The Cooperative and Condominium Tax Abatement has been extended until June 30, 2021. This is good news for qualifying cooperative shareholders and condominium unit owners. However, we wanted to make you aware of a significant potential change in the law (Section 467-a of the Real Property Tax Law) that may become a “hot button” issue if it takes effect on July 1, 2020.
If signed into law by the governor, effective July 1, 2020 cooperatives and condominiums will have to meet the requirements of a “qualified property” in order for its eligible shareholders and unit owners to receive the Abatement. A qualified property is defined as (i) a property with an average unit assessed valuation of less than or equal to $60,000; or (ii) a property in which all building service employees employed or to be employed at the property receive the applicable prevailing wage for the duration of the tax abatement.
Properties with an average assessed valuation above $60,000 per unit will have to pay building service employees at the applicable prevailing wage—including, but not limited to—doormen, porters, handymen, gardeners and building cleaners. However, persons who are not regularly scheduled to work at least 8 hours per week are exempt from the prevailing wage requirement. Compliance with the prevailing wage requirement has been satisfied will be verified via an affidavit from either the sponsor, an officer of the cooperative or condominium board or another authorized signatory, as will be determined by the New York City Department of Finance or other governmental agency.
Cooperative and condominium sponsors and managing agents of existing cooperatives and condominiums who desire to qualify their buildings for the Abatement will want to evaluate whether the building service employees are being paid prevailing wages and, if not, what the impact on maintenance charges or common charges would be if they were paid prevailing wages.
All of the other requirements and limitations that the law previously included remain in effect, including but not limited to:
- The Abatement is not available if the property is also receiving the J-51 abatement or exemptions under Sections 421-a, 421-b, 420-c, or 421-g of the Real Property Tax Law
- The co-op or condominium unit must be the owner’s primary residence
- Apartments owned by a legal entity are not eligible for the Abatement
- Apartments held by sponsors are not eligible for the Abatement
- Apartments owned by a trust are eligible for the Abatement, but only if the apartment is the primary residence of the beneficiary, trustee or life estate holder
If you have any questions about the Abatement or are interested in filing a cooperative or condominium offering plan, please call 212-935-1400.