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Analyzing the 421g Tax Abatement in NYC

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  • Analyzing the 421g Tax Abatement in NYC

    Hello,

    Can you please help me understand those property tax bills with multiple tax abatements?

    For example, I have enclosed here the property tax bill for 1 Wall St Ct #1001. As you can see, current annual property tax is $10,387, which is consistent with the monthly tax reported on StreetEasy.com ($10,387/12 = $866).

    However, the property tax bill (found on the NYC Department of Finance website) has two abatements on it. One is called "Resid-Conv. Low Manh", in the amount of $3,051. The other abatement is called "Residential Conversion Abatement", in the amount of $3,626.

    My question is: if I buy the property and rent it out (instead of using it as my primary residence), will I lose both abatements or just one of these two abatements? In other words, once I start renting (and assume the building's 421g abatement expires at that time), will my annual tax bill become $17,064? or will it become $14,013?

    Thank you very much for your kind help Chris!

    Best regards,
    Ping

  • #2
    Hi Ping! Please refer to the below article on the 421g tax abatement to learn more. Please see the Excel model and video on how to use the model at the bottom of that article. It's a fantastic model that gives you an estimate of future cashflow before and after the 421g tax incentive expires.

    To our understanding, the 421g tax abatement doesn’t have anything to do with primary residency.

    Also, do you have a lawyer yet? He or she can also be a great source of insight for complex matters such as this, along with a seasoned buyer's broker. Your lawyer can help confirm exact cash flows during the due diligence and contract review period.
    The 421g tax abatement and exemption in NYC explained. History of the 421-g tax incentive and how to calculate and verify the incentive. Projection model.

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