The New York City Department of Finance requires owners of income-producing property in New York City, that have an assessed property value of more than $40,000, to file an annual Real Property Income and Expense (RPIE) statement. A net lessee, responsible for all the real estate taxes on a New York City property, may file in lieu of the owner. By law, 2013 RPIE statements must be filed electronically by June 2nd. Statements for 2014 will be due June 1, 2015.
The City Assessor uses the RPIE, together with reports from other comparable properties, to estimate the market value for property tax purposes as well as to estimate market values of future property development. The assessed value of a property can be obtained from the New York City website, www.nycprop.nyc.gov.
In general, the following properties are required to file an RPIE statement:
- Rental properties, including rental apartment buildings and commercial properties with one or more tenants.
- Co-ops where the shareholders of the corporation have a right to occupy an apartment, or other space in the building, that contains over 2,500 square feet of commercial space, not including a garage.
- Owners of an income-producing commercial building or rented commercial space in a residential condominium building. Note, condominium owners do not need to file an RPIE for residential units individually owned. However, owners of a residential condominium building are required to file if 10% or more of the units remain unsold.
- Hotels and motels, parking lots and garages, department stores with over 10,000 square feet, power plans, theaters, and cinemas.
Failure to comply with RPIE statement requirements can subject property owners to fines and penalties. The law authorizes monetary penalties for late filers and additional penalties for failing to file. In fact, last November the Department of Finance implemented stiffer compliance penalties, depending on the type of infraction, ranging from three to five percent of the assessed value of income-producing property. The penalty is entered as a charge on the property’s tax records and becomes a lien on the property. In recent years, there has been a significant increase in RPIE penalty assessments. Many owners are unaware of the assessed penalties, because (1) often the funds are paid by escrow agents from funds they hold for real estate taxes, and (2) there is two-year lag between the time the penalty accrues and the time it is entered into the tax records.
It should be noted that all income producing gproperty owners are required to make an annual RPIE filing, even if it is only to claim an “exclusion” from the filing requirement. Examples of exempt properties include residential properties with 10 or fewer apartments, properties with six or fewer residential units and one commercial unit, properties that are owner occupied, and vacant or uninhabitable properties. For recently purchased properties or those operating for less than a year, the owner should file a partial year RPIE statement.
If you have any questions regarding the New York City Real Property Income and Expense statements, please contact Alan Goldenberg, Manager of State and Local Tax and Tax Controversy, at email@example.com or 212-897-6421, or contact your Friedman LLP tax professional.