THE CITY OF NEW YORK DEPARTMENT OF FINANCE Claiming a New York City Real Property Transfer Tax Exemption for Transfers to or from Housing Development Fund Companies (HDFC) Interim Solution for using ACRIS to create NYC-RPT This memorandum provides instructions for claiming a new Real Property Transfer Tax ( RPTT ) exemption for transfers of real property subject to certain affordable housing restrictions. Beginning August 19, 2016, taxpayers may be eligible to claim a full or partial Real Property Transfer Tax exemption for transfers of real property, or economic interests therein, to or from Housing Development Fund Companies, or entities in which a Housing Development Fund Company owns a controlling interest (collectively known as an HDFC Transfer ) under Section 11-2106(b)(9) of the Administrative Code of the City of New York (the HDFC Exemption ). If an HDFC Transfer satisfies the statutory exemption criteria, the HDFC Exemption reduces the consideration subject to tax in proportion to the floor area that is restricted to the purchase, lease, license or other use by Persons and Families of Low Income (as defined by Section 2 of the Private Housing Finance Law). The HDFC Exemption may be claimed if: (1) the transfer is an HDFC Transfer; (2) at the time of conveyance, the property is bound by a regulatory agreement with the State of New York, a municipal corporation (i.e., the City of New York), or any other public corporation created by or pursuant to any law of the State of New York (for example, the New York City Housing Development Corporation); and (3) the regulatory agreement (a) binds the property for 30 years or more, (b) requires mutual consent for revocation or amendment, (c) restricts more than 50% of the floor area, other than common areas, to residential real property, and (d) restricts at least 66-2/3% of the residential real property to purchase, lease, license or other use by Persons or Families of Low Income. If the regulatory agreement restricts less than 100% of the floor area, other than common areas, to purchase, lease, license or other use by Persons or Families of Low Income, then tax applies to the consideration in proportion to the floor area that is unrestricted. This memorandum includes a sample worksheet for determining and calculating the exemption below. Taxpayers must complete and submit a worksheet with the same information as the sample worksheet, in accordance with the instructions below, for each NYC- RPT that claims an HDFC Exemption. Taxpayers must also include (I) the regulatory agreement, and (II) if applicable, organizational documents that show the HDFC s controlling ownership interest in any non- HDFC transferor or transferee (together with the worksheet, described in this memorandum as the HDFC Supporting Documents ). 12/23/16
Page 2, Claiming a New York City Real Property Transfer Tax Exemption The HDFC Exemption is retroactive to January 1, 2010, which means that it may apply to HDFC Transfers occurring on or after that day, as long as the limitations period for assessment or refund, as applicable, has not yet expired. The New York City Department of Finance may assess additional tax within three years from the date the return is filed, and no time restriction applies in cases of non-filing or fraud. Taxpayers have one year from the date tax is paid to request refunds, except that a modified period for claiming refunds applies for purposes of this exemption, as more fully explained below. This memorandum also contains instructions for requesting a refund on the basis of the HDFC Exemption. Some HDFC Transfers may not have a regulatory agreement in place at the time of transfer, but the property owners may subsequently obtain a regulatory agreement. In that case, RPTT is due on the total consideration subject to tax, but DOF will grant a refund if (1) the transferred real property is made subject to a regulatory agreement that meets the requirements of the HDFC Exemption within two years from the date of the conveyance or transfer, and (2) a refund is claimed within one year of the effective date of the regulatory agreement. Refund requests must also include the HDFC Supporting Documents, in accordance with the instructions below for claiming a refund.
Page 3, Claiming a New York City Real Property Transfer Tax Exemption First Scenario: Claiming Exemption at Time of Transfer Step 1 Complete a worksheet containing the same information as the sample worksheet below to determine whether you meet the criteria for the HDFC Exemption, and if so, to calculate the HDFC Exemption. If you meet the criteria and want to claim the HDFC Exemption, go to Step 2. HDFC Exemption Analysis - Administrative Code 11-2106(b)(9) Checklist Transfer by or to HDFC (or an entity in which the HDFC owns a controlling interest) Regulatory Agreement HPD, HDC, NYS or other NYC or NYS agency or public corporation is the counterparty Mutual consent for revocation or amendment Restricts some portion of the residential floor space to purchase, lease, license or use by Persons or Families of Low Income Restriction extends for 30 years or more (If one or more of these criteria are not met, STOP. You are not eligible for the HDFC exemption.) Floor Areas (See next page for definitions) 1. Total Floor area 2. Common Floor Area 3. Adjusted Total Floor Area (subtract Common Floor Area) 4. Residential Floor Area 5. Low-Income Residential Floor Area Exemption Thresholds 6. Residential Floor Area-% of Adjusted Floor Area (Divide line 4 by line 3. If 50% or less, STOP. You are not eligible for the HDFC Exemption.) 7. Low-Income Residential Floor Area-% of Residential Floor Area (Divide line 5 by line 4. If less than 66-2/3%, STOP. You are not eligible for the HDFC Exemption.) Exemption Percentage 8. Low-Income Residential Floor Area-% of Adjusted Floor Area (Divide line 5 by line 3) Consideration Total Consideration Exemption Total Consideration * Line 8 Exemption Percentage (Enter on NYC-RPT Line 2, Schedule 2) Y/N Square Feet Percentage Percentage Amount Amount
