William Timlen CPA is a Partner with Eisner Advisory Group, LLC focusing on real estate. In the following article, Wiliam Timlen recaps some recent tax law changes that affect businesses, property owners, and residents of New York City.

William Timlen CPA on NYC Property Tax Reform Efforts

William Timlen CPA observes that the present property tax system in New York State, specifically in NYC, has long been criticized for its:

• Preferential treatment of affluent neighborhoods
• Negative impact on rental housing development
• Burden on homeowners in Staten Island, Southeast Queens, Eastern Brooklyn, and the Northeast Bronx, who sometimes pay an effective tax rate three times that of homeowners in Manhattan and brownstone Brooklyn
• Inequitable system that hampers affordable housing development due to tax law sections that govern property tax rates and exemptions.

However, this means that there is a lot of potential for significant reforms that achieve equity, safeguard homeowners, and establish affordable housing programs tailored to true affordability with equitable labor standards. The objective of property tax reform in NYC is to address these longstanding issues and create a more just system for all residents.

Changes in Personal Income Tax Rates

Besides property tax reform, modifications to personal income tax rates could also influence the NYC real estate market. William Timlen CPA says that, starting in 2023, middle-class tax cuts could potentially enhance the funds available for housing, thereby impacting the real estate market.

Other tax adjustments in the tax code include the Homeowner tax rebate credit for tax year 2022 and an increase in the New York City earned income credit rate for 2022. These changes aim to provide relief to taxpayers and stimulate investment in the housing market.

Business Corporation Tax Updates

Recent updates to the business corporation tax have introduced new credits, deductions, and modifications that are applicable to various industries, including real estate. For example, modifications to the Pass-through entity tax (PTET) include an extension of the deadline to elect in to PTET under Article 24-A. To ensure compliance with these changes, it is crucial to consult the relevant tax law section.

Furthermore, William Timlen CPA explains that a range of credits and deductions are available for businesses, such as the COVID-19 Capital Costs Tax Credit Program, the Empire State Digital Gaming Media Production Credit, and the Farm Workforce Retention Credit. The goal of these updates is to bolster businesses and spur growth across diverse sectors, real estate development included.

Tax Credits Affecting Real Estate Development

Tax credits play a significant role in real estate development, providing incentives for developers to invest in various types of projects. Some examples of these credits include:

• Low-Income Housing Tax Credit (LIHTC)
• 45L Tax Credit
• Rehabilitation Tax Credit
• Investment Tax Credit (ITC)

These credits encourage investment in low-income housing, energy-efficient properties, and the rehabilitation of qualifying buildings.

These tax credits contribute to satisfying the escalating demand for affordable and sustainable housing in NYC and elsewhere, fostering a real estate market that is both equitable and eco-friendly.

Incentives for Green Building Technologies

William Timlen CPA notes that incentives for green building technologies include credits for alternative fuels, electric vehicle recharging, and geothermal energy systems. The Alternative Fuels and Electric Vehicle Recharging Property Credit has been extended through tax year 2025, providing an ongoing incentive for the adoption of these sustainable technologies.

These tax credits encourage developers to invest in sustainable projects, promoting environmentally friendly development while contributing to the long-term health of the NYC real estate market.

Support for Affordable Housing Projects

Support for affordable housing projects includes increased low-income housing credits and extensions to the Empire State apprenticeship tax credit. The goal of these incentives is to expedite the construction of affordable housing projects, thereby offering much-needed housing alternatives for low-income residents.

With NYC’s ongoing housing crisis, William Timlen CPA says these tax credits play a crucial role in promoting the construction of affordable housing and ensuring that all residents have access to safe, stable, and affordable homes.

Stimulating Rental Development in NYC

Stimulating rental development in NYC involves tax credits for brownfield redevelopment and incentives for converting commercial properties for residential use. The brownfield redevelopment tax credit program promotes the redevelopment of contaminated or abandoned properties, while incentives for commercial property conversion encourage the repurposing of unused commercial spaces into residential units.

Beyond just addressing the city’s housing shortage, William Timlen CPA explains that these incentives also aid in urban revitalization, turning underused spaces into dynamic, habitable communities.

Metropolitan Commuter Transportation District (MCTD) Taxes

William Timlen CPA reports that MCTD taxes have been updated to reflect changes in the overall tax landscape, impacting commuters and businesses in the NYC area. Employers and self-employed individuals in the MCTD area are subject to MCTD taxes, with a tax rate of 0.34% of net earnings from self-employment allocated to the MCTD during the tax year.

These taxes are pivotal in financing the city’s transportation infrastructure and maintaining the ongoing efficiency and accessibility of the public transit system. As such, MCTD taxes have a direct impact on the overall quality of life and attractiveness of NYC as a place to live and work.

Summary

In conclusion, William Timlen CPA maintains that fully understanding and adapting to the latest tax updates impacting NYC is crucial for homeowners, renters, and developers alike. From property tax reform to changes in personal income tax rates and business corporation tax updates, these tax changes have the potential to reshape the city’s real estate market in significant ways. Staying informed and navigating these changes with confidence will enable all stakeholders to make the most of the evolving tax landscape and create a more equitable, sustainable, and vibrant real estate market in NYC.