Archive for September, 2013

Sep
22

How’s the Market – August 2013

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While Quarterly Sales Reports show closed activity for the previous quarter, monthly Contract Signed reports are the ‘crystal ball’ of closed sales to come.  Granted, all contracts signed for any given month may not close in the next month, and some may not close at all but most (over 95%) will become closed sales which will become part of the next Quarterly Sales Report.

In the following charts and graphs you can see how the market stacks up against last month and this month last year.

 

Av&Med_DOM_SP-Aug_2013

Dis_AP_Aug-2013

Sales_Region_Aug-2013

In 1971, the city launched the 421a program as an incentive for developers to build projects on underused or unused land.  Today, a record number of condos have a 421a status.  Ranging from 10 years duration below 96th Street to 15-25 years in Upper Manhattan, the exemptions do have an expiration date.  The exemptions start to decrease annually after the first two years, which usually means rising common charges.

Historically, condos will sell for a higher price if the common charges are low.  While in development, the developer will set the rate for the monthly charges until a board is in place.  Luxury buildings with high-end amenities like rooftop decks, concierges, etc. may have lower common charges while the 421a Tax Abatement is in force.

Once the tax abatement expires, condo boards are generally scrambling to find ways to reduce costs.  Some condo bards have taken the drastic action of terminating their contracts with property management and hiring an on-site manager.  This extreme step takes a dedicated hands-on board to oversee the manager, decrease costs and look for ways to raise revenue.  Board members are generally volunteers, so finding people willing to give their time for the community is sometimes difficult

Some condo boards find other ways to chip away at the expenses; cutting staff, renegotiating mortgage rates, installing high-efficiency lighting in the common areas, and other similar strategies. Some cost-cutting measures come with risk of reduced services, but the upside remains – lower common charges generally create higher selling prices.

 

Inspired by The Real Deal Article by Hayley Kaplan

Sep
02

Co-op & Condo Tax Abatement – New Rules

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In New York City, real estate taxes are an important part of the value, and it seems the rules are about the change.

According to Jerry Feeney, Residential Real Estate Attorney   the following is a summary of the changes.  As always, it is important to see qualified advice when dealing with legal and tax matters.

 

  • Primary Residence:  The apartment must be the owner’s primary residence to be eligible for the abatement, and parking spaces and storage units are excluded.  This important change is effective July 1, 2014.  Non-residents who received the abatement in 2011/2012 will see the abatement phase out in 2012/2013 and 2013/2014.  By 2014/2015 the abatement will be completely phased out for non-residents.
  • Multiple unit ownership:  Ownership of 4 or more units in the same building disqualifies the owner from any abatement, regardless of whether one of them is a primary residence.   If one owner owns 3 or fewer units, and one is the primary residence, the abatement will apply to all of the units.  If none of the three units are owner occupied, none will get the abatement.
  • Other Exemption/Abatement programs:  This change in the law will not affect other real estate tax relief programs, but recipients of certain relief programs are ineligible for the co-op/condo abatement, without regarding primary residence status.  These programs are (a) J51, (b) 420c and 421a, b, and g. (c) HFDC, (d) DAMP, (e) Mitchell-Lama, and (e) clergy.  Personal exemptions, however, will have no impact on the receipt of the co-op/condo abatement.  Examples of these programs are:  (a) STAR, (b) disabled homeowner, (c) senior citizen, and (d) veterans
  • Trusts:  In determining principal residence for a unit owned by a trust, NYC Finance requires that the unit is the principal residence of the beneficiary of the trust, trustee, or in the case of a life estate, the life estate holder.

 

This post is provided as informational purposes only and should not be construed as legal, accounting or tax advice by the RealEstateGeezer. You should seek advice from a qualified professional.

 

Information provided by Jerry M Feeney, Residential Real Estate Law