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History
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Full text
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Sponsor's memo
BILL NUMBER:S8446
Title of bill
An act to amend the tax law, in relation to clarifying the exemption for cooperative housing corporations where there is no change in beneficial ownership
Purpose
This bill would clarify the exemption in the tax law for coop- erative housing corporations when there is no change in beneficial ownership.
Justification
The intent of the Mitchell-Lama, when enacted, was to create much needed affordable housing through the use of low interest loans and reduced real estate taxes for fixed periods in order to create needed housing. Once a cooperative had repaid its government loans, it would cease to be a regulated cooperative and become standard cooper- ative. The law intended for coops to evolve out of regulation.
Over the last several years, a number of cooperatives have met their obligations, and have exited the Mitchell Lama program. This process includes approval of both the NYS Division of Housing and Community Renewal and the New York State Attorney's General's office. The Mitchell Lama program is seen as one of the most cost-effective and successful housing programs ever created.
Following the issuance of an advisory opinion in 2008, the NYS Depart- ment of Taxation and Finance has opened audits of the many former Mitc- hell Lama buildings that have come out of the program in recent years, and concluded that in a number of cases State tax was due as a result of this conversion. This increase in audit activity prompted additional examination by the Department on this retroactive application of the tax. In April 2010, they issued an advisory opinion which concludes that the conversion of a not for profit housing company to a private cooper- ative housing corporation constitutes a conveyance by the plan sponsor of the real property comprising the cooperative dwelling, and would be subject to the real estate transfer tax. This advisory opinion provides limited guidance regarding the exemption provided if there is no change in the beneficial ownership.
This bill would clarify that for certain conversions, in which there is no change in the beneficial ownership of the property, would qualify for this exemption.
Legislative history
New bill
Fiscal implications
None.
Effective date
Immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.