I am on the verge of buying a co-op and our attorney brought it to our attention (from the financials) that there is a "special operating assessment of $X, which has been offset by the NYC real estate tax abatement received by eligible stockholders." I have done a lot of web research and understand the tax abatements / that it is common for co-ops to take these funds from shareholders instead of... [more]
I am on the verge of buying a co-op and our attorney brought it to our attention (from the financials) that there is a "special operating assessment of $X, which has been offset by the NYC real estate tax abatement received by eligible stockholders."
I have done a lot of web research and understand the tax abatements / that it is common for co-ops to take these funds from shareholders instead of increasing maintenance.
However, I don't understand if ineligible shareholders are then required to pay as assessment equivalent to what their abatement could have been. And if that’s the case, I don’t understand why this wasn’t disclosed earlier as an assessment.
Our attorney asked the seller if he was eligible and he said he doesn’t know. It looks like a lot of people have trouble getting approved for this abatement and end of having to pay an assessment for years. We finally accepted a very high monthly maintenance cost, but this is a new surprise.
Am I misunderstanding something? Any insight is greatly appreciated!
[less]
Response by Aaron2
over 8 years ago
Posts: 1695
Member since: Mar 2012
Yes, you will pay the assessment if you are ineligible for the tax abatement (which would otherwise 'pay' for the assessment). Your attorney needs to determine when the assessment will be made, whether you will be eligible for the tax abatement (primary residence? senior? veteran? etc.), and whether the managing agent will file the appropriate paperwork for your eligibility timely. It's highly likely you will be ineligible in your first year of ownership. The discussion boards are full of people who have had problems with the managing agents' filings.
Ignored comment.
Unhide
Response by AfternoonTee
over 8 years ago
Posts: 5
Member since: Jun 2016
Random question / rant.. should this be disclosed on a listing or when you start the bidding process?
Ignored comment.
Unhide
Response by 30yrs_RE_20_in_REO
over 8 years ago
Posts: 9876
Member since: Mar 2009
You are going to find that almost every coop does this, so this isn't a situation where if you bought in a different coop it would change.
Ignored comment.
Unhide
Response by AfternoonTee
over 8 years ago
Posts: 5
Member since: Jun 2016
Thanks for your replies! Is it common not to mention this as an assessment, or is that something the seller broker would need to disclose early on since not everyone is eligible (I believe people making over $500k aren't)? We're thinking of asking the seller to pay for it for a few years since we were a bit blindsided by this.
Ignored comment.
Unhide
Response by 300_mercer
over 8 years ago
Posts: 10553
Member since: Feb 2007
Afternoon, There is a much simpler way to look at it. If you qualify for primary residence rebate, the coop will not charge you extra amount of taxes due to a lack of rebate. If it is a primary residence, you will qualify with a few months delay (it is very possible that there is a longer delay but you will start to get the rebate. Your lawyer should be able to explain that to you rather than confusing you. The future rebate with you as the owner and resident has nothing to do with the current seller's rebate.
Ignored comment.
Unhide
Response by 300_mercer
over 8 years ago
Posts: 10553
Member since: Feb 2007
Every one who uses as a primary residence is eligible regardless of income. Your attorney should know that. This is not an assessment which any one needs to disclose.
Ignored comment.
Unhide
Response by 30yrs_RE_20_in_REO
over 8 years ago
Posts: 9876
Member since: Mar 2009
They don't need to disclose it because it's not a monthly assessment which you would be required to pay after you close. It was a one time assessment which both began and ended in the same month. Next year the coop will decide again if they are going to assess back whatever rebate they will get (and they will assess it, trust me, but it will be a new one shot deal).
Ignored comment.
Unhide
Response by AfternoonTee
over 8 years ago
Posts: 5
Member since: Jun 2016
Ah, interesting. I thought there was a good chance we'd have to pay out of pocket for (potentially) a few years?
For some of my neighbors it's been two years. First, there's a long lead time so the timing of when you get the break depends partly on the timing of when you closed, and second, the government changed the property tax breaks from "opt-out" to "opt-in" a few years ago. With a co-op, the managing agent has to file for you, so you want to make sure he/she does.
