Proposed law would eliminate tax break for converted rentals
By Jeff Simms
The Beacon City Council will hold a public hearing on Tuesday, Jan. 16, on a proposed law that could save the city from a potential tax revenue loss if any of its hundreds of rental apartments are converted to condos.
The calculation is complex. New York State law allows owner-occupied condominiums to be assessed at their estimated rental value, not their market value. For example, if a condo sells for $200,000, its taxes are determined by an estimate of what it would bring as a rental, not the sale price.
In many cases, the estimated rental value is less than what the unit will sell for. As a result, a condo owner will likely pay less in taxes than the owner of a comparable single-family home.
At the same time, the owners of rental buildings pay a higher tax rate. Under the proposed law, the city’s apartments would be ineligible for the condominium-rate assessment if they’re ever converted from rental (one owner) to condo (multiple owners). By comparison, there are 82 condos in Beacon now, with 40 more under construction.
“What our law is going to say is if you didn’t build your place as a condo, you’re not entitled to the [lower] condo assessment if you convert it from rental to condos,” said Beacon Mayor Randy Casale.
“The city is exploring this purely as a protective measure,” said Judson Siebert, a city attorney who briefed the council. Beacon would be among the first Hudson Valley municipalities to adopt such a law but “we might as well have it in our arsenal,” City Council Member George Mansfield said last month.
The assessment formula originated in New York City decades ago, Siebert explained, as an attempt to establish equity for condos and apartments, which could conceivably be located on the same block and generate similar usage of city services, such as schools or garbage pickup.
Outside of that urban environment, however, it often provides what amounts to a 20 to 30 percent tax break for condo owners compared to what the owners of single-family homes pay.The Current is a nonprofit supported by its readers; please consider a year-end gift.