Story:
Kenneth is a young professional. He’s looking to buy a condominium with tax abatement, so that he can afford to pay the mortgage without paying too much in real estate taxes. In New York City, new construction condos built in certain areas are qualified to benefit from 421a tax exemption (for details check out http://www.nyc.gov/html/dof/html/property/421a.shtml)
Kenneth saw an online listing for a condominium building in Brooklyn, which stated the offering price of each unit. According to the advertisement, the real estate tax is only $25 a month for the unit that he’s interested in. Kenneth is very excited to have found something with such low real estate taxes. He made an offer and it was accepted. When he came in to review the contract with his attorney, a printout of the real estate tax bill from the New York City Department of Finance website indicates an amount much higher than $25.00 per month.
What should Kenneth do now?
Answer: The real estate taxes listed in the advertisement and Condominium Offering Plan are always an estimate. If a purchaser actually reads the Offering Plan, he/she will find there is a section which clearly states that the real estate tax listed is only an estimate, that the Sponsor (the Seller) is not responsible for the discrepancy between the actual tax and the estimated tax, and that there is a risk that the Condominium does not have tax abatement approved.
Tips:
1. Website to research the actual real estate taxes: NYC Finance Property Address Search.
Type in the address and select the county. You will see the actual bill of the real estate taxes for the unit you are buying.
2. Final or Preliminary Certificate of Eligibility for 421a tax abatement:
Always ask the the agent or developer for this Certificate. The Certificate is proof of the eligibility of the condominium qualifying for the tax exemption.
3. Figure out the actual real estate taxes with – AND without – the tax exemption.
In the real estate tax bill, it will state how much the taxes will be without any exemption. It gives purchasers a good idea of what to expect once the tax abatement runs out.
If you are thinking of purchasing a new condo and have any questions about tax abatement, please don’t hesitate to call or email jackiehuang@huanglawfirm.com. We will be glad to answer your questions.
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Jacqueline Huang Huang & Associates, P.C. 6402 8th Avenue, Suite 405 Brooklyn, NY 11220 Telephone: (718) 435-666 Email: jackiehuang@huanglawfirm.com  |
