421-a

The 421-a Tax Incentive is a partial tax exemption for new multiple dwellings.

421-a (1-15) Program

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Eligible Projects

New construction of multiple dwellings on lots which were vacant, predominantly vacant or improved with a non-conforming use three years prior to the start of construction. Buildings in the exclusion area are not eligible unless they contain 20% affordable units. Project must commence construction on or before December 31, 2015 and completed on or before December 31, 2019.

Exclusion Areas

Generally, buildings within these areas must meet additional affordable housing requirements to be eligible for benefits.

Benefits Granted

Construction period exemption (up to 3 years) plus 10-year (2 years full + 8 years phase out), 15-year (11 years full + 4 years phase out), 20-year (12 years full + 8 years phase out), or 25-year (21 years full + 4 years phase out) post-construction exemption from the increase in real estate taxes resulting from the work.

The length of benefits depends on location, commencement of construction, and affordability in the project.

All market rate rental units become subject to rent stabilization for the duration of the benefits, with initial rents approved by HPD. Affordable rental units are rent stabilized for 35 years.

Procedural Requirements

The developer applies to HPD and receives a Certificate of Eligibility. The Department of Finance (DOF) implements the benefits. Benefits may be applied once construction begins.

DOF Suspension

For more information regarding compliance of 421-a requirements, please contact the Division of Compliance and Enforcement at 212-863-7676.

Email: 421AFCEcompliance@hpd.nyc.gov

How to Apply

*Important COVID-19 Update*
In light of the current COVID-19 outbreak, HPD is authorizing alternative means of application submission and fee payment. See the About Tax Incentives webpage for more information.

A $100 fee must be submitted at the time of application submission.

Submit completed application to: 421-a Program, Tax Incentive Programs, Room 8-C09, HPD, 100 Gold Street, New York, NY 10038. There is a $100 application fee.

Office Hours

Office hours are suspended until further notice. Please contact 421_customerservice@hpd.nyc.gov.

Additional Information

421-a Geographic Exclusion Area (GEA) effective July 1, 2008 

New Features

Please visit the following links on DOF's webpage for additional information regarding which properties are receiving 421-a and to look up a specific property or apartment to find information regarding its benefit start and end dates, current benefit year, and benefit amount.

421-a (1-15) Report

421-a (16) Affordable Housing New York Program

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New 421-a Program

The New 421-a Program is available to projects that commence construction between January 1, 2016 and June 15, 2022, and are completed on or before June 15, 2026. Projects that commenced construction on or before December 31, 2015 also may opt into the New Program if they have not as yet received 421-a benefits.

Only one application would be required, it would have to be filed within one year after completion, and construction benefits would be retroactive.

Projects that do not receive the enhanced 35 year benefit would have to comply with the affordability requirements and other requirements for 35 years. Projects that receive the enhanced 35 year benefit would have a 40 year compliance period.

A market unit shall be subject to rent stabilization unless, in the absence of 421-a benefits, the owner would be entitled to remove such market unit from rent stabilization upon vacancy by reason of the monthly rent exceeding any limit established thereunder.

Changes to Real Property Tax Law 421-a

Chapter 20 of the Laws of 2015, which took effect on June 15, 2015, made the following changes to Real Property Tax Law Section 421-a:

  • Extended the date by which a project must commence construction in order to still qualify under the existing 421-a program (“Existing Program”) from June 23, 2015 to December 31, 2015
  • Required any project that commenced construction after June 15, 2015 and on or before December 31, 2015 to be completed on or before December 31, 2019 in order to qualify under the Existing Program
  • Established a new 421-a tax exemption program for any project that commenced construction between January 1, 2016 and June 15, 2019 and was completed on or before June 15, 2023 (“New Program”) and provided that the New Program would not come into effect until representatives of residential real estate developers and construction labor unions signed a memorandum of understanding regarding wages of construction workers performing work on 421-a projects that contain more than 15 units
  • Created a new option for owners of some projects that are currently receiving 421-a benefits to extend the exemption for 10 to 15 years in return for agreeing to both preserve the existing affordable units and provide additional affordable units during that period (“421-a(17) Program”).

