The state’s popular co-op and condo tax abatement will no longer be available to homeowners who own their apartments through LLCs or trusts, effectively hiking up the cost of privacy, the New York Observer reported.
Lawmakers in Albany acted this winter to extend the 17.5 percent abatement through June 30, 2015, but to exclude pied-à-terres; all homes owned by LLCs and trusts fall into that category, according to the city’s Department of Finance . “We have not changed our interpretation of the law- the law has changed,” Department of Finance spokesman Owen Stone wrote to the Observer in an email. “Under the previous law, there was no restriction, and LLCs and Trusts could qualify, under the new law, they do not.”
The move will affect roughly 7,700 homeowners, and has many in the real estate community calling the law a blatant challenge to privacy.
“They’re penalizing people who want their privacy or the convenience of owning in a trust,” Eva Talel, a real estate attorney at Strook & Strook & Lavan, told the Observer.
Real estate insiders see tax breaks as essential to the market’s growth, as The Real Deal previously reported.
Even notoriously stodgy co-op boards who reserve their most skeptical eye for pied-à-terres have, in recent years, begun to recognize the need for trusts, and increasingly allow establish residents to transfer their apartments into them.
Mary Ann Rothman, the executive director of the Council of New York Cooperatives & Condominiums, told The Observer that the Council begged the Department of Finance to reconsider the change to the law, particularly in respect to trusts.
“We told them that 99 percent of the time, there’s an agreement between the co-op board and the trust that only the trust-holder will live there,” Rothman said. [NYO] —Hiten Samtani