Co-op and condo tax break drama unfolds | Bedford Hills NY Real Estate
When hundreds of thousands of condominium and co-op unit owners open their tax bills July 1, the amounts they see may not accurately reflect what they owe.
That's because the city erroneously included a 17.5% tax break that is set to expire on June 30. Gov. Andrew Cuomo declined the Bloomberg administration's request for a last-minute "message of necessity" that would have allowed the state Legislature to extend the abatement, and lawmakers left Albany without taking action.
The city's response, so far, is to maintain the status quo.
The city Department of Finance planned to mail tens of thousands of letters to condo and co-op owners explaining why the expiring tax break was wrongly included in their bills. The letter—which insiders said was being edited by Deputy Mayor Howard Wolfson—would have explained to property owners that their taxes will increase based on a percentage of their condo or co-op's "assessed value," which could reach up to 30%.
Without the tax break, an estimated 365,000 condo and co-op owners would pay up to $430 million in additional taxes.
But now the city seems content to do nothing.
"We are assured that this will be taken up [in Albany] before the end of the year, and therefore are not sending a letter," mayoral spokeswoman Lauren Passalacqua told Crain's.
Mr. Cuomo told the New York Times last week that he would like the mayor to restore the tax break "administratively." And informing property owners of a tax increase may be viewed by Cuomo as "an unnecessary act of aggression," an insider said, explaining one reason the letter will not be sent.
There were several proposals in Albany to extend the abatement, none of which passed. Assembly Speaker Sheldon Silver proposed a straight extension of the abatement. The Bloomberg administration sought to reduce both the number of people eligible for the abatement and the amount of money paid out, first by limiting the abatement to just three residences, one of which a primary residence, and then by capping the tax value at $100,000.
The failure to extend the tax break is being chalked up to several factors. Elizabeth Botwin, the Finance Department's deputy commissioner for administration and planning, traveled to Albany in May to lobby for the changes to the abatement program, but an insider said she was unable to find an Assembly member to sponsor the bill.
Joseph Strasburg, president of the Rent Stabilization Association, said the expired tax break presented the city and property owners with a "real dilemma."
"If you don't pay your full amount in the first quarter, you have to pay an interest on it," he said. "That to me is the biggest problem. How do you forgive somebody paying less then they're supposed to and not wave the interest payment?"
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