Ignored comment.
Unhide
Response by KAS61
over 8 years ago
Posts: 126
Member since: Mar 2012
Even if it is your primary residence, you may find yourself paying the assessment out of pocket for up two years, depending on whether your closing date and the deadline for applying for the rebate align well, or not. This happened to me. I didn't even know there was a rebate/assessment until I was billed for it I think the whole process could and should be more transparent. I raised this with my building and they said it was the attorney/broker's responsibility to inform the buyer not the seller or the building.
Ignored comment.
Unhide
Response by 300_mercer
over 8 years ago
Posts: 10553
Member since: Feb 2007
The coop will get it back for you. If you buy now, you are eligible starting July 2018 if the apartment closes before Jan 5th. The coop managing agent files a form in Feb 2018. Your lawyer can also file a form in addition. So the worst cases, if you close now is 10 months. If the form is filed by the coop and you do not get a rebate, the coop managing agent will get it back for you. Get a better lawyer!!
'/%3e%3c/g%3e%3c/svg%3e)
Yes, you will pay the assessment if you are ineligible for the tax abatement (which would otherwise 'pay' for the assessment). Your attorney needs to determine when the assessment will be made, whether you will be eligible for the tax abatement (primary residence? senior? veteran? etc.), and whether the managing agent will file the appropriate paperwork for your eligibility timely. It's highly likely you will be ineligible in your first year of ownership. The discussion boards are full of people who have had problems with the managing agents' filings.
Random question / rant.. should this be disclosed on a listing or when you start the bidding process?
You are going to find that almost every coop does this, so this isn't a situation where if you bought in a different coop it would change.
Thanks for your replies! Is it common not to mention this as an assessment, or is that something the seller broker would need to disclose early on since not everyone is eligible (I believe people making over $500k aren't)? We're thinking of asking the seller to pay for it for a few years since we were a bit blindsided by this.
Afternoon, There is a much simpler way to look at it. If you qualify for primary residence rebate, the coop will not charge you extra amount of taxes due to a lack of rebate. If it is a primary residence, you will qualify with a few months delay (it is very possible that there is a longer delay but you will start to get the rebate. Your lawyer should be able to explain that to you rather than confusing you. The future rebate with you as the owner and resident has nothing to do with the current seller's rebate.
Every one who uses as a primary residence is eligible regardless of income. Your attorney should know that. This is not an assessment which any one needs to disclose.
They don't need to disclose it because it's not a monthly assessment which you would be required to pay after you close. It was a one time assessment which both began and ended in the same month. Next year the coop will decide again if they are going to assess back whatever rebate they will get (and they will assess it, trust me, but it will be a new one shot deal).
Ah, interesting. I thought there was a good chance we'd have to pay out of pocket for (potentially) a few years?
http://streeteasy.com/talk/discussion/23806-coop-assessment-lump-sum-payment
For some of my neighbors it's been two years. First, there's a long lead time so the timing of when you get the break depends partly on the timing of when you closed, and second, the government changed the property tax breaks from "opt-out" to "opt-in" a few years ago. With a co-op, the managing agent has to file for you, so you want to make sure he/she does.
Even if it is your primary residence, you may find yourself paying the assessment out of pocket for up two years, depending on whether your closing date and the deadline for applying for the rebate align well, or not. This happened to me. I didn't even know there was a rebate/assessment until I was billed for it I think the whole process could and should be more transparent. I raised this with my building and they said it was the attorney/broker's responsibility to inform the buyer not the seller or the building.
The coop will get it back for you. If you buy now, you are eligible starting July 2018 if the apartment closes before Jan 5th. The coop managing agent files a form in Feb 2018. Your lawyer can also file a form in addition. So the worst cases, if you close now is 10 months. If the form is filed by the coop and you do not get a rebate, the coop managing agent will get it back for you. Get a better lawyer!!
http://www1.nyc.gov/site/finance/benefits/landlords-coop-condo.page