Property Q&A in Astoria>Question Details

Junkieliam, Home Buyer in Astoria, Queens, NY

What happens when tax abatement expires?!?!?

Asked by Junkieliam, Astoria, Queens, NY Wed Jun 23, 2010

I'm about to go into contract on a new construction condo. I've talked to my accountant friend and he mentioned that once the tax abatement expires, my property taxes will go from ($1,500 a year to over $12,000 a year). We're talking about a 600sq ft one bedroom condo!!! Why are the property tax more expensive than the property tax of a house?

If that's the case, how is anyone able to afford the taxes?! Roughly $2,800 (mortgage maintenance) plus $1,000 (taxes) = $3,800 monthly sounds crazy. Seems like it's not even worth it. Might as well just rent.

What is your take on this? Is it true that the property tax can jump that high? If that's the case, aren't a lot of the "new" condos in the "up and coming" sections of LIC going to be in serious trouble when the tax abatement expires? I can see that the value of the condos will plummet to compensate for the ridiculous property taxes. I don't know how people can afford it.

Should I just rent and forget about ownership?

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Answers

2
Hi Liam

I took a quick look at the condo listings in LIC. Most of the new buildings have 15 year tax abatement. After 15 years the tax abatement will expire and you or whomever owns the apartment will have to pay the full amount. This will be substantially more than the first year. I also checked the NYC Department of Finance website for one of the apartments in a new building but was unable to determine what the actual tax would be today if there were no tax abatement. You need to call the department of finance to find out what your full actual taxes would be today. They won't be able to tell you what it will be in 15 years but they or your offering statement prepared by the developer should have an estimated 15 year schedule of taxes. You should also keep in mind that your taxes will increase each year by an additional 1/15th of the estimated tax--or by some other amount based on a formula.
If you have a copy of the offering statement give it to your accountant friend (or attorney) to review. It should have the answer to your questions. You cannot sign a contract or mortgage documents without knowing this answer. The information is available and the following people should be able to get an answer for you:
Your attorney,
your accountant friend,
your agent,
your mortgage broker,
the developer,
a representative from the NYC Dep't of Finance.
Good Luck!

Allen Bauman
Century21 Yve R. E.
Licensed R. E. Agent
NYS Certified Residential Appraiser
516-791-3846
allen.bauman@gmail.com
0 votes Thank Flag Link Wed Jun 23, 2010
This is a judgment call on your part, but after the TAX Abatement expires ( normally 5, 7 or 10 years) the tax bill has to be paid.
The national average is 5-7 years normally a home owner moves or re-finances. So may be you want to give it a thought. But it is you who got to think about this. Way all options before you jump in.
Good Luck
0 votes Thank Flag Link Wed Jun 23, 2010
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