According to a recent audit by New York City Comptroller Scott M. Stringer, corporate-owned condos and other properties such as indoor parking spaces and gardens were granted more than $10 million in improper tax abatements over the past four years because the New York City Department of Finance failed to conduct basic document checks.
“The City handed out millions in tax abatements to corporate-owned condos, parking spots and cabanas because no one bothered to review basic tax records,” New York City Comptroller Scott M. Stringer said.
“This money could have been used to fund our schools, put more police on our streets and help house our homeless but instead they lined the pockets of LLCs and corporations. The Department of Finance needs to significantly step up its game and collect all the taxes the City is owed.”
The audit investigated the Department of Finance’s administration of the Co-Op/Condo Tax Abatement during Fiscal Years 2013-2016. The abatement is designed to give individual homeowners in co-ops and condos tax relief through a partial property tax reduction.
A 2013 amendment to the law clarified that to receive the abatement, the property must be the owner’s primary residence, and it cannot be owned by a corporate entity. During Fiscal Year 2015, there were 35,335 condominium units that received abatements totaling $76.46 million, and 226,284 cooperative units that received abatements totaling $322.98 million.
The comptroller’s office offers the Department of Finance several recommendations to address the problem, including upgrading internal systems to automatically reject tax abatements for properties that are owned by corporations or are not classified as residential; requiring staff to verify that a unit applying for a tax abatement is both individually-owned and residential; and enforcing the state law which requires condo boards to submit documents each year detailing which units have been sold, and if the new owner is a corporation – and thus ineligible for abatements.
“Every tax dollar counts,” said Stringer. “It’s time for the Department of Finance to take action now and recoup these lost millions on behalf of all New Yorkers.”
To read the audit, click here.