Tax Incentives: J-51

J-51

As-of-right tax exemption and abatement for residential rehabilitation or conversion to MULTIPLE DWELLINGS

ELIGIBLE PROJECTS

For projects that complete construction before December 31, 2011:

  • Government-assisted moderate and gut rehabilitation of MULTIPLE DWELLINGS;
  • Privately-financed moderate and gut rehabilitation of MULTIPLE DWELLINGS;
  • Privately-financed and government-assisted major capital improvements to MULTIPLE DWELLINGS; and
  • Conversions of lofts and other non-residential buildings into MULTIPLE DWELLINGS.

For projects that complete construction on or after December 31, 2011:

  • Government-assisted moderate and gut rehabilitation of MULTIPLE DWELLINGS;
  • Privately-financed moderate and gut rehabilitation of MULTIPLE DWELLINGS;
  • Privately-financed and government-assisted major capital improvements to MULTIPLE DWELLINGS;
  • Cooperative/condominium projects with an average assessed value of less than $30,000 per dwelling unit or less;
  • Cooperative/condominium projects with an average assessed value of $30,000 or more per dwelling unit only if carried out with substantial governmental assistance (defined as federal, state or city grant/loan/subsidy or a written agreement between HPD and the HDFC owner/applicant). This limitation is not applicable to Parkchester, Article V Redevelopment Company,  or Mitchell Lama projects; and
  • Conversions of non-residential to residential property only if carried out with substantial governmental assistance (defined as federal, state or city grant/loan/subsidy or a written agreement between HPD and the HDFC owner/applicant).

SEE ALSO NOTICES SECTION BELOW

TIME REQUIREMENTS

For projects that complete construction before December 31, 2011:

  • Must complete work within 36 months (projects with substantial government assistance may have up to 60 months)
  • Must file application within 48 months of commencement
  • Must complete application within 24 months

For projects that complete construction on or after December 31, 2011:

  • Must complete work within 30 months (projects with substantial government assistance may have up to 60 months)
  • Must file application within 36 months of commencement
  • Must complete application within 12 months
  • May be subject to inspection penalty fee if work is incomplete at time of inspection

BENEFITS GRANTED

  • 34-year (30-years full + 4-years phase out) or 14-year (10-years full + 4-years phase out) exemption from the increase in real estate taxes resulting from the work. Affordable housing projects generally get the 34-year exemption while other projects get the 14-year exemption;
  • Abatement of existing real estate taxes by up to 8 1/3% or 12 1/2% of the cost of the work each year for up to 20 years. Affordable housing projects generally receive the 6% abatement while other projectsget the 4% abatement.

Privately-financed projects in Manhattan south of 110th Street and co-ops and condominiums generally receive some limited benefits.
All rental units become subject to rent stabilization or rent control for the duration of the benefits. In rental buildings, the landlord must also reduce the MCI rent increase allowed under rent stabilization as a result of the work, by a portion of the value of the tax abatement. The rent is temporarily reduced in the MCI proceeding or at a later date in a Tax Abatement Modification Proceeding. The rent is restored at the end of the tax abatement period. For more info, please see the HCR Fact Sheet on Major Capital Improvements.

PROCEDURAL REQUIREMENTS

The developer applies to Tax Incentive Programs (TIP) of HPD. Projects receiving governmental assistance may apply for temporary benefits during construction/rehabilitation. All other projects may apply after completion of work, but not more than four years after commencement of construction. Applications must be completed within two years of the filing date. TIP issues Certificate of Eligibility. The Department of Finance implements the benefits.

NOTICES

The J-51 Program is governed by Real Property Tax Law §489 and Administrative Code §11-243 (collectively, “Laws”) as well as Chapter 5 of Title 28 of the Rules of the City of New York (“Rules”). In the case of any inconsistency between the Laws and the Rules, the Laws always govern. It is therefore essential to always consult the Laws and not merely rely on the Rules.

We call your attention to the following provision of the Laws because it is inconsistent with the Rules. You should therefore rely strictly on this provision of the laws (Administrative Code §11-243(d)(8)(b)(ii)), and not on the corresponding section of the Rules (28 R.C.N.Y. §5-06(d)(4)).
Administrative Code §11-243(d)(8)(b)(ii) provides that:

(ii) Notwithstanding any other provisions of this subparagraph, and in addition to all other conditions of eligibility for the benefits of this section, the availability of abatements pursuant to subdivision c of this section for any multiple dwellings, buildings or structures not owned as a condominium or cooperative, except for multiple dwellings in which units have been newly created by substantial rehabilitation of vacant buildings or conversions of non-residential buildings, shall be conditioned on the assessed valuation of such multiple dwelling, building or structure, including land, not exceeding an average of thirty thousand dollars per dwelling unit at the time of commencement of the alterations or improvements, provided, however, that such average shall not exceed $40,000 per dwelling unit at the time of commencement of the alteration or improvement for alterations or improvements commenced after the effective date of this local law, which added this

HOW TO APPLY

Obtain additional information and request an application by calling (212) 863-5517. Completed applications are accepted from February 1-March 15, from May 1-June 15, from August 1-September 15, and from November 1-December 15.
Submit completed application to: J-51 Program, Tax Incentive Programs, Room 8-C10, HPD, 100 Gold Street, New York, NY 10038. There is a $500 application fee.
You may also download the following (Note: To download these documents, you will need the latest copy of the Adobe Acrobat Reader.)

Summary of office hours:
Walk-in hours: Tuesdays and Thursdays 9:00am-12:00pm and 1:00pm-3:00pm
Appointments: Mondays and Wednesdays 9:00am-12:00pm and 1:00pm-3:00pm
No walk-ins or appointments on Fridays. Customers may still call customer service at (212) 863-5517


Please note: The above tax incentive program is for developers and future or current property owners. If you are looking for an affordable apartment, please visit our Affordable Housing Hotline. Additionally, HPD's partners are required to advertise available affordable apartments in daily and local newspapers