Tax Incentive Programs

Tax incentive programs administered by HPD may reduce or eliminate the amount of municipal taxes a property owner must pay. Incentives are typically awarded in exchange for investment that benefits the public, and are used by developers and property owners to offset the cost of investment in the property.

Tax Incentives programs can either be granted as-of-right or in exchange for the creation or preservation of affordable housing. Projects that meet the eligibility requirement of one of the tax programs listed below are granted benefits pursuant to the statutes and regulation of the program.

Tax benefits may be an exemption and/or abatement. A real property tax exemption typically refers to a full or partial exclusion of an increase in the assessed value of a newly constructed or rehabilitated property which results from such construction or rehabilitation. A real property tax abatement typically provides a reduction in the amount of taxes owed on rehabilitated property by applying credits based on the cost of the improvement.

HPD administers the program and determines the eligibility of all applications. The Department of Finance applies the HPD-approved benefits to real property assessed value and taxes. HPD administers the following tax incentive programs:

  • J-51: As-of-right tax exemption and abatement for residential rehabilitation or conversion to multiple dwellings.
  • 421-a: Partial tax exemption for new multiple dwellings.
  • 421-a Affordable Housing Program.
  • 421-b: Partial tax exemption for new construction or substantial rehabilitation of owner-occupied one- and two-family homes.
  • 421-g: Tax exemption and abatement for conversion of commercial buildings to multiple dwellings (Downtown Manhattan).
  • 420-c: Complete or partial tax exemption for low-income housing developed with tax credits.
  • UDAAP: Tax exemption for rehabilitation or new construction of housing in UDAAP areas.
  • Article XI: Tax exemption for HDFC-owned new construction or rehabilitation.
  • 420-a: Complete tax exemption for HDFC-owned housing with on-site social services.

For information on the Low Income Housing Tax Credit, go to LIHTC & Qualified Action Plan

Program Tools:

RPTL 421-a(16)

RPTL 421-a(17) 

RPTL 421-a(1) through (15)