Page 4, Claiming a New York City Real Property Transfer Tax Exemption Total Floor Area is defined as the floor area within the exterior walls of a building, exclusive of vent shafts and courts but without deduction for Common Areas. Residential Floor Area is the portion of the Total Floor Area restricted to residential uses under the Regulatory Agreement, other than Common Areas. Low Income Residential Floor Area is the portion of the Residential Floor Area restricted to purchase, lease, license or other use by Persons or Families of Low Income under the Regulatory Agreement. Common Areas are all parts of the property necessary or convenient to its existence, maintenance and safety, or normally in common use (other than the portion restricted to purchase, lease, license, or other private use) such as: (a) halls, corridors, lobbies, stairs, stairways, fire escapes, and entrances and exits of the building; (b) the basements, cellars, yards, gardens, recreational or community facilities, parking areas and storage spaces; (c) the premises for the lodging or use of janitors and other persons employed for the operation of the property; (d) Central and appurtenant installations for services such as power, light, gas, hot and cold water, heating, refrigeration, air conditioning and incinerating; (e) the elevators, escalators, and in general all apparatus and installations existing for common use; (f) such facilities as may be designated as common areas in the agreements covering the use of the building, and in each case made available or used by Persons or Families of Low Income. Persons of Low Income and Families of Low Income are defined in Article I, Section 2 of the Private Housing Finance Law, which states Persons or families who are in the low income groups and who cannot afford to pay enough to cause private enterprise in their municipality to build a sufficient supply of adequate, safe and sanitary dwellings. Regulatory Agreement shall mean an agreement with the State of New York, a municipal corporation, or any other public corporation created by or pursuant to any law of the State of New York, in particular, the NYC Department of Housing Preservation and Development, the NYC Housing Development Corporation, and/or the NYS Department of Homes and Community Renewal, which restricts the use of a property or a portion thereof to Persons or Families of Low Income.
Page 5, Claiming a New York City Real Property Transfer Tax Exemption Step 2 On the ACRIS TAX FORMS / COVER PAGE menu screen, select New Tax Forms and then complete all NYC-RPT tabs/screens as normal EXCEPT: A. General Info Property Information tab: On the Property Type drop down list, select HDFC EXEMPTION PROPERTY as shown below:
Page 6, Claiming a New York City Real Property Transfer Tax Exemption B. Schedule 1 Details of Consideration: No changes enter all of the Consideration details. For example, if the FULL Consideration is $10,000,000.00 Cash and the calculated HDFC Exemption is $4,000,000.00, enter $10,000,000.00 on line 1 as shown below.
Page 7, Claiming a New York City Real Property Transfer Tax Exemption C. Schedule 2 Computation of Tax No changes EXCEPT enter the amount of the HDFC Exemption as calculated on the HDFC Exemption Analysis Worksheet (see Step 1) on Line 2. Excludable Liens. As shown below, using the same example, Line 1 Total Consideration is automatically populated with the $10,000,000.00 Consideration. Enter the $4,000,000 calculated exemption in the Line 2 Excludable liens field:
Page 8, Claiming a New York City Real Property Transfer Tax Exemption Step 3 When bringing the NYC-RPT into the ACRIS Cover Page on the Supporting Document tab, the NEW Supporting Document entitled HDFC EXEMPTION SUPPORTING DOCUMENTATION will be checked. You must enter a page count that is one or more for this supporting document and submit all required information with the RPT. The REQUIRED Supporting Document consists of the HDFC Supporting Documents (as defined above).
Page 9, Claiming a New York City Real Property Transfer Tax Exemption Claiming Refund for Exemption subsequent to filing NYC-RPT without Exemption Step 1 Complete a worksheet containing the same information as the sample worksheet below to determine whether you meet the criteria for the HDFC Exemption, and if so, to calculate the HDFC Exemption. If you meet the criteria and want to claim a refund for the HDFC Exemption, go to Step 2. HDFC Exemption Analysis - Administrative Code 11-2106(b)(9) Checklist Transfer by or to HDFC (or an entity in which the HDFC owns a controlling interest) Regulatory Agreement HPD, HDC, NYS or other NYC or NYS agency or public corporation is the counterparty Mutual consent for revocation or amendment Restricts some portion of the residential floor space to purchase, lease, license or use by Persons or Families of Low Income Restriction extends for 30 years or more (If one or more of these criteria are not met, STOP. You are not eligible for the HDFC exemption.) Floor Areas (See next page for definitions) 9. Total Floor area 10. Common Floor Area 11. Adjusted Total Floor Area (subtract Common Floor Area) 12. Residential Floor Area 13. Low-Income Residential Floor Area Exemption Thresholds 14. Residential Floor Area-% of Adjusted Floor Area (Divide line 4 by line 3. If 50% or less, STOP. You are not eligible for the HDFC Exemption.) 15. Low-Income Residential Floor Area-% of Residential Floor Area (Divide line 5 by line 4. If less than 66-2/3%, STOP. You are not eligible for the HDFC Exemption.) Exemption Percentage 16. Low-Income Residential Floor Area-% of Adjusted Floor Area (Divide line 5 by line 3) Consideration Total Consideration Exemption Total Consideration * Line 8 Exemption Percentage (Enter on NYC-RPT Line 2, Schedule 2) Y/N Square Feet Percentage Percentage Amount Amount Total Floor Area is defined as the floor area within the exterior walls of a building, exclusive of vent shafts and courts but without deduction for Common Areas.
