Co-op and Condo RPTL 467-a Tax Abatement and the Primary Resident Requirement

For several decades, many cooperatives and condominiums in New York City have benefitted from a tax abatement program under Real Property Tax Law §467-a. The amount of the abatement varies from 17.5% to 28.1% and depends on the average assessed value of units in the building (see Tax Equity Now NY LLC v. City of New York, 182 A.D.3d 148, 156 [1st Dep’t 2020], appeal dismissed 35 N.Y. 1079 [2020], lv. granted 28 N.Y.3d 906 [2022]). RPTL §467-a’s tax abatement should be called the Primary Resident Tax Abatement because, under its current form, an essential criterion for eligibility is the primary resident requirement (see RPTL 467-a[2][a]). This requirement raises an interesting question in the scenario where a condominium or cooperative unit has more than one “owner.” That is, whether all unit owners must meet the primary resident requirement to qualify for the tax abatement. The statute does not provide an explicit answer to the question. However, the rules promulgated by the agency responsible for administering the tax abatement, the New York City Department of Finance (DOF), does provide a definitive answer. As fully explained below, the answer is that only one of several owners of a single cooperative or condominium must satisfy the primary resident requirement.

A review of the history of RPTL 467-a is instructive in understanding the meaning of the term “owner” within the context of the primary resident requirement. The genesis of RPTL 467-a stems from a study commissioned by the City in the 1990s, which concluded that the tax rate for condominiums and cooperative in New York City was substantially higher than for Class one properties (primarily one-, two-, and three-family residential real property), which are taxed at a significantly lower rate (see Memo in Support A-10588-A, NY Assembly, 1996 NY Session Laws at 2233 [McKinney 1996]). In 1996, to address this disparity, the state legislature passed RPTL 467-a which provided a partial real estate tax abatement to condominium and cooperative unit owners of three or fewer units in the same development. The initial version of RPTL 467-a was very broad: The 1996 version did not explicitly prohibit corporate entities from receiving the abatement; nor did it contain a provision limiting the abatement to units that were the primary residence of the owner.