Chapter 59 of the Laws of 2017, which took effect on April 10, 2017, renamed tax exemptions issued pursuant to Real Property Tax Law Section 421-a as the Affordable New York Housing Program and activated the New Program by legislatively establishing requirements discussed further below regarding minimum average hourly wage requirements for construction workers in rental projects containing three hundred or more dwelling units. Chapter 59 of the Laws of 2017 made additional changes to the New Program that are referenced separately above in the New 421-a Program section.

Eligible Rental Projects

Eligible rental projects that are not entitled to the enhanced 35 year benefit would receive:

  • A 100% exemption for a construction period of up to three years; and
  • A 35-year post-construction tax exemption (a 100% exemption during the first 25 years and an exemption equal to the percentage of affordable units during the last 10 years).

These rental projects would be required to choose one of three affordability options and comply with it for the entire benefit period:

Option A

  • 25% of the units must be affordable: at least 10% at up to 40% of AMI, 10% at up to 60% of AMI, and 5% at up to 130% of AMI; and
  • The project cannot receive any government subsidies other than tax-exempt bond proceeds and 4% tax credits.

Option B

  • 30% of the units must be affordable: at least 10% at up to 70% of AMI and 20% at up to 130% of AMI.

Option C

  • At least 30% of the units must be affordable at up to 130% of AMI;
  • The project cannot receive any government subsidies; and
  • The project cannot be located south of 96th Street in Manhattan or in any other area established by local law.

Eligible rental projects with 300 or more dwelling units that either are located in one of the enhanced affordability areas (portions of Manhattan, Queens and Brooklyn) or elect to comply with the minimum average hourly wage requirements for construction workers, would receive:

  • A 100% exemption for a construction period of up to three years; and
  • A 35-year post-construction 100% exemption.

Option D Homeownership Projects

Eligible homeownership projects would receive:

  • A 100% exemption for a construction period of up to three years; and
  • A 20-year post-construction tax exemption (a 100% exemption during the first 14 years and a 25% exemption during the next six years), subject to an assessed valuation cap of $65,000 per dwelling unit.
Homeownership projects would have to meet the following eligibility requirements: 
  • Upon the first assessment following completion, the project must have an average assessed value not exceeding $65,000 per unit; 
  • Each purchaser during the benefit period must agree in writing to maintain the unit as their primary residence for at least the first five years of ownership; and
  • The project cannot be located in Manhattan or contain more the 35 units.

These rental projects would be required to choose one of three affordability options and comply with it through the extended restriction period (40 years from completion):

Option E

  • 25% of the units must be affordable: at least 10% at up to 40% of AMI, 10% at up to 60% of AMI, and 5% at up to 120% of AMI; and
  • The project cannot receive any government subsidies other than tax-exempt bond proceeds and 4% tax credits.

Option F

  • 30% of the units must be affordable: at least 10% at up to 70% of AMI and 20% at up to 130% of AMI.

Option G

  • At least 30% of the units must be affordable at up to 130% of AMI;
  • The project cannot receive any government subsidies; and
  • The project cannot be located in the Manhattan Enhanced Affordability Area.

Approval, denial or termination of these tax exemption benefits cannot be based upon compliance with the minimum average hourly wage requirements for construction workers. Furthermore, a project labor agreement satisfies the requirements, and eligible multiple dwellings with at least 50% of their units affordable to and restricted to occupancy by persons or families at or below 125% of Area Median Income, are exempt.  The New York City Comptroller is the enforcement agency for the minimum average hourly wage requirements for construction workers. 

Other Provisions of the New Program

  • All rental dwelling units in an eligible multiple dwelling must share the same common