NYC Provides Guidance for Programs Available to Property Owners for Relief from Property Taxes

In the midst of the global COVID-19 (Coronavirus) pandemic, the New York City Department of Finance (“DOF”) recently publicized several programs aimed at assisting property owners experiencing hardships with making their property tax payments.  The programs are not new but may provide relief for homeowners and other property owners experiencing hardship during these difficult times.  Among the DOF programs available to eligible property owners are the Property Tax and Interest Deferral (“PT AID”) Program, standard payment plan options, and exemption programs that lower the amount of taxes owed.

I. Property Tax and Interest Deferral (PT AID) Program

In the event that an unexpected event or hardship makes it difficult for a property owner to pay its property taxes, eligible property owners can defer their property tax payments or pay only a small percentage of their income towards their property tax payments under the PT AID program. Accordingly, this program allows property taxes to be deferred for a given length of time, such as a fixed length for a temporary hardship or for a longer period because of a chronic hardship.  The amount of taxes that can be deferred depends on the type of home you own. For example, you can defer an amount equal to: (a) up to twenty five percent (25%) of the equity in a one, two, or three-family home, and (b) up to fifty percent (50%) of the equity in a condominium unit.

The following three payment plans are available under the PT AID Program for eligible homeowners who have fallen behind or are in danger of falling behind on their property taxes: (1) Extenuating Circumstances Income-Based (“ECI”) Plan, (2) Fixed-Term Income-Based (“FTI”) Plan, and (3) Low-Income Senior (“LIS”) Plan.

1. Extenuating Circumstances Income-Based (“ECI”) Plan

Under the ECI Plan, homeowners experiencing a temporary loss of income due to extenuating circumstances can enter into a payment plan that limits their payments to a maximum eight percent (8%) of their adjusted gross income during the duration of the hardship.  Extenuating circumstances are defined as (i) loss of income, such as a job loss, (ii) the death or illness of a property’s owner or immediate family member, or (iii) enrollment in the Department of Environmental Protection’s Water Debt Assistance Program. To be eligible for the ECI Plan:

(1) the applicant must own a property that is a one, two, or three-unit class 1 residential property or a condominium unit;

(2) the property must have been the applicant’s primary residence for at least one year;

(3) the applicant must have a federal adjusted gross income of $58,399 or less; and

(4) the applicant must provide supporting documentation of the alleged extenuating circumstance.

2. Fixed-Term Income-Based (“FTI”) Plan

Similar to the ECI Plan, homeowners experiencing financial difficulties that are likely to continue into the foreseeable future can enter into a payment plan that limits their payments to a maximum eight percent (8%) of their adjusted gross income under the FTI Plan.  Moreover, the FTI plan may include only the delinquent amount or the delinquent amount plus charges projected to be due over the next year. To be eligible for the FTI Plan:

(1) the applicant must own a property that is a one, two, or three-unit class 1 residential property or a condominium unit;

(2) the property must have been the applicant’s primary residence for at least one year; and

(3) the applicant must have a federal adjusted gross income of $58,399 or less.

3. Low-Income Senior (“LIS”) Plan 

Homeowners that are 65 years of age or older and are experiencing hardship can fully or partially defer payment of their delinquent and future property taxes for a fixed or indefinite period of time under the LIS Plan.  Under the LIS Plan, eligible property owners can choose to pay 0% (full deferral), 25%, 50% or 75% of the delinquent and future property taxes.  Accordingly, an eligible homeowner can defer delinquent taxes and charges until the property is sold or at another future date.  To be eligible for the LIS Plan:

(1) the applicant must be 65 or older;

(2) the applicant must own a property that is a one, two, or three-unit class 1 residential property or a condominium unit;

(3) the property must have been the applicant’s primary residence for at least one year; and

(4) the applicant must have a federal adjusted gross income of $58,399 or less.

