ProdigalSon wrote:
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Dolomiti wrote:
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ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

Disclaimer: I'm not an accountant.

A tax deduction is not the same thing as a tax credit. It may not be a 1-to-1 savings.

I also don't think that developers get an extra benefit compared to condo owners. A deduction is a deduction is a deduction. Any difference would be due more to scale and to the way corporate and individual taxes are handled.

If you use TurboTax or a similar tax program, you could try seeing the direct effect of a $2000 reduction in property taxes.

I am fairly certain PILOTS are considered Property Tax and deducted as such on a Federal tax return.

To determine your benefit received from a deduction, and this is for a normal tax payer, you can just take your effective Federal tax rate (which is provided to you by turbo tax) and multiply it by the total deduction. So if your effective tax rate is 35% you multiply that by $10,000 in property taxes and you save $3500 in Federal taxes. This is rudimentary but it is accurate.

Dolomiti wrote:
Quote:

ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

Disclaimer: I'm not an accountant.

A tax deduction is not the same thing as a tax credit. It may not be a 1-to-1 savings.

I also don't think that developers get an extra benefit compared to condo owners. A deduction is a deduction is a deduction. Any difference would be due more to scale and to the way corporate and individual taxes are handled.

If you use TurboTax or a similar tax program, you could try seeing the direct effect of a $2000 reduction in property taxes.

ricky241 wrote:
yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes.

ricky241 wrote:
I have always wondered how the tax abatements/assesments on high rise towers benefit the condo owners.....

yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes, which if you were allowed to could have gotten you an additional $1000-$2000. Instead, you can claim only city taxes against property tax (which is less than a $1000 bucks in most cases).

So except for developers, do condo unit owners really benefit ? or is the same for them?

ricky241 wrote:
I have always wondered how the tax abatements/assesments on high rise towers benefit the condo owners.....

yes you probably save a $1000-$2000 on tax every year due to the tax abatement....but you can't put that value (which are payments in lieu of taxes) against property tax when you file your taxes, which if you were allowed to could have gotten you an additional $1000-$2000. Instead, you can claim only city taxes against property tax (which is less than a $1000 bucks in most cases).

So except for developers, do condo unit owners really benefit ? or is the same for them?

Bubble_Tea wrote:
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dtjcview wrote:

So no, new developments do not have extremely high tax obligations. Quite the reverse. By the posts on this board it seems they get huge tax breaks - most large developers get a 15-30 year PILOT, at the end of which, when the developer decides to convert the use from apartments to condos, there is another 5-year 30% or so tax abatement tagged on to that.

Right, I'm talking about smaller new developments that do not have PILOTS/abatement. It seems they would get hit the hardest by the current rules.

dtjcview wrote:

So no, new developments do not have extremely high tax obligations. Quite the reverse. By the posts on this board it seems they get huge tax breaks - most large developers get a 15-30 year PILOT, at the end of which, when the developer decides to convert the use from apartments to condos, there is another 5-year 30% or so tax abatement tagged on to that.

ThirdStreet wrote:
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For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value

Yep, they are pretty steep even with the tax abated rate. That's why it just really hits a nerve when I hear people complaining how these new developments are getting tax abatement and not paying their "fair" share.

ThirdStreet wrote:
Quote:

For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value

Yep, they are pretty steep even with the tax abated rate. That's why it just really hits a nerve when I hear people complaining how these new developments are getting tax abatement and not paying their "fair" share.

For new construction, that would make the tax obligation extremely high relative to other properties. Unless of course the "assessed market value" isn't really market value

Bubble_Tea wrote:
Can someone please explain to me how JC taxes for condos works with specific details?

I have heard very mixed and vague information from a number of sources. When I attempt to get clarification, it becomes clear that people don't really have the specifics.

I am trying to find out the following:

(a) what the general tax rate *currently* is (when there is no abatement) (I understand that the rate is about to go up.)

(b) whether the assessed/taxable value of the property is *automatically* adjusted based on each new purchase of the property for both abated and non-abated condos.

(c) any other info that you think is relevant to the calculation.

