They say there are two inevitabilities in life: taxes and death. Regardless of how hard you try, you can’t escape them – especially the taxes! Fortunately for us, there are ways to help reduce our tax liability every year. For residents of NYC however – specifically condo owners – avoiding higher taxes may have just gotten a little tougher. How does this apply to you? We give you all the details inside today’s blog post.
Condo Owners in NYC Facing Higher Taxes
All condo owners have been in the same situation before; you purchase a new residence, and your proposed tax bill at the open house is different than the one presented to you at tax time. In most cases, that bill is a higher than originally presented.
But why would your estimated taxes change – especially over such a short period of time? There are a number of factors that can make your bill higher than anticipated, particularly if you are condo owner. Some of those reasons are surprisingly good news, while others – not so much.
The biggest reason your taxes might increase in New York City has to do with property value. As condos in your area increase in value, so too, does your home. This sounds great on the surface, and for those who will eventually sell, it can be a great thing. For those that plan on staying foot for the long haul – or are unable to find a buyer – it can be bad; with higher home value, comes higher taxes, as taxes are based on the value of the property.
Another factor for condo owners has to do with the size of your unit. If you purchase a larger condominium in a building, you will end up owing more than residents who own smaller ones. Always keep that in the back of your mind when you are deciding how many square feet you are considering.
Ways to Avoid Higher Taxes for NYC Condo Owners
If you live in a booming neighborhood that is experiencing a lot of real estate growth, it can be hard to avoid higher taxes; it comes with the territory (literally). Fortunately, there are some ways to decrease your tax burden if you are a condo owner.
For starters, always make sure you perform your due diligence. If you are purchasing an older condominium, ask for previous tax records. Even if the unit is only a few years old, you will be able to see a trend in taxes so that you can prepare. If it is a new unit, this won’t be possible, unfortunately.
Something else to look out for is whether the building itself has a 421a tax abatement. If so, your taxes will be reduced by roughly a third. The abatement is good for 15 years, so be certain to see how long you will have this benefit.
Purchasing a condo in a small building – featuring ten units or less – is one way to help limit your tax burden. Small condominium building tax increases can only go up 8% in a given year. Further, they may not exceed a 30% increase over the course of five years. If you purchase in a building that has more than ten units, be forewarned: there are no limits to tax increases.
Another step that may help condo owners reduce taxes – or at least prepare for them is to hire an attorney. Legalise can often be confusing, so having someone who speaks the language comb through your contract can ensure you do not get a raw deal.
For more information on tax assessments and tax abatements for condo owners, visit the NYC property tax website.
Tips for Lowering Your Tax Bill
While you cannot control the real estate market or its effect on your taxes each year, you can reduce your overall burden. For starters, keep all of your receipts for any home improvements. Do the same for medical expenses and business expenses as well. Keep a folder system with a slot for each type of expense and as you purchase items, file them right away. Waiting until the last minute can make you late on your filing and result in additional fees. In addition, rushing once the tax man comes knocking might make you forget a few items or lose documentation.
If you are making changes to your condo, be smart about your decisions. Look for tax credits or rebates for items such as energy efficient appliances. If a tax credit exists and you need a new water heater, for example, it might be worth the expenditure; not only would you get the credit, but you would also save on your monthly utility bills. Just make certain the tax credit applies for the year you purchased it.
New York City Realtors and Real Estate Agents
Before you become a new condo owner, contact the NYC REAL ESTATE AGENTS at Weichert Realtors. Part of The Franzese Group, our realtors can help you assess the potential taxes in your new condominium and find a property that is right for your needs.