2A —November 19 - December 23, 2021 — M id A tlantic Real Estate Journal
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M id A tlantic Real Estate Journal
M id A tlantic R eal E state J ournal Publisher, Conference Producer . .............Linda Christman AVP, Conference Producer ...........................Lea Christman Publisher ........................................................Joe Christman Editor/Graphic Artist ......................................Karen Vachon Social Media . ....................................................Halle Morton Contributing Columnist .Matthew Trubenbach-Byrne, CPA, CCIFP Mid Atlantic R eal E state J ournal ~ Published Semi-Monthly Periodicals postage paid at Hingham, Massachusetts and additional mailing offices Postmaster send address change to: Mid Atlantic Real Estate Journal 350 Lincoln St, Suite 1105, Hingham, MA 02043 USPS #22-358 | Vol. 33, Issue 9 Subscription rates: 1 year $99.00, 2 years $148.50, 3 years $247.50 & $4.00 single issue - plus postage REPORT AN ERROR IMMEDIATELY MARE Journal will not be responsible for more than one incorrect insertion Phone: 781-740-2900 www.marej.com
New York Commercial Rent Tax Matthew Trubenbach-Byrne, CPA, CCIFP s New York City and many countries around the world begin to re- sume some normalcy following the rise in vaccinations, busi- ness activities are anticipated to accelerate recovery back to pre-COVID levels. While business owners will surely welcome the increased income that should result, anticipated tax law changes will make this rebound bittersweet for many. While most will be taking strategies to mitigate their li- ability for income taxes paid, the same steps should be taken where available for the New York Commercial Rent Tax (“CRT”). For those renting space in Manhattan south of the center line of 96th Street, the CRT is not a new concern and has been around for nearly 60 years. The CRT is a tax charged on rent paid for space relating to any trade, business, profession, or commercial activity in this designated area. You heard that correct – a A
tax paid on an expense that usually reduces the tax bill. While there are exemptions from the tax such as minimum rent fees paid subject to tax, small business credits for those below a certain income thresh- old, and those within certain zones of the CRT area, this tax is unavoidable for most large businesses. Even though this may seem counter-intuitive, the solution to mitigate this tax is equally counter-intuitive – earn income on the space through subleasing. If there is one thing that has been proven through the COVID-19 pandemic, it is that a majority of companies were operating with excess office,
meeting, or common space and that there are many employees who can perform their tasks on a limited- or fully-remote schedule. This has left compa- nies paying rent and CRT on significantly more space than is required for the business to function. While income tax laws con- tain a plethora of options for deductions and other strate- gies to mitigate taxes owed, the major deduction available for the CRT is through subleasing income. Through a sublease, a Company is able to offset all or a portion of the expenses paid on a dollar-for-dollar basis by passing the expense along to continued on page 28
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