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Can New York City Coworking Spaces Use Membership Fees to Reduce Their Commercial Rent Tax?

Can New York City Coworking Spaces Use Membership Fees to Reduce Their Commercial Rent Tax?

The short answer is yes. In September 2022, the New York City Department of Finance issued a letter, in response to a coworking company’s request to clarify this question. In this letter, it was determined that certain coworking businesses may reduce their base rent by the membership fees paid by members who use the space for more than fourteen days in a tax year.

This change will reduce the base rent paid by the coworking business, and ultimately, the amount of New York City Commercial Rent or Occupancy Tax paid.

For the taxpayer’s membership fees to be eligible for this deduction, it must be found that the membership fees qualify as rent paid by a tenant, or consideration paid by a licensee for permission to enter and use the premises for trade, business, professional, or commercial activity.

Article by Zaid Butt, Tax Director

Zaid Butt
Author: Zaid Butt
Zaid is a certified public accountant with significant tax compliance and consulting experience in diverse industries, including private equity, software, construction, manufacturing, retail, and financial services.