This tax is charged to tenants who occupy or use a property for commercial activity in Manhattan, south of 96th Street. You are subject to the Commercial Rent Tax if you rent space in this area for any trade, business, profession, or commercial activity, and:
Note: Tenants with annual taxable rents between $250,000 and $300,000 are eligible for a sliding-scale credit that partially offsets the tax.
A "tenant" is someone who pays rent as a lessee, sub-lessee, licensee, or concessionaire. Tenant-shareholders in co-ops are included. You must also pay the Commercial Rent Tax if you:
The tax rate is 6% of the base rent. All taxpayers are granted a 35% base rent reduction, which reduces the effective tax rate to 3.9%. In addition, you are allowed a tax credit if your annualized base rent before the 35% rent reduction is between $250,000 and $300,000. Be sure to review the instructions for Commercial Rent Tax for information about other types of deductions from base rent.
Calculating Base Rent
Rent paid by a tenant for each location
- Rent received or due from a subtenant
= Base Rent*
*When the base rent is for less than one year (or for less than three months on a quarterly return), you must annualize it over the entire period of the return. The annualized base rent is used to determine the appropriate tax rate.
Calculating Your Tax
Use quarterly and annual Commercial Rent Tax returns to calculate the exact tax that you owe:
If you rented more than one property in the part of Manhattan that is covered by the tax, repeat these four steps for each location to determine your total tax liability.
If you rent more than one location in the same property, aggregate all locations to determine the base rent.
Exemptions from this Tax
You are not subject to the Commercial Rent Tax if:
Forms and Reports
Every tenant must file an annual return on or before June 20 covering the prior year, from June 1 to May 31, unless both of the following are true:
Every tenant who is subject to tax for a period must also file a quarterly return.
Title 11, Chapter 7, Administrative Code
Enabling Act: Chapter 257 of the Laws of 1963
Frequently Asked Questions
What records related to Commercial Rent Tax should a taxpayer keep?
Every landlord of taxable property and every tenant of taxable property must keep the following records:
Records must be available for examination upon request by the Department of Finance. Leases and agreements stating rents required to be paid and/or the rights of a tenant should be kept for a period of three years after the expiration of the lease. Other records must also be kept for a three-year period after the annual return is filed (unless written permission is granted to destroy them before that time).
If a business ends during the year, what returns must I file?
Your tax is due within twenty days after your business ends. The amount of tax due is measured by your base rent, including escalations and other charges normally payable to the landlord for the part of the tax year that you were doing business. If, under your lease, you are required to continue to pay rent, or if, for any reason, you continue to pay rent for the premises after business ends, you still must file the normally required returns.
Are billboards subject to the Commercial Rent Tax?
Yes, the rent paid with respect to a billboard is taxable under the CRT if the billboard is located in the borough of Manhattan, south of the center line of 96th Street; the annual or annualized gross rent paid is at least $250,000; and the tenant does not meet any other exemption criteria, such as short rental periods, residential subtenants, use for theatrical productions, and not-for-profit status. Download Update on Audit Issues concerning billboards.