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Three Changes In New York State Laws That May Affect Real Estate Consumers And Professionals In Our Own Backyard!

John A. Viteritti

A change in the New York State "Mansion Tax" is among new laws that could impact the area. (Photo: Nicole Barylski)

The first legislative change that we will address is incorporated in the New York State Executive Law that became effective on April 12, 2019, and how it impacts the same subject incorporated in the Suffolk County Human Rights Law: Source of Income.

The Suffolk County Law has prohibited discrimination in rental housing based on lawful source of income including Section 8 since 2014. The law provides an exemption for rental housing of two or fewer units unless the landlord owns at least one rental housing anywhere in Suffolk County of three or more units; then the exemption doesn't apply. The State Law now in effect does not allow any exemptions and replaces the Suffolk County Law. Both landlords and real estate professionals are required to comply with the law.

A second legislative change applies to the New York State School Tax Relief Program, popularly know as the STAR Program. It has allowed any owner of a primary residence whose income does not exceed $500,000 to apply for and receive a partial tax exemption of the school portion included in its property taxes. It further provides an additional exemption for those owners 65 years of age or older whose income does not exceed $86,300.

The change in the law for school-year 2019 -20 includes several changes. For those new homeowners who wish to benefit from the STAR Program, the reduction is no longer available. They must pay the full tax and apply for a credit to the New York State Department of Taxation & Finance to receive a check as reimbursement. For those already enrolled in the Program, if their income exceeds $250,000, they must also participate in the Credit Program to receive a credit rather than a reduction. Those qualified senior citizens to receive the enhanced reduction must enroll in the Income Verification Program to verify eligibility each year.

Anyone requiring assistance with these changes should contact their local tax assessor's office.

A third change relates to New York State transfer taxes pertaining to the sale and purchase of real property. The new laws which affect transfers of real property only apply to municipalities with populations of 1 million residents or more, which means, only New York City. But since the real estate market of Eastern Long Island is sensitive to much of what goes on in NYC, I thought it best to call attention to the changes effective July 1, 2019, but will not apply to binding contracts entered into on or before April 1, 2019 even if the transaction closes after July 1, 2019.

Currently, in New York State, a seller pays a Transfer Tax on the sale of a residential property of $2.00 for every $500 or any fraction thereof of the sale price. As of July 1, 2019, an additional $1.25 for each $500 when the price is $3 million or more, and on all other non-residential properties, when the price is $2 million or more.

Another category of change involves the New York State "Mansion Tax." A tax of 1% applies to the full price on a purchase of $1 million or more, paid by the buyer. While the 1% remains on the purchase price of $1 million or more, the new law affecting sales in NYC imposes graduated increases in the percentages based on the purchase price, from $2 million up to $25 million or more, the highest percentage being 3.9%.

With respect to mixed use-properties, commercial and residential that sell for $1 million or more, the 1% tax continues to apply only to the value of the residential property.

For more information regarding these taxes, contact the New York State Department of Taxation & Finance.

John is a St. John's University graduate, licensed Real Estate Broker, DOS Certified Instructor, and real estate consultant. He previously taught at NYU, LIU, and The Cook Maran Real Estate School, which he helped found. www.johnaviteritti.com

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