New Rules for New York City Commercial Rent Tax
It is a tax imposed on tenants, lessees, sub-lessees, and concessionaires renting space to carry on commercial or professional activities who pay annualized gross rent that is at least $250,000 a year. The tax (3.9% effective rate) is only imposed on renters located in the borough of Manhattan, south of 96th Street, except for certain exempt areas, e.g. the “World Trade Center Area.” Other exemptions include governmental bodies or nonprofit religious, charitable, or educational organizations. In addition to the monetary burden, it is an administrative burden requiring an additional tax filing. All non-exempt tenants must file an annual return on or before June 20 covering the prior year, from June 1 to May 31, as well as three quarterly returns during the year.
In an effort to decrease the CRT burden on small businesses and the retail industry within Manhattan, NYC has established a threshold based Small Business Tax Credit against its CRT. The credit would provide complete tax relief for taxpayers who have incomes of $5 million or less and who pay less than $500,000 per year in rent. Taxpayers who have incomes of $5 million or less and who pay between $500,000 and $550,000 per year in rent, and those taxpayers who have incomes between $5 million and $10 million and who pay less than $550,000 per year in rent would receive a partial, sliding scale credit. Taxpayers who have incomes of more than $10 million would not receive any credit. The credit would be available beginning July 1, 2018.
The bill is estimated to reduce the NYC CRT liability for 2,700 small businesses, including 1,800 that will no longer pay the tax at all. The average annual tax relief for small business is anticipated to be between $11,300 and $13,000.
For more information or to contact one of our Real Estate Services team members, please fill out the form below.
Ask Our Experts
 |
Rebecca Machinga, CPA, CGMA, Practice Leader of the Real Estate Services Group 609-520-1188 [email protected]
|
