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.
Beginning June 1, 2018, taxpayers may claim the Small Business Tax Credit.
The credit effectively exempts tenants with "total income" of $5,000,000 or less AND "annual base rent before rent reduction" of less than $500,000 from the Commercial Rent Tax.
Taxpayers with "total income" of more than $5,000,000 but less than $10,000,000 and "annual base rent before rent reduction" of more than $500,000 but less than $550,000 receive a sliding scale credit against the tax.
Taxpayers with "total income" equal to or more than $10,000,000 or "annual base rent before rent reduction" less than $250,000, or equal to or more than $550,000, are not eligible for this credit.
Taxpayers with multiple premises and "total income" of less than $10,000,000 may be eligible for this credit with respect to some of their premises, while ineligible with respect to others.
The “small business tax credit base rent” is the base rent before the 35% rent reduction (amount on page 2, line 7 of the NYC Form CR-A Commercial Rent Tax Annual Return) allowed pursuant to Administrative Code Section 11-704(h)(2). Note: Do not use “Annualized Base Rent before rent reduction (page 2, line 12 of the NYC Form CR-A).”
“Total income” is defined by section 11-704.4 of the Administrative Code to mean the amount reported to the Internal Revenue Service for federal income tax purposes (i.e. Federal 1120 line 11; Federal 1120S line 6; Federal 1065 line 8) in the tax year immediately preceding the period for which the tenant is applying for this credit that is equal to the gross receipts or sales of the individual, trust, estate, partnership, association, company, or corporation minus returns and allowances, minus the cost of goods sold plus the amount of any dividends, interest, gross rents, gross royalties, capital gain net income, net gain or loss from the sale of business property, net farm profit or loss, ordinary income or loss from other partnerships, estates or trusts or other income or loss. "Total income" is the income reported on your federal tax return, regardless of how you file for New York City tax purposes.
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.
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.
You are not subject to the Commercial Rent Tax if:
File electronically at www.nyc.gov/eservices. If you are filing on paper, visit the Commercial Rent Tax (CRT) Returns forms page to download the current tax forms as well as spreadsheets for additional premises and subtenants.
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.
If a tenant ceases to do business, the tax is due immediately, and a final return for the entire year (Form CR-A) must be filed within 20 days from the date the tenant ceases to do business.
Title 11, Chapter 7, Administrative Code
Enabling Act: Chapter 257 of the Laws of 1963
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).
Your tax is due within 20 days after your business ceases operations. 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 your business ceases operations, you still must file the normally required returns.
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.