New York lawmakers pass bill to end big property tax rebates for high-end condos
The state legislature has passed a bill that would stop giving unofficial tax breaks to condos that look like upscale suburban homes.
The escape was the subject of a series of stories in www.syracuse.com | The Post Standard.
In New York, condos are taxed at a lower rate than other homes, even when they are worth significantly more.
A condo in Skaneateles sold in 2020 for $2.2 million. It was assessed and taxed as if it was only worth $464,000.
Another sold for $1.7 million. It is assessed at a total market value of approximately $345,000, according to records.
Property taxes on a $2 million house in Skaneateles would be around $50,000 a year. But a home valued at $400,000 would pay $10,000.
After more than a decade, Congresswoman Sandy Galef’s bill to end the practice was approved by the state Senate early this morning. It will go to Governor Kathy Hochul for her signature or veto.
“It’s so exciting,” said Galef, a Democrat from Ossining, where landlords have complained for years that condo owners aren’t paying their fair share of property taxes.
If the bill is signed into law, it would end the loophole for new homes, but would not be retroactive. This would allow each municipality to decide if they want to stop the practice, she said.
Sen. Elijah Reichlin-Melnick, D-Nyack, said he used the Syracuse.com stories to explain the complicated issue to his colleagues. He mentioned Syracuse during the Senate debate after midnight last night.
RELATED: New York State Gives Millions to Condo Owners in Property Tax Breaks; the rest of us pay for it
Reichlin-Melnick called the current practice “absurd”.
“This is essentially a loophole that developers have been able to exploit to build and market single family homes at a preferable tax rate, where existing single family home owners in the community are forced to pay a higher rate” , he told the Senate.
Sen. Edward Rath, R-Amherst, spoke against the bill. He said it would be “disastrous” for development in Western New York.
The law would not affect condos in New York or Nassau County. But some downstate lawmakers, including seven Democrats, still voted against it, Reichlin-Melnick said.
The vote was 39-24.
Here’s how the escape works:
Most people think of a condo as an apartment or a townhouse. But in New York, new properties that don’t share walls can also be called condos, as long as they file the correct paperwork. It’s as simple as that: A builder files a condominium corporation statement with the county clerk and files a promise with the state attorney general’s office to offer the units at a certain price.
The law allows owners who come together to form a condominium association to be taxed as a single unit. Their property tax bills are based on the potential rental income of the units. The other houses are appraised according to market value.
The law, created in the 1960s, was originally intended to protect residents of New York’s high-rise buildings when their buildings were converted into units for sale. The goal was to keep taxes low and encourage home ownership in the city.
When a condo sells, the tax relief extends to the new owners. It’s perfectly legal and it’s no secret. In fact, it’s a selling point. In some neighborhoods it’s even advertised – a 37% tax reduction is listed with quartz counter tops, walk-in pantries and stainless steel appliances.
The condominium advantage has become even more exaggerated during the pandemic as house prices soar.
The disparity is not isolated to Skaneateles. It’s happening in Manlius, Lysander, Syracuse and suburbs from Buffalo to Albany. Some lucky homeowners get an unofficial tax break while their neighbors take over paying for schools, public safety and more.
Galef and Reichlin-Melnick have a high-profile example in their districts, in Westchester County. The Trump National Golf Club has 12 freestanding homes, each valued at about a third of its recent sale value. Reichlin-Melnick mentioned the properties on the Senate floor, but he said Friday morning that he didn’t think it would advance the debate to say who owned them.
New York State appraisers have been pushing since the 1980s to close this loophole.
Warren Wheeler, executive director of the New York State Assessors Association, was busy Friday morning writing a memo to assessors in upstate New York.
“It’s certainly not a silver bullet, but it’s definitely a tool in the right direction for municipalities that find this problematic,” he said.
Contact Michelle Breidenbach | [email protected] | 315-470-3186.