Can Co-op Charge a Fee for Owner’s Abatement?
Q. To the extent that a co-op owner is eligible, he or she may receive property tax relief from various programs like the New York State School Tax Relief Program and the Co-op and Condominium Tax Abatement Program. When an co-op owner gets such an abatement, can the co-op automatically deduct an “annual administrative fee” from the abatement one receives?
A.“A cooperative corporation is not permitted to deduct a fee for acting as a conduit for a tax abatement,” said Aaron Shmulewitz, a Manhattan co-op lawyer. “Real estate tax abatements like those mentioned are intended to be passed through to the apartment owner. And deducting a fee would effectively deprive the shareholder of the full benefit of the intended benefit.”
At the same time, Mr. Shmulewitz said, some co-ops impose a buildingwide assessment for the total amount of the abatement in the building — thereby effectively recapturing the entire benefit — as a way of increasing income for the building.
While recapturing the entire abatement is more costly for shareholders than deducting an administrative fee — and may seem less fair — the former is legal, while the latter is not.
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