Page 10, Claiming a New York City Real Property Transfer Tax Exemption Residential Floor Area is the portion of the Total Floor Area restricted to residential uses under the Regulatory Agreement, other than Common Areas. Low Income Residential Floor Area is the portion of the Residential Floor Area restricted to purchase, lease, license or other use by Persons or Families of Low Income under the Regulatory Agreement. Common Areas are all parts of the property necessary or convenient to its existence, maintenance and safety, or normally in common use (other than the portion restricted to purchase, lease, license, or other private use) such as: (a) halls, corridors, lobbies, stairs, stairways, fire escapes, and entrances and exits of the building; (b) the basements, cellars, yards, gardens, recreational or community facilities, parking areas and storage spaces; (c) the premises for the lodging or use of janitors and other persons employed for the operation of the property; (d) Central and appurtenant installations for services such as power, light, gas, hot and cold water, heating, refrigeration, air conditioning and incinerating; (e) the elevators, escalators, and in general all apparatus and installations existing for common use; (f) such facilities as may be designated as common areas in the agreements covering the use of the building, and in each case made available or used by Persons or Families of Low Income. Persons of Low Income and Families of Low Income are defined in Article I, Section 2 of the Private Housing Finance Law, which states Persons or families who are in the low income groups and who cannot afford to pay enough to cause private enterprise in their municipality to build a sufficient supply of adequate, safe and sanitary dwellings. Regulatory Agreement shall mean an agreement with the State of New York, a municipal corporation, or any other public corporation created by or pursuant to any law of the State of New York, in particular, the NYC Department of Housing Preservation and Development, the NYC Housing Development Corporation, and/or the NYS Department of Homes and Community Renewal, which restricts the use of a property or a portion thereof to Persons or Families of Low Income.
Page 11, Claiming a New York City Real Property Transfer Tax Exemption Step 2 On the ACRIS TAX FORMS / COVER PAGE menu screen, select New Tax Forms and then prepare a SECOND NYC-RPT in ACRIS and complete all tabs/screens as done on the ORIGINAL NYC-RPT EXCEPT: A. General Info Property Information tab: On the Property Type drop down list, select HDFC EXEMPTION PROPERTY:
Page 12, Claiming a New York City Real Property Transfer Tax Exemption B. Schedule 1 Details of Consideration: NO CHANGES: Enter the FULL Consideration as entered on the ORIGINAL RPT. For example, if the FULL Consideration is $10,000,000.00 Cash and the calculated HDFC Exemption is $4,000,000.00, enter the $10,000,000.00 on line 1 as shown below.
Page 13, Claiming a New York City Real Property Transfer Tax Exemption C. Schedule 2 Computation of Tax No changes EXCEPT: i. Enter the amount of the HDFC Exemption as calculated on the HDFC Exemption Analysis Worksheet (see Step 1) on Line 2. Excludable Liens. ii. Enter on Line 8. Credit, the tax due from Schedule 2 Line 9 of the ORIGINAL NYC-RPT that was filed without claiming the HDFC Exemption. iii. Check Exempt from filing fee below line 13. As shown below, using the same example, Line 1 Total Consideration is automatically populated with the $10,000,000.00 Total Consideration from Schedule 1. Enter $4,000,000 in the Line 2 Excludable Lien field. When you click Calculate Taxes, Line 14 Total Remittance Due will be calculated as $0.00.
Page 14, Claiming a New York City Real Property Transfer Tax Exemption Step 3 When complete, select Pay Tax for Unrecorded Transfer on the ACRIS TAX FORMS / COVER PAGE menu screen and then: A. On the Document tab, select Document Class = OTHER DOCUMENTS and select Document Type = NYC REAL PROPERTY TRANSFER TAX. B. On the Cross Reference tab, enter the CRFN or Document ID of the ACRIS document with which the original NYC-RPT was filed. C. When bringing the NYC-RPT into ACRIS Cover Page, on the Supporting Document tab, the NEW Supporting Document entitled HDFC EXEMPTION SUPPORTING DOCUMENTATION will be checked. You must enter a non-zero page count for this supporting document and submit all required information with the RPT. The REQUIRED Supporting Document consists of HDFC Supporting Documents (as defined above).
Page 15, Claiming a New York City Real Property Transfer Tax Exemption Step 4 Complete the Application for a Partial Refund of the Real Property Transfer Tax paid for an HDFC Exemption.