§ 11-704 Exemptions and deductions from base rent.
AC § 11-704
a. The following shall be exempt from the payment of the tax imposed by this chapter: 1. The state of New York, or any public corporation (including a public corporation created pursuant to agreement or compact with another state or the Dominion of Canada), improvement district or other political subdivision of the state; 2. The United States of America, insofar as it is immune from taxation; 3. The United Nations or other world-wide international organizations of which the United States of America is a member; 4. Any corporation, or association, or trust, or community chest, fund or foundation, organized and operated exclusively for religious, charitable, or educational purposes, or for the prevention of cruelty to children or animals, and no part of the net earnings of which inures to the benefit of any private shareholder or individual and no substantial part of the activities of which is carrying on propaganda, or otherwise attempting to influence legislation; provided, however, that nothing in this paragraph shall include an organization operated for the primary purpose of carrying on a trade or business for profit, whether or not all of its profits are payable to one or more organizations described in this paragraph; 5. Any tenant who would be subject to taxes under this chapter aggregating not more than one dollar for a tax year with respect to all taxable premises used by the tenant; and 6. Any tenant located in the "World Trade Center Area," as defined as follows: the area in the borough of Manhattan bounded by Church Street on the east starting at the intersection of Liberty Street and Church Street; running northerly along the center line of Church Street to the intersection of Church Street and Vesey Street; running westerly along the center line of Vesey Street to the intersection of Vesey Street and West Broadway; running northerly along the center line of West Broadway to the intersection of West Broadway and Barclay Street; running westerly along the center line of Barclay Street to the intersection of Barclay Street and Washington Street; running southerly along the center line of Washington Street to the intersection of Washington Street and Vesey Street; running westerly along the center line of Vesey Street to the intersection of Vesey Street and West Street; running southerly along the center line of West Street to the intersection of West Street and Liberty Street; running easterly along the center line of Liberty Street to the intersection of Liberty Street and Washington Street; running southerly along the center line of Washington Street to the intersection of Washington Street and Albany Street; running easterly along the center line of Albany Street to the intersection of Albany Street and Greenwich Street; running northerly along the center line of Greenwich Street to Liberty Street; and running easterly along the center line of Liberty Street to the intersection of Liberty Street and Church Street. b.
(1)A tenant who uses premises for no more than fourteen days in a tax year whether or not consecutive, where his or her agreement with his or her landlord does not require him or her to pay rent for a longer period shall be exempt from the payment of the tax imposed by this chapter in respect to the rent paid by him or her for such premises.
(2)A tenant whose base rent, (i) for tax years beginning on or after June first, nineteen hundred eighty-one and ending on or before May thirty-first, nineteen hundred eighty-four, is not in excess of four thousand nine hundred ninety-nine dollars per year, (ii) for the tax year beginning June first, nineteen hundred eighty-four and ending May thirty-first, nineteen hundred eighty-five, is not in excess of seven thousand nine hundred ninety-nine dollars per year, (iii) for the tax years beginning on or after June first, nineteen hundred eighty-five and ending on or before May thirty-first, nineteen hundred ninety-four, is not in excess of ten thousand nine hundred ninety-nine dollars per year, (iv) for the tax year beginning June first, nineteen hundred ninety-four and ending May thirty-first, nineteen hundred ninety-five, is not in excess of twenty thousand nine hundred ninety-nine dollars per year, (v) for the tax year beginning June first, nineteen hundred ninety-five and ending May thirty-first, nineteen hundred ninety-six, is not in excess of thirty thousand nine hundred ninety-nine dollars per year, (vi) for the tax year beginning June first, nineteen hundred ninety-six and ending May thirty-first, nineteen hundred ninety-seven, is not in excess of thirty-nine thousand nine hundred ninety-nine dollars per year, and (vii) for tax years beginning on or after June first, nineteen hundred ninety-seven and ending on or before May thirty-first, two thousand, is not in excess of ninety-nine thousand nine hundred ninety-nine dollars per year, calculated without regard to any reduction in base rent allowed by paragraph two of subdivision h of this section, (viii) for the period beginning June first, two thousand and ending November thirtieth, two thousand, is not in excess of ninety-nine thousand nine hundred ninety-nine dollars per