Published: Autumn 1997
FINANCE COMMITTEE EXPLAINS
PROPERTY TAX ABATEMENTS,
VETERANS' & "STAR" EXEMPTIONS
At the September 24, 1997, meeting of the Action Committee for Reasonable
Real Estate Taxes, chairman Martin Karp welcomed New York City Deputy
Finance Commissioner Martin Oestreicher, who spoke of the property tax
abatements that were credited to qualifying cooperative and condominium
units on their July tax bills. He answered questions about the distribution
of this credit and outlined the way in which the Department of Finance
will be collecting data for the third year of this abatement.The deputy
commissioner also gave insights into how the Department will qualify people
for the veterans' tax abatements that will begin in July of 1998, as well
as for the State School Tax Relief Program (STAR), which applies to homes
that are primary residences of their owners.The STAR program begins in
July 1998 for senior citizens with family incomes of $60,000 or less,
and in July 1999 for all other qualifying homeowners.
LOWER TAX BILLS FOR CO-OPS
In July, qualifying cooperatives and condominiums paid lower property
tax bills as a result of the abatement, which was enacted as Chapter 273
of the Laws of 1996. The lower bills reflected the full first year of
the three-year property tax abatement and the first portion of the tax
abatement for this fiscal year. However, because the tax rate for fiscal
1998 had not yet been established at that time, we knew that adjustments
would have to be made.
In the case of condominiums, where each unit owner receives an individual
bill, January bills will reflect the appropriate adjustment. The situation
is different for cooperatives. To help cooperatives distribute accurate
amounts to qualifying shareholders, the Department of Finance had calculated
the precise dollar amounts attributable to each qualifying unit and had
sent this information to cooperatives early in September. This enabled
many cooperatives to begin crediting these abatements on shareholders'
October or November maintenance bills.
DISTRIBUTING THE ABATEMENT
Cooperatives have considerable discretion in selecting how and when they
distribute the abatement, but the money cannot be absorbed into buildings'
general funds. The law requires that the cooperative distribute the abatement
to the qualifying units in the course of the year in which the abatement
is granted. This means that the 1997 credit -- 2% on taxes in cooperatives
with average assessments of $15,000 or less and 1.25% on the taxes of
cooperatives with assessments averaging more than $15,000 per unit --
should be distributed immediately. The fiscal 1998 abatement -- 16% on
taxes of cooperatives with average assessments of $15,000 or less and
10.75% on taxes in cooperatives with assessments that average $15,000
or more per unit -- must be distributed by the end of June 1998. Commissioner
Oestreicher explained that the abatement goes with the unit and, therefore,
if the shareholder who was in place on the January 5th qualifying date
has subsequently sold the apartment, there is no need to track down that
prior shareholder: The abatement is to be credited to the apartment.
THE THIRD-YEAR ABATEMENT
In third year, the abatement jumps to 25% on taxes in cooperatives with
assessments that average $15,000 or less per unit and 17.5% on taxes in
cooperatives with assessments that average $15,000 or more. For those
cooperatives and condominiums where units were among the 261,000 that
filed with the Department of Finance for prior-year abatements, the DOF
will soon send a full listing of all data presently in its computers to
the designated contact person (generally the managing agent). Missing
information about square footage or number of bedrooms, which was excused
for the 1997 and 1998 abatements, must be supplied this time. If apartments
have changed ownership, full data will be required for the new owners,
and sales prices will also be required on all new sales.
The DOF is sending this information out in November so that there is
ample time for you to provide all missing data. However, it will not be
possible to file the forms until after January 5, 1998, as this is the
record date for determining which units qualify. You are encouraged to
file well before the April 1, 1998, deadline, so that there will be time
to correct any errors. Cooperatives or condominiums that did not file
for the 1997 or 1998 abatements can contact the Department of Finance
after December 1, 1997, for forms to describe all the units and to provide
appropriate information about their owners.
Chapter 273 required that the city develop a long-range plan to continue
progress toward tax fairness for homeowners in cooperatives and condominiums.
Mr. Karp and Commissioner Oestreicher reported that, while this plan is
now overdue, the Department of Finance and the City Council Finance Division
have been working on the plan and have reached out to various industry
groups for input, including CNYC and the Action Committee. Both Mr. Karp
and Commissioner Oestreicher expressed optimism that a satisfactory plan
can be developed in the next several months and presented to the legislature
for enactment in the spring of 1998.
VETERAN'S BENEFITS SOON AVAILABLE
TO VETERAN OWNERS OF COOPERATIVES
Two tax exemption programs were passed this year that affect many homeowners
in co-ops and condos. Thanks to the perseverance of the Federation of
New York Housing Cooperatives and to Assemblyman Ivan Lafayette, legislation
was signed this spring bringing homeowners' tax benefits to those veterans
making their homes in cooperatives, who would have received these benefits
if they lived in private homes or in condos. Veterans who served in time
of war qualify for these benefits (as do their surviving spouses), with
additional levels of benefits for those who served in combat or are disabled.
Forms are already available at borough offices of the Department of Finance
and must be filed by the individual veteran by March 15, 1998. The DOF
is also sending sample forms to co-ops for duplication and distribution
to veterans in their buildings. This exemption will begin in July 1998.
Like the homeowners' property tax abatement, this amount will have to
be distributed to veterans by co-ops in a timely manner.
SCHOOL TAX EXEMPTION IS COMING
Governor Pataki's School Tax Relief (STAR) Program was passed in July.
Over the next four years it will phase in reductions in the school taxes
paid by homeowners whose primary residence is in New York State. Of these,
senior citizens with a family income of $60,000 or less can begin to benefit
from this program starting in July 1998. Other homeowners will begin in
To implement the STAR Program, the Department of Finance must gather specific
information on every homeowner. DOF will send individual letters in December
to each person whose name was listed as the shareowner of the cooperative
units that qualified for the property tax abatements. Owners of condominium
units and private homes will also receive letters and forms requesting
information about the owner.
You will be asked to complete these forms and return them quickly to
the DOF so that it can begin the enormous task of integrating all needed
information into its data files. You will be asked to confirm that this
apartment is your primary residence (a precise definition will be provided).
For cooperatives that did not participate in the abatement program, the
DOF does not have names of individual owners. It will send the forms to
the board or the manager and require that they be distributed to all the
owners in the cooperative. For senior citizens to claim additional benefits,
they will have to provide information including date of birth and proof
that family income does not exceed $60,000.
The STAR program will be phased in over a four-year period for qualifying
seniors and over three years for other primary homeowners, so that full
abatement will be received by all in fiscal 2002.