Tax time is coming soon, and a time no one really enjoys will likely be even less fun thanks to the current recession. In the case of condo and co-op buildings however, accountants and attorneys may be able to help the communities they represent save money during the tax season. They can do this by making sure they’re assessed properly and, in the event of an error, by challenging these assessments via a tax certiorari proceeding through the New York City Tax Commission.
A Word on Taxes
In New York City, tax certiorari proceedings are usually handled by experienced attorneys who work on a contingency basis. In most cases, these attorneys are paid between 12 and 20 percent of the co-op or condo’s actual tax savings, if they’re successful in recouping money for the association.
What residential classifications do co-op and condos fall under for tax purposes? Co-ops and condos are in Class 2, a category that includes all residential rental property other than those in 1, 2, or 3-family houses, according to attorney Marty Friedman, a partner in the firm of the Manhattan-based law firm of Sonnenschein, Sherman & Deutsch. (Hotels and motels are considered commercial property, he adds).
Attorney Paul Korngold of Tuchman Korngold Weiss Lippman & Gelles LLP in Manhattan, elaborates that condos and co-ops pay within the Class 2 tax rate, which has been set a 12.139 percent for the 2008-09 fiscal year. “Because of the date, the tax rate was set,” he says. “Taxpayers were billed on the lower 2007-08 rate of 11.928 percent for the first half of 2008-09. Therefore, the tax will go up in the beginning of 2009.”
Co-ops and most condos that have 10 or fewer units are in a special tax class known as 2-C. Their tax assessments, although not their local taxes, may be increased by only eight percent per year, and no more than 30 percent in any 50-year period. There is an exception for alterations, so if a co-op adds a penthouse, it’s not protected by the caps.