year, calculated without regard to any reduction in base rent allowed by paragraph two of subdivision h of this section, (ix) for the period beginning December first, two thousand and ending May thirty-first, two thousand one, is not in excess of one hundred forty-nine thousand nine hundred ninety-nine dollars per year, calculated without regard to any reduction in base rent allowed by paragraph two of subdivision h of this section, and (x) for tax years beginning on or after June first, two thousand one, is not in excess of two hundred forty-nine thousand nine hundred ninety-nine dollars per year, calculated without regard to any reduction in base rent allowed by paragraph two of subdivision h of this section, shall be exempt from the payment of the tax imposed by this chapter with respect to such rent, provided, however, that where the base rent of such tenant is for a period of less than one year, such base rent shall, for purposes of this paragraph, be determined as if it had been on an equivalent basis for the entire year; and provided further, that for purposes of subparagraphs (viii) and (ix) of this paragraph, base rent for the period specified in each of such subparagraphs shall be separately annualized as if it had been on an equivalent basis for an entire year, irrespective of the actual base rent for the tax year including the period specified in such subparagraph. Notwithstanding the preceding sentence, (xi) a tenant whose base rent for the tax year beginning June first, nineteen hundred eighty-four and ending May thirty-first, nineteen hundred eighty-five, is at least eight thousand dollars per year, but not in excess of ten thousand nine hundred ninety-nine dollars per year, shall be exempt from the payment of the tax imposed by this chapter with respect to such rent for the period beginning December first, nineteen hundred eighty-four and ending May thirty-first, nineteen hundred eighty-five, and (xii) a tenant whose base rent for the tax year beginning June first, nineteen hundred ninety-five and ending May thirty-first, nineteen hundred ninety-six, is at least thirty-one thousand dollars per year, but not in excess of thirty-nine thousand nine hundred ninety-nine dollars per year, shall be exempt from the payment of the tax imposed by this chapter with respect to such rent for the period beginning September first, nineteen hundred ninety-five and ending May thirty-first, nineteen hundred ninety-six. c. Base rent shall be reduced by the amount of the taxpayer's rent for, or reasonably ascribable to, the taxpayer's own use of the premises: 1. As premises used for railroad transportation purposes.
2.As premises used for air transportation purposes.
3.As piers insofar as such premises are used in interstate or foreign commerce.
4.Which are located in, upon, above or under any public street, highway or other public place, and which are defined as special franchise property in the real property tax law.
5.Which are taxed pursuant to subchapter one of chapter twenty-two-A or chapter twenty of this title to the extent that such premises are subject to, and during the period that they are subject to, such tax.
6.Which are taxed pursuant to subdivision b or c of section 11-1005 of chapter ten of this title.
7.Which are advertising signs, advertising space, vending machines or newsstands within or attached to stations, platforms, stairways, entranceways, passageways, mezzanines or tracks of a rapid transit subway or elevated railroad operated by the New York city transit authority when the rent of the tenant or of the tenant's landlord is payable to such authority.
8.As premises used for omnibus transportation purposes.
9.As premises used for retail sales purposes where such premises are located in the area in the borough of Manhattan bounded by Murray Street on the north starting at the intersection of West Street and Murray Street; running easterly along the center line of Murray Street, connecting through City Hall Park with the center line of Frankfort Street and running easterly along the center lines of Frankfort and Dover Streets to the intersection of Dover Street and South Street; running southerly along the center line of South Street to Peter Minuit Plaza; connecting through Peter Minuit Plaza to the center line of State Street and running northwesterly along the center line of State Street to the intersection of State Street and Battery Place; running westerly along the center line of Battery Place to the intersection of Battery Place and West Street; and running northerly along the center line of West Street to the intersection of West Street and Murray Street. Any tax lot which is partly located inside such area shall be deemed to be entirely located inside such area. d. A tenant who uses taxable premises for renting to others for residential purposes to the extent of seventy-five per centum or more of the rentable floor space shall be exempt from the tax imposed by this chapter in respect to the rent paid for such premises from the time that construction thereof commences, provided, however, that this paragraph shall not be applicable to hotels, apartment hotels or lodging houses as defined in former title V of chapter forty-six of the code. e.
