Deadline looms for Real Property Income and Expense statements.
This year, City officials are encouraging owners to submit their RPIE-2005 data electronically on the Finance website at nyc.gov/finance. To encourage owners to file electronically, Finance has extended the filing deadline for those opting to file online to midnight, September 15, 2006. For those owners who will continue to file by mail, the deadline remains September 1, 2006 and all filings must be postmarked on or before that date.
Although the annual RPIE filing requirement continues to be a subject of contention among many in the real estate industry, City officials are firm in their belief that the information garnered from the hundreds of thousands of financial statements submitted to Finance is essential in deriving fair and equitable assessments of property in New York City.
All owners of income producing properties with actual assessed values greater than $40,000 are required to file an RPIE unless the property qualifies for exemption from filing, e.g., the property is vacant, uninhabitable, non income producing, owner occupied, leased to a related party or entity, a residential co-op with less than 2,500 square feet of commercial space, tax exempt, an individual residential condominium, a smaller property with ten or fewer residential apartments, or a property with six or fewer residential apartments and no more than one commercial space.
With regard to cooperative buildings, only those cooperatives with more than 2,500 square feet of commercial space (not including garage space) are required to file income and expense information for their commercial space. Co-ops with less than 2,500 square feet of commercial space are exempt from filing income and expense information, however, the first five pages and page eight of the RPIE must still be completed and filed. With regard to condominiums, individual residential condominiums that are not part of a group of rental units that make up the majority of the property are not required to file income and expense statements.
An RPIE must be filed when 50% or more of the residential space in a condominium is operated as a rental property. Commercial condominiums are also required to file RPIE forms and are treated, for RPIE filing purposes, just like any other income producing property which is not part of a condominium regime of ownership.
The RPIE form is eight pages long and requires disclosure of a significant amount of lease information, particularly for properties with commercial tenants. This annual disclosure of commercial rent rolls is a serious bone of contention with many in the real estate industry as such information is considered by some to be in the nature of "trade secrets". Notwithstanding representations of confidentiality by Finance, industry representatives remain uncomfortable with the form and believe that many portions of it are overreaching and require information well beyond the scope of what is permitted by law.
Owners who have filed income and expense information with the New York City Tax Commission as part of their real estate tax appeal must still complete and file the first five pages and signature page of the RPIE form. Failure to file, non-compliant filing, or non-timely filing may result in monetary penalties and disqualification from hearings before the Tax Commission for those seeking reductions in assessment.
Consolidated filings for income producing properties that are comprised of multiple lots are not permitted by Finance. Separate RPIE filings for each block and lot are required, even in cases where multiple lots are operated as one economic entity. This may require an allocation of income and expenses among or between lots on some reasonable basis.
Consolidated filing is allowed, however, for condominiums. Owners are required to break out income distinguishing regulated and unregulated residential income as well as commercial income. Government subsidies, signage/ billboard income, and cell tower income must also be disclosed. Such income is considered to be derived from the property. Operating escalations, real estate tax escalations, sales of utility services, laundry, vending, valet and similar services are also considered to be income from real estate. Vacancies are reportable only if they are for the entire filing period, and gross square footage is defined as exterior wall to exterior wall. These are just some of the issues that owners should be mindful of when preparing the annual RPIE form this year.
Since the information contained within the RPIE form is a threshold compliance requirement and basis for any potential real estate tax appeal or claim for correction of assessed valuation, due diligence will be required of owners in their presentation of the RPIE.
* Jeffrey Golkin is one of New York's leading real estate and tax certiorari practitioners and serves as adjunct Associate Professor at NYU.
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|Title Annotation:||INSIDER'S OUTLOOK|
|Publication:||Real Estate Weekly|
|Date:||Aug 23, 2006|
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