Commercial rent tax (CRT)

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.

Small business tax credit base rent

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

“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

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.

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:

• Your annualized base rent is less than $250,000 before applying the 35% rent reduction and the NYC Commercial Revitalization Program special reduction. However, you are required to file a tax return if your annual gross rent paid is more than $200,000.
• You are renting premises for 14 days or less during the tax year.
• You are a Tenant who uses at least 75 percent of the floor space to rent to others for residential purposes. This does not include operators of hotels.
• You are renting property for certain theatrical productions. The exemption will be for the first 52 weeks after the production begins.
• You are a governmental body or a nonprofit religious, charitable, or educational organization. Other types of nonprofit organizations will be exempt as long as the property is not used for commercial purposes and they receive a written tax exemption from the Department of Finance.
• You are located in the "World Trade Center Area." Refer to the CR-A instructions for a detailed definition of this area's boundaries
• You occupy a property that is located in the Commercial Revitalization Program abatement zone and is being used for retail sales purposes.

CR-Q Quarterly Returns

• CR-Q1 2024-25 Commercial Rent Tax 1st Quarter Return
  (applicable for the tax period June 1, 2024 to August 31, 2024)
  Download Instructions
  File online with e-Services
• Finance Supplemental Excel Spreadsheet (Quarterly Reporting)
  (to report more than 3 (three) premises or multiple subtenants)
  Note: If reporting multiple subtenants for any one premises, attach a separate excel spreadsheet with the following information – premises number, subtenant name and EIN or SSN, and rental income amount. Aggregate the rental income and enter on the applicable row 21. Add this multiple subtenant attachment to your paper filings.

Archived Commercial Rent Tax Annual Returns (by Tax Year)

Every landlord of taxable property and every tenant of taxable property must keep the following records:

• Identification of each tenant or sub-tenant
• The rent required to be paid
• The rent paid and received
• The location of each premises
• The period of each occupancy
• All leases or agreements that fix the rents required to be paid and/or the rights of the tenants

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 commercial rent tax 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 the update on audit issues concerning billboards.