun 24, 2008 04:53 AM #4
Rainmaker
597,761
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

 Lenn, Thank you now we need NYS to raise the 1% mansion tax to $3 million from $1 million.

Rich, Thanks for stopping by. Mayor Bloomberg is the green Mayor. He has a 30 year plan for the city PlaNYC. A comprehensive sustainability plan for the City's future.

Jun 24, 2008 11:49 AM #5
Anonymous
Andrea
The question is... How much of those tax rebates will actually end up in the hands of Coop shareholders? In many buildings the Sponsors of large Coops and their puppets on the board will institute an "assessment" equal to the tax rebate. The people paying the taxes (the shareholders) get nothing while, once again, the intrenched sponsors get another windfall. Shareholders are virtually defenseless against this tactic because in most cases the shareholders will not have the opportunity to vote on this decision. What sort of legislation is being proposed to protect shareholders from tactics like that? Thanks, A
Jun 28, 2008 12:36 AM #6
Rainmaker
597,761
Mitchell J Hall
Compass - Manhattan, NY
Lic Associate RE Broker - Manhattan & Brooklyn

Hi Andrea,

Thanks for visiting my blog. As you know, coop ownwership is a form of ownership that is different than owning real property (condo or house.) A coop is a corporation with shareholders. Corporations are not run as democracies and shareholders don't always have the opportunity to vote on all corporate decisions. I don't beleive there is legislation proposed to protect shareholders from coop board tactics. Coop ownership is not for everyone.

Coop boards have the right to reject any buyer who doesn't quite fit, however they define "fit." Coop boards also have the right within their proprietery lease to impose an assesment equal to the tax reduction if they see fit. However, coop boards also have a fiduciary duty to the shareholders.

The $400 rebate is sent directly to every home owner and not the coop board. Individual coop shareholders do not pay real estate taxes directly to the city the way real property owners do. Coop shareholders pay real estate taxes as a portion of their maintenance. The portion of the maintenance that pays real esate tax and interest on the building's underlying mortgage is tax deductible. 

As far as "sponsors of large buildings and puppets on their boards" most coops vote for their board of directors. A sponsor can only control the board if they own 50% or more of the unsold shares.

When purchasing a coop, during the "due diligence" process a buyer's attorney will ascertain if the sponsor controls the board and or if the building is more than 50% owner occupied. There are pros and cons of coop ownership. A sponsor controlled board or many unsold shares in a coop is a "red flag". 

While the majority of our housing stock in Manhattan is still coops, there are many condos available. Owning real property might be better for you than owning shares in a building corporation. If you are a coop shareholder and would like to sell your coop and buy a condo, please contact me as I can help you with both.

Jun 28, 2008 05:48 AM #7
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Mitchell J Hall

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