operating budget.What are co-op assessments used for?
Special assessments in NYC can be divided into capital assessments and operating assessments.
As a co-op shareholder, you can support or oppose proposed improvements or repairs in your building, such as lobby renovations, hallway re-carpeting, or installing a roof deck.
The funds from capital assessments pay for projects considered beneficial to the co-op building.
When are co-op and condo special assessments in NYC payable?
Co-op and condo special assessments in NYC are typically paid in equal installments throughout 12 to 36 months. However, a co-op or condo building may bill the per-apartment assessment as a lump sum, payable immediately.
The co-op or condo building determines the amount and payment structure of a special assessment. A lump-sum assessment is more common when urgent and costly repair work is required immediately, and the building does not have enough cash in its reserve fund to pay for the repairs.
To prevent these situations, co-op and condo buildings in NYC may establish a line of credit, take out a mortgage, or implement an assessment specifically to build the reserve fund.
Is a co-op special assessment tax deductible in NYC?
Co-op and condo buildings in NYC may establish a line of credit, take out a mortgage, or implement an assessment to build the reserve fund over a set period.
Please keep all the documentation and bills when your building conducts an assessment. Your accountant can help you determine which assessments and other bills you’ve paid during your ownership period the IRS will consider as an increase to your apartment’s cost basis.Why are Special Assessments in NYC used instead of monthly maintenance increases?
Is the buyer or seller responsible for paying a special assessment in NYC?
The sales contract will specify who pays for identified and ongoing special assessments. Suppose a new evaluation is implemented after the contract has been signed but before closing. In that case, the buyer is typically responsible for any evaluation payments due on or after the closing date.
As part of your attorney’s pre-contract due diligence procedure, the buyer will review the building minutes and financial statements to check for any indication of a potential future assessment.
Can you negotiate the amount of an assessment?
Please note that once a special assessment has been implemented, you cannot negotiate the assessment amount payable for your unit. Failure to pay any assessments could result in legal action by the building, including fines and potential consequences for your ownership stake in the apartment.
If you are purchasing an apartment with a current assessment, you may be able to negotiate this with the seller. However, it’s essential to consider the market demand for the listing when asking the seller to cover a current assessment.
In a competitive market, asking the seller to pay for the assessment may not be taken seriously, especially if there’s a bidding war.
What is a co-op tax abatement assessment?
Co-ops use a co-op tax abatement assessment to recoup the amount given by the NYC Department of Finance as part of the ‘Cooperative and Condominium Tax Abatement’ program. In NYC, it’s typical for co-ops to impose an assessment equivalent to the tax abatement received from the city.
Primary Residence Tax Abatement
Implementing a tax abatement assessment can help a co-op building strengthen its finances without increasing monthly maintenance fees. Furthermore, this type of assessment is less burdensome for shareholders because they do not directly pay the money used to cover the assessment. A co-op tax abatement assessment also serves as a strategy to increase a unit owner’s cost basis, thereby reducing any capital gains tax owed when selling. Special assessments are typically added to your apartment’s cost basis over time.