II. Standard Payment Plan Options

The DOF also offers flexible payment plans for all property owners who have missed payments or have outstanding balances on their property tax bills or other property charges.  However, you cannot enter into a DOF payment plan if your property has been placed into a tax lien sale or an in rem action has commenced.  The DOF payment plan comes with a significant cost, however, if your property is at risk for a lien sale or in rem action then you may be able to take advantage of the payment plan to avoid loss of the property.  For property owners possessing properties with an assessed value of less than $250,000, the annual interest rate under the payment plan would be seven percent (7%), whereas for property owners possessing properties with an assessed value of more than $250,000, the annual interest rate would be eighteen percent (18%).

Under the DOF payment plans, property owners can chose a payment plan for a term of up to 10 years and agree to make payments over a period of time such as monthly or quarterly. Moreover, eligible property owners may select a payment plan with no up-front payment.  However, the property owner is required to keep current on the payment of property taxes while the payment agreement for the delinquent taxes and charges is in place.   Accordingly, the property owner must pay both the installment payments under the payment plan agreement and all new property taxes. The failure to make any payments under the payment plan agreement or property taxes for a period of 6 months triggers a default under the payment plan agreement and possibly termination of the payment plan agreement, which would subject the property owner to collection actions including tax lien sales.

III. Exemption Programs

The DOF offers several tax exemption, abatement, and money-saving programs for property owners and renters.  Exemptions lower the amount of tax owed by reducing a property’s assessed value, whereas abatements reduce taxes by applying credits to the amount of taxes owed.  One such DOF exemption program is the NYC Rent Freeze Program, which includes the (i) Senior Citizen Rent Increase Exemption (“SCRIE”) Program and (ii) Disability Rent Increase Exemption (“DRIE”) Program.  As the name implies, the NYC Rent Freeze Program freezes eligible renters’ rent, and, as such, gives landlords property tax credits to cover the difference between the actual rent amount and what the tenant is responsible for paying at the frozen rate.

(1) NYC Rent Freeze Program for Seniors – SCRIE Program

To be eligible for the SCRIE program, a property owner must:

(1) be at least 62 years old;

(2) be the Heath of the Household as (i) the primary tenant named on the lease/rent order or (ii) have been granted succession rights in a rent controlled, rent stabilized or a rent regulated hotel apartment;

(3) have a combined household income for all members of the household that is $50,000 or less; and

(4) must spend more than one-third (1/3rd) of their monthly household income on rent.

If an applicant for the SCRIE program lives in a Housing Development Fund Corporation (HDFC) or Mitchell-Lama development apartments, then the applicant must contact the NYC Department of Housing, Preservation and Development (HPD) to apply for the SCRIE program.

(2) NYC Rent Freeze Program for Tenants with Disabilities – DRIE Program

To be eligible for the DRIE program, a property owner must:

(1) be at least 18 years old;

(2) be (i) named on the lease or the rent order or (ii) have been granted succession rights in a rent controlled, rent stabilized, rent regulated hotel apartment or an apartment located in a building where the mortgage was federally insured under Section 213 of the National Housing Act, owned by a Mitchell-Lama development, Limited Dividend housing company, Redevelopment Company or Housing Development Fund Corporation (HDFC) incorporated under New York State’s Private Housing Finance Law;

(3) have a combined household income that is $50,000 or less;

(4) must spend more than one-third (1/3rd) of their monthly household income on rent; and

(5) must have been awarded one of the following: (i) Federal Supplemental Security Income (SSI), (ii) Federal Social Security Disability Insurance (SSDI), (iii) U.S. Department of Veterans Affairs disability pension or compensation, or (iv) Disability-related Medicaid if the applicant has received either SSI or SSDI in the past.

The aforementioned DOF programs can provide relief for certain property owners in New York City experiencing hardship, however will fall short to protect many commercial property owners that will experience hardship due to the profound economic impact of the COVID-19 pandemic.  If you are an owner of a one, two, or three-family property or condominium or own commercial property that is at risk for a lien sale or in rem action you should consider these programs before making your next property tax payment.