(ii)For purposes of this paragraph, the term "theatrical work" shall mean a performance or repetition thereof in a theater of a live dramatic performance (whether or not musical in part) that contains sustained plots or recognizable thematic material, including so-called legitimate theater plays or musicals, dramas, melodramas, comedies, compilations, farces or reviews, provided that such performance is intended to be open to the public for at least two weeks. The term "theatrical work" shall not include performances of any kind in a roof garden, cabaret or similar place, circuses, ice skating shows, aqua shows, variety shows, magic shows, animal acts, concerts, industrial shows or similar performances, or radio or television performances, whether or not such performances are pre-recorded for later broadcast. f.
(3)The reduction allowed by this subdivision may be claimed on an estimated basis on the returns filed for the tax periods ending on the last days of August, November and February of each year if, and to the extent, permitted by regulations promulgated by the commissioner of finance.
(4)No tenant shall be authorized to receive a reduction in base rent subject to tax under the provisions of this subdivision, until the premises with respect to which it is claiming a reduction in base rent meet the requirements in the definition of eligible premises and until it has obtained a certification of eligibility from the mayor or an agency designated by the mayor, and an annual certification from the mayor or an agency designated by the mayor as to the number of eligible aggregate employment shares maintained by such tenant which may qualify for obtaining a base rent reduction for the tenant's tax year. Any written documentation submitted to the mayor or such agency or agencies in order to obtain any such certification shall be deemed a written instrument for purposes of section 175.00 of the penal law. Application fees for such certifications shall be determined by the mayor or such agency or agencies. No certification of eligibility shall be issued to an eligible business on or after July first, nineteen hundred ninety-nine unless such business meets the requirements of either subparagraph (a) or (b) below: (a) (1) prior to such date such business has purchased, leased or entered into a contract to purchase or lease particular premises or a parcel on which will be constructed such premises or already owned such premises or parcel; (2) prior to such date improvements have been commenced on such premises or parcel which improvements will meet the requirements of subdivision (e) of section 22-621 of this code relating to expenditures for improvements; (3) prior to such date such business submits a preliminary application for a certification of eligibility to such mayor or such agency or agencies with respect to a proposed relocation to such particular premises; and (4) such business relocates to such particular premises not later than thirty-six months or, in a case in which the expenditures made for the improvements specified in clause two of this subparagraph are in excess of fifty million dollars within seventy-two months from the date of submission of such preliminary application; or (b) (1) not later than June thirtieth, two thousand two, such business has purchased, leased or entered into a contract to purchase or lease particular premises wholly contained in a building in which at least an aggregate of forty per centum or two hundred thousand square feet, whichever is less, of the nonresidential floor area of such building has been purchased or leased by a business or businesses which meet or will meet the requirements of subparagraph (a) of this paragraph with respect to such floor area and which are or will become certified as eligible to receive a credit under section 22-622 of this code with respect to such floor area; (2) not later than June thirtieth, two thousand two, such business submits a preliminary application for a certification of eligibility to such mayor or such agency or agencies with respect to a proposed relocation to such particular premises; and (3) not later than June thirtieth, two thousand two, such business relocates to such particular premises. Any tenant subject to a tax imposed under chapter five, or subchapter two, three or three-A of chapter six, of this title obtaining a certification of eligibility pursuant to subdivision (b) of section 22-622 of the code shall be deemed to have obtained the certification of eligibility required by this paragraph. g. Whenever the rent paid by a tenant for his or her occupancy of taxable premises is measured in whole or in part by the gross receipts from the tenant's sales within such place, the tenant's rent, to the extent paid on the basis of such gross receipts, shall be deemed not to exceed fifteen percent of such gross receipts. h.
(b)When used in this subdivision, the following terms shall mean or include: (i) "Eligible government-owned building." A building that would be an eligible building, as such term is defined in section four hundred ninety-nine-a of the real property tax law, but for the fact that it is owned by a governmental agency.
(iii)"Eligible tenant." A tenant with respect to whose lease of eligible taxable premises there has been issued a certificate of abatement or a certificate of eligibility.
(iv)"Base year." The twelve-month period that commences on the rent commencement date.
(v)"Base rent for the base year." The total base rent for eligible taxable premises for the base year, determined without regard to the special reduction allowed by this subdivision.
(vi)"Certificate of abatement." The certificate of abatement issued pursuant to section four hundred ninety-nine-d of the real property tax law.
(vii)"Certificate of eligibility." The certificate of eligibility issued pursuant to paragraph five of this subdivision.
(a-1)Notwithstanding paragraph one of this subdivision, for purposes of, and to the extent relevant to, the special reduction allowed by this subparagraph, the definitions set forth in section four hundred ninety-nine-aa of the real property tax law shall apply with the same force and effect as if they had been set forth in full in this subdivision, except as such definitions are hereinafter modified. An eligible tenant of eligible taxable premises shall be allowed a special reduction in determining the taxable base rent for such eligible taxable premises, provided, however, that (i) such eligible taxable premises are eligible premises as defined in paragraph (c) of subdivision ten of section four hundred ninety-nine-aa of the real property tax law, (ii) such eligible taxable premises are located in the special garment center district identified in the abatement zone defined in paragraph (c) of subdivision two of section four hundred ninety-nine-aa of the real property tax law, (iii) the lease for such eligible taxable premises commences within the eligibility period applicable to the abatement zone defined in paragraph (c) of subdivision two of section four hundred ninety-nine-aa of the real property tax law, (iv) the lease for such eligible taxable premises has an initial lease term of at least three years and (v) such special reduction is limited to the benefit period, as defined in subdivision five of section four hundred ninety-nine-aa of the real property tax law, applicable to a lease commencing on or after July first, two thousand five for eligible premises located within the abatement zone defined in paragraph (c) of subdivision two of section four hundred ninety-nine-aa of the real property tax law.
(a-2)The amount of the special reduction allowed by subparagraph (a-1) of this paragraph shall be determined as follows: (i) For the base year the amount of such special reduction shall be equal to the base rent for the base year.
(a-3)When used in this subdivision, for purposes of the special reduction allowed by subparagraph (a-1) of this paragraph, the following terms shall mean or include: (i) "Eligible taxable premises." Taxable premises that are eligible premises or expansion premises.
(b-2)The amount of the special reduction allowed by this subdivision with respect to a lease other than a sublease commencing between July first, two thousand five and June thirtieth, two thousand twenty-seven with an initial or renewal lease term of at least five years shall be determined as follows: (i) For the base year the amount of such special reduction shall be equal to the base rent for the base year.
(c)For purposes of determining (i) whether a tenant is, pursuant to the provisions of paragraph two of subdivision b of this section, exempt from payment of the tax imposed by this chapter with respect to the base rent for eligible taxable premises or (ii) whether, and the extent to which, a tenant is eligible for the credit allowed pursuant to the provisions of section 11-704.3 of this chapter with respect to eligible taxable premises, the term "base rent" as used in such provisions shall be the base rent as determined prior to the allowance of any special reduction allowed by this subdivision.
(d)Notwithstanding anything to the contrary, for purposes of this subdivision, expansion premises shall be treated as separate and distinct from any other premises of the expansion tenant in the same eligible building.
(5)(a) (i) With respect to premises located in an eligible government-owned building, an application for a certificate of eligibility entitling a tenant to claim the special reduction allowed by this subdivision shall be filed by such tenant with the department of finance on or after the date on which the lease for the eligible premises is executed by the landlord and tenant but in no event more than one hundred eighty days following the later of the rent commencement date or the date that chapter four of the laws of nineteen hundred ninety-five became a law, and no such certificate of eligibility shall be issued unless such application is filed within such time.
(e)The department of finance may provide by rule for the payment by tenants of premises in eligible government-owned buildings of reasonable administrative charges or fees necessary to defray expenses in connection with the determination of initial and continuing eligibility for the special reduction allowed by this subdivision.
(6)(a) If an eligible tenant (i) sublets any portion of the eligible taxable premises to any other person, or (ii) otherwise ceases to occupy or use any portion of the premises as eligible taxable premises, such tenant shall, immediately upon the occurrence of any such event, cease to be eligible for the special reduction allowed by this subdivision with respect to the portion of the premises which is sublet or which ceases to be occupied or used by such tenant as eligible taxable premises, and for any period following the occurrence of any such event, the special reduction otherwise allowed by this subdivision shall be reduced by an amount determined by multiplying the amount of such special reduction by the percentage of the premises which is sublet or which has ceased to be occupied or used as eligible taxable premises. Such tenant shall give written notice of the occurrence of any such event to the department of finance within thirty days thereof. If the tenant fails to give such notice, an assessment of any additional tax that may become due as a result of the occurrence of any such event may be made at any time, notwithstanding anything in section 11-717 of this chapter to the contrary.
