Did you know that “handyman” work traded for rent is bartering? For some co-op and condo unit owners this sounds a lot like the superintendent or resident manager who performs a number of roles and lives on premises, but that is not the case. In 2018 the tax court once again determined that handyman services in exchange for rent is considered bartering and therefore taxable. In the ruling a handyman traded work for the rent he owed his landlord and was required to pay tax on the value of the work performed that was applied to his rent. So why would it be different for your superintendent or resident manager?
This is because your superintendent or resident manager falls under the convenience-of-the-employer exclusion. This rule means that an employee may exclude from gross income the value of lodging provided free by an employer if the employer does so for a substantial non-compensatory business reason. It must occur on the business premises and since New York City requires either an on-site person or one in close proximity to the property this shows that the housing is for the employer’s rather than the employee’s convenience and the employer must require the employee to accept the housing as a condition of employment. Thus, in order to satisfy local and federal taxation laws, the employee must live in the lodging to be able to perform the duties of their employment. This allows for your board to provide a wonderful quality of life to your unit owners at a lower cost.
With over 35 years of experience serving co-ops and condos, the Czar Beer team can outline specific steps you should take to minimize taxes, maximize loan eligibility, and enhance the value of your property.
For more information, contact us at firstname.lastname@example.org or (212) 397-2970.