New York, NY – September, __ 2008 – An important victory by Rubinstein & Rubinstein, LLP against a New York State municipality has been underscored by the recent codification of that victory as statutory law.
In the case, Rubinstein v. Office of the Assessor (NY Sup. Ct., Rockland Co., N.Y.L.J. Oct. 22, 2003), the court ruled against a New York State municipality that had denied the STAR tax exemption for personal residences owned by Family Limited Partnerships (FLPs). The court held that it is unconstitutional for local tax departments to deny this tax exemption to FLPs.
On April 23, 2008, the New York State legislature in Albany amended section 425 of the Real Property Tax Law to include dwellings held by qualified limited partnerships, including FLPs, as eligible for the STAR exemption.
The amended statute now states that a limited partnership is qualified for the exemption if the dwelling held by the partnership is the primary residence of one or more partners who pay all taxes and other costs associated with the dwelling, the partnership does not engage in any commercial activity and was lawfully created for estate planning or asset protection purposes. Significantly, and with potentially wide ranging impact, asset protection is specifically recognized in the statute as a legitimate, bona fide goal, on par with estate planning.
Properties held by FLPs that were previously denied the STAR tax exemption may benefit from application for a retroactive rebate.
This tax law amendment is the latest example of significant tax victories by Rubinstein & Rubinstein. Earlier, Rubinstein also won a decisive victory against the New York City Tax Department when the Tax Appeals Tribunal determined that the City improperly taxed an upfront, lump-sum payment of rent in a long-term lease. Rubinstein successfully argued that a long-term lease is not subject to Real Property Transfer Tax (RPTT) merely because the lessee paid one upfront lump-sum payment at the start of the lease term.
In an earlier matter, Rubinstein was successful in arguing that real property transfer taxes imposed by the City of New York on transfers of real property from an individual to an FLP were improper. The tax arbiter agreed with Rubinstein, holding that no transfer taxes were warranted because the transfers were a mere change in identity or form of ownership, while the beneficial ownership of the property remained the same after the transfer to the FLP.
For more information about Rubinstein & Rubinstein’s legal services, including tax planning and tax representation, please visit www.AssetLawyer.com.
Kenneth Rubinstein, Esq.