A tax exemption for residential renovations will now include more co-op owners, thanks to a bill that was officially signed into law by Governor Andrew Cuomo on Friday.
The bill, which was co-sponsored by state Sen. Tony Avella (D-Bayside) and Assemblyman Ed Braunstein (D-Bayside), passed both the Assembly and the state Senate at the end of June. It deals with a tax exemption called the J-51 tax abatement, which provides significant tax breaks for the renovation of residential apartments.
Before 2013, co-ops with an assessed value of less than $40,000 were eligible for the J-51. However, this threshold was reduced to $30,000 following a 2013 law. According to Braunstein and Avella, this decrease removed many middle-class families from eligibility, as it excluded anyone whose co-op was valued at between $30,000 and $40,000.
The new law has increased that threshold to $32,000 and ensures that the cap will rise with the cost of living each year to a maximum of $35,000.
“The cost of living in New York is always on the rise, making it difficult for middle-class families to afford living in the state. Cutting the qualification threshold for the J-51 tax abatement from $40,000 to $30,000 in 2013 was a step in the complete opposite direction,” said Avella in a statement. “The increase that was signed into state law today will allow more middle-class co-op and condo owners to qualify for the J-51 abatement and will ensure that threshold stays relevant in the years to come.”
Braunstein explained that the decrease in the J-51 tax abatement cap pushed many co-op owners out of the program over time.
“At that time, 30 assessed value, I guess it was 2012 when the deal was struck, most of the units in and around my district would still qualify for the J-51 abatement,” Braunstein told the Queens Tribune. “But over time, as the value of co-ops and condos continued to increase, more and more units have been falling out of the program because they’re going above that 30-assessed-value threshold.”
Avella said that in his original bill, he was hoping to get the assessment cap raised to $50,000, which he called “a more realistic assessed value of many co-ops and condos.”
Avella’s version of the bill passed in the Senate, but he says that the Assembly, after negotiations with the mayor’s administration, agreed to a more modest increase – the $32,000 cap. That new law was then passed in both the Senate and the Assembly and signed into law by the governor last week.
“I still fully intend to reintroduce my bill next year to go to [$50,000],” Avella told the Queens Tribune. “I’m happy that the mayor agreed to this modest increase, and it’s a baby step in the right direction. But we still need to do more.”
Avella also guessed that the original threshold drop was an effort to reduce tax abatements to protect revenue.
“The problem is, this is not like one of those programs that it’s the big developers with huge multimillion tax abatements,” said Avella. “This program was really used by the average co-op and condo, which really is affordable housing in the city of New York.”
Reach James Farrell at (718) 357-7400 x127, email@example.com or @farrellj329.