§ 7-02 Imposition of Tax.
RCNY § 7-02
In addition to any and all other taxes the law imposes a tax for each tax year beginning on or after June 1, 1963, on every tenant of taxable premises. For each tax year falling within the period beginning June 1, 1963 and ending May 31, 1970, the tax was imposed at the rate of 2 1/2 percent of the tenant's base rent for such tax year where his base rent did not exceed $2,500 per year, or where his base rent was for a period of less than one year and would not exceed $2,500 for a year if it were paid on an equivalent basis for an entire year; or at the rate of 5 percent of his base rent for such tax year where his base rent exceeded $2,500 per year, or where his base rent was for a period of less than one year and would exceed $2,500 a year if it were paid on an equivalent basis for an entire year. For each tax year commencing on or after June 1, 1970 and ending on or before May 31, 1977, every tenant was required to pay a tax at the rates shown in the following table: When the base rent was:But not more than:The rate was: 0 $2,499 2 1/2% of the rent $2,500 or over $4,999 5% of the rent $5,000 or over $7,999 6 1/4% of the rent $8,000 or over $10,999 7% of the rent $11,000 or over 7 1/2% of the rent For tax years beginning on or after June 1, 1977 and ending on or before May 31, 1980, the tax was imposed at rates equal to 90 percent of the rates shown in the above table. For the tax year beginning June 1, 1980 and ending May 31, 1981, the tax was imposed at rates equal to 85 percent of the rates shown in the above table. For tax years beginning on or after June 1, 1981, the tax is imposed on every tenant having base rent in excess of $4,999 per year at the rates shown in the following table: When the base rent is:But not more than:The rate shall be:$5,000 or over $7,999 5% of the rent $8,000 or over $10,999 5.6% of the rent $11,000 or over 6% of the rent (See 19 RCNY § 7-04(f) for exemption from tax where base rent is under prescribed amounts.) Where the rent is for a period of less than one year, the rate shall be determined by assuming that the rent is on an equivalent basis for the entire year. Example 1: A tenant occupies a store for business purposes, for which his base rent is $16,000 for the tax year. The applicable rate of tax is 6 percent. The tax due is $960 (6% × $16,000) for the tax year. Example 2: A tenant occupies a boardwalk concession during the months of June, July, August and September, for which his base rent is $4,000. Since his base rent, if paid on an equivalent basis for the entire year, would amount to $12,000 ($4,000 ÷ 4) × 12), the applicable rate of tax is 6 percent. The tax due is 6 percent of $4,000 base rent, or $240. Example 3: A tenant conducts his business in two stores, one located in Brooklyn, the other in Manhattan. The base rent for the Manhattan store is $16,000 for the tax year while the base rent for the Brooklyn store is $4,500. The tax is computed separately for each taxable premises. The rate of 6% applies to the base rent paid for the Manhattan store while no tax is due on the base rent paid for the Brooklyn store, since it does not exceed $4,999. (See 19 RCNY § 7-04(f) for exemption from tax where base rent is under prescribed amounts.) Where a tenant pays an undivided rent for premises used by him for both residential purposes and as taxable premises, the tax is applicable to so much of the rent as is ascribable to the portion of such premises used as taxable premises. Where, however, the rent ascribable to so much of such premises as is used as taxable premises does not exceed $50 a month, such rent is to be excluded from such tenant's base rent. However, this shall not be construed to exclude any base rent from tax merely because it is paid as part of an undivided rent for premises which are only partially used as taxable premises. (For tax years beginning on or after June 1, 1981, no tax will be due if the rent ascribable to the portion of the premises used as taxable premises does not exceed the amounts prescribed in 19 RCNY § 7-04(f).) Example 4: An artist rents a three-room apartment in a residential building for which he pays rent of $1,200 for the tax year beginning June 1, 1977. He uses one room as a studio and the other two rooms as living quarters. For federal income tax purposes, he deducts $400 as his annual rent for the studio used in his work. Since the rent ascribable to the part of the premises used as taxable premises does not exceed $50.00 a month, the rent so ascribable is to be excluded from the tenant's base rent, and the tax is not imposed with respect to his occupancy of the premises. Example 5: A dentist is the tenant of a five-room apartment in a residential building, for which he pays rent of $30,000 per year. He uses two of the rooms for professional purposes and the other three rooms as a personal residence. In determining his federal income tax, he deducts two-fifths of his total rent, or $12,000, as rent ascribable to the part of the apartment devoted to his professional pursuits. For the purpose of the tax, it will be conclusively presumed against the tenant that the base rent of his taxable premises is $12,000, and the tax due is $720 (6% × 12,000). Nothing in the law shall be deemed to require payment of a double or multiple tax pursuant to said law on any part of any taxable premises. Thus, where a tenant sublets the entire taxable premises to another person who is liable for payment of the tax, such tenant is not required to pay the tax on the amount of rent paid to him by the subtenant. This section shall not be construed as permitting base rent of a tenant for one taxable premises to be reduced by deducting rents received by him for another taxable premises of which he is also a tenant.