JadedJC wrote:
PILOTS are based on the selling price of the condo when it first changes hands between developer and the initial owner. The reason you see big variations within the same building is that many buildings were completed right at the height of the real-estate bubble around 2007--08. The units that were first sold during this period will have higher PILOTS because they were pretty much sold at the peak of the market. When the market tanked after 2008, the developers in these buildings still had unsold inventory that they subsequently marked down in price - hence these units will have lower PILOTS. The PILOTS do not reset with a resale of the property.

JadedJC wrote:
But if you have a specific property you're interested in, your best bet is to go to City Hall and ask the people at the Tax Assessor's office rather than ask people here to address generalities. They are very nice and helpful there.

Bubble_Tea wrote:
Are you certain that the tax base doesn't adjust for some building at the time of subsequent purchases? I keep hearing that.

Bubble_Tea wrote:
Quote:

dtjcview wrote:
Useful detail on the process under:

http://www.state.nj.us/treasury/taxat ... /referencematerials.shtml

Strictly speaking, PILOTS and abatements are different things. The PILOT is paid by a developer instead of paying property taxes, abatements are a reduced assessed value, that typically are applied for up to 5 years after an improvement to an existing property. One big different is the PILOT is paid to the City only, whereas an abated property pays taxes to both City and County. PILOTS don't contribute to school funding for example - a huge local issue.

As far as having different assessment on similar condos, its probably not an exact science. The assessment is probably done when the master deed on a new or converted condo property is filed with the County, and not necessarily at the time of purchase/sale. If the assessments differ between similar condos, it might be related to how and when the developer filed the deed, or converted it's use from a rented apartment subject to a PILOT, to a condo subject to regular property tax.

Bottom line, the assessment isn't directly related to the purchase/sale price, though may be incidentally related as a result of timing.

Thanks for the info and the link.

See the comment from ProdigalSon above. What you are saying seems to contradict the experience he has in his building.

JadedJC wrote:
PILOTS are based on the selling price of the condo when it first changes hands between developer and the initial owner. The reason you see big variations within the same building is that many buildings were completed right at the height of the real-estate bubble around 2007--08. The units that were first sold during this period will have higher PILOTS because they were pretty much sold at the peak of the market. When the market tanked after 2008, the developers in these buildings still had unsold inventory that they subsequently marked down in price - hence these units will have lower PILOTS. The PILOTS do not reset with a resale of the property.

dtjcview wrote:

Also, the implied tax rate against implied current market value would be:

7.184 * 0.3272 = 2.35%

Yvonne wrote:
I suggest you get a copy of the agreement. I have attended many council meetings and have witnessed many abatement agreements. You would be surprised how different some agreements are. Some are base on construction cost other agreements are based on sales price. Then other agreements have bump up costs and others agreements do not.

dtjcview wrote:
Useful detail on the process under:

http://www.state.nj.us/treasury/taxat ... /referencematerials.shtml

Strictly speaking, PILOTS and abatements are different things. The PILOT is paid by a developer instead of paying property taxes, abatements are a reduced assessed value, that typically are applied for up to 5 years after an improvement to an existing property. One big different is the PILOT is paid to the City only, whereas an abated property pays taxes to both City and County. PILOTS don't contribute to school funding for example - a huge local issue.

As far as having different assessment on similar condos, its probably not an exact science. The assessment is probably done when the master deed on a new or converted condo property is filed with the County, and not necessarily at the time of purchase/sale. If the assessments differ between similar condos, it might be related to how and when the developer filed the deed, or converted it's use from a rented apartment subject to a PILOT, to a condo subject to regular property tax.

Bottom line, the assessment isn't directly related to the purchase/sale price, though may be incidentally related as a result of timing.

From what I understand, Abated properties do not pay real estate taxes. They make PILOTS Payments In Lieu of Taxes. These are typically based on the selling price, at least mine was, but I suppose could be based on assessed value, and paying a percentage of tax. I think that some of the older buildings may have been done in this fashion.

Bubble_Tea wrote:
......

Also, I heard the reval was cancelled. Have you heard that it is back on?