N.Y. Comp. Codes R. & Regs. tit. 20 § 575.8

Current through Register Vol. 46, No. 22, May 29, 2024

Section 575.8 - Cooperative housing corporation transfers

Tax Law, § 1405-B

(a) Notwithstanding the definition of controlling interest contained in section 575.1(b) of this Part or anything to the contrary contained in section 575.1(e)(1) of this Part, the real estate transfer tax applies to:

(1) the original conveyance of shares of stock in a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold by the cooperative housing corporation or cooperative plan sponsor; and

(2) the subsequent conveyance of such stock in a cooperative housing corporation in connection with the grant or transfer of a proprietary leasehold by the owner thereof.

(b)Transfers of shares in a cooperative housing corporation pursuant to contracts dated on or before February 16, 1989. Transfers of cooperative shares pursuant to a binding written contract (e.g. a written agreement to purchase shares) entered into on or before February 16, 1989 are not subject to tax (see section 575.5 of this Part). The fact that the real property (the building containing the cooperative units) was transferred on or before February 16, 1989 or that the contract to transfer such property was entered into prior to such date is irrelevant for purposes of determining if the transfer of shares in a cooperative corporation are subject to tax. Also, the transfer of the real property to the cooperative housing corporation is subject to tax whether or not the transfer occurred pursuant to a binding written contract entered into on or before February 16, 1989.

Example:

The sponsor of a cooperative housing corporation transferred a building containing ten apartments to the cooperative corporation on January 30, 1989, and took back 100 shares of cooperative stock (the unsold shares as of the date of transfer to the cooperative housing corporation). As of February 1, 1989, the sponsor had entered into subscription agreements for 50 shares in connection with the granting of proprietary leases to five apartments. On March 1, 1989, the sponsor entered into subscription agreements for the remaining 50 shares. However, the 100 shares were not transferred until July 3, 1989. The 50 shares transferred pursuant to the subscription agreements entered into as of February 1, 1989 would not be subject to tax. The 50 shares transferred pursuant to subscription agreements entered into on March 1, 1989 are subject to tax.

(c)Credit for tax previously paid.

(1) In the case of conveyances described in paragraph (a)(1) of this section, a credit shall be allowed for a proportionate part of the amount of any tax paid upon the conveyance to the cooperative housing corporation of the real property comprising the cooperative dwelling or dwellings to the extent that such conveyance effectuated a mere change of identity of form of ownership of such property and not a change in the beneficial ownership of such property.

(2) The amount of the credit is determined by multiplying the amount of tax paid upon the conveyance to the cooperative housing corporation by a percentage representing the extent to which such conveyance effectuated a mere change of identity or form of ownership and not a change in the beneficial ownership of such property, and then multiplying the result by a fraction, the numerator of which is the number of shares of stock conveyed in a transaction described in paragraph (a)(1) of this section and the denominator of which is the total number of shares of stock of the cooperative housing corporation (including any stock held by the corporation).

(3) The credit will not reduce the tax below zero. The credit will not be allowed for a tax paid more than 24 months prior to the date on which occurs the first in a series of conveyances of shares of stock in an offering of cooperative housing corporation shares as described in paragraph (a)(1) of this section.

Example:

The A B partnership, as sponsor, conveyed a building containing 10 apartments to cooperative housing corporation C in exchange for the unsold shares of stock of C and paid real estate transfer tax of $5,000. Each of the 10 apartments in the building are allocated 5 shares of C's stock and, on the date of the conveyance of the building to C, the partnership sold shares of stock relative to two of the apartments (10 shares) which were transferred directly from C to the unit purchasers, and the partnership took back the remaining 40 unsold shares. The transfer of the building to C is considered to constitute a 100 percent mere change of identity with no change in beneficial interest, since the 10 shares sold are considered to be first taken back by the partnership and then sold to the unit purchasers. Therefore, the credit available to the partnership when it sells share of C is $5,000. (100 percent × $5,000.)

(d)Information return.

Every cooperative housing corporation must file an information return with the department by July 15th of each year covering the preceding period of January 1st through June 30th and by January 15th of each year covering the preceding period of July 1st through December 31st. The first information return is due by January 15, 1990 for the period of July 1, 1989 to December 31, 1989. The return shall contain such information regarding the conveyance of shares of stock in the cooperative housing corporation as the department may deem necessary, including but not limited to, the names, addresses and employer identification numbers or social security numbers of the grantor and grantee, the number of shares conveyed, the date of the conveyance and the consideration paid for such conveyance.

N.Y. Comp. Codes R. & Regs. Tit. 20 § 575.8