The state Legislature has passed a bill that would stop awarding unofficial property tax breaks to condos that look like upscale suburban homes.
The loophole has been the subject of a series of stories in syracuse.com | The Post Standard.
In New York, condos are taxed at a lower rate than other homes, even when they are worth a lot more.
One condo in Skaneateles sold in 2020 for $2.2 million. It was assessed and taxed as if it were worth just $464,000.
Another one sold for $1.7 million. It is assessed for a full-market value of about $345,000, records show.
The property taxes on a $2 million home in Skaneateles would be about $50,000 per year. But a home assessed for $400,000 would pay $10,000.
After more than a decade, Assemblywoman Sandy Galef’s bill to stop the practice won approval from the state Senate early this morning. It will go to Gov. Kathy Hochul for her signature or veto.
“It’s so exciting,” said Galef, a Democratic from Ossining, where homeowners have been complaining for years that condo owners were not 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. It would allow each municipality to decide whether they want to stop the practice, she said.
sen. Elijah Reichlin-Melnick, D-Nyack, said he used Syracuse.com stories to explain the complicated issue to his colleagues. He mentioned Syracuse during the debate on the Senate floor after midnight last night.
RELATED: NY state gives condo owners millions in property tax breaks; the rest of us pay for it
Reichlin-Melnick called the current practice “nonsensical.”
“This is essentially a loophole which developers have been able to exploit to build and market single-family houses at a preferable tax rate, where existing single family homeowners in the community are stuck paying a higher rate,” he said on the Senate floor.
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 City or Nassau County. But some downstate legislators, including seven Democrats, still voted against it, Reichlin-Melnick said.
The vote was 39-24.
Here’s how the loophole works:
Most people think of a condo as an apartment or a townhouse. But in New York, new properties that do not share walls can also be called condos, as long as they file the correct paperwork. It’s as simple as this: a builder files a declaration of a condominium association with the county clerk and files a promise with the state attorney general’s office to offer the units for a certain price.
The law allows homeowners who join together to form a condominium association to be taxed as one unit. Their property tax bills are based on the units’ potential rental income. Other homes are assessed based on the market value.
The law, created in the 1960s, was originally intended to protect New York City high-rise apartment dwellers as their buildings were converted to units for sale. The goal was to keep taxes low and encourage home ownership in the city.
When a condo sells, the tax break extends to the new owners. It’s perfectly legal and it’s not a secret. In fact, it’s a selling point. In some neighborhoods, it is even advertised — a 37% tax discount is listed along with the quartz countertops, walk-in pantries and stainless-steel appliances.
The condo advantage has become even more exaggerated during the pandemic as home 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 pick up the slack to pay 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 free-standing homes, each assessed for about one-third of their recent sale values. Reichlin-Melnick mentioned the properties on the Senate floor, but he said Friday morning that he did not think it would advance the debate to say who owned them.
New York state assessors have been pushing since the 1980s to close the loophole.
Warren Wheeler, executive director of the New York State Assessors Association, was busy Friday morning writing a memo to assessors across Upstate New York.
“It certainly isn’t a fix-all, but it’s definitely a tool in the right direction for those municipalities that find it an issue,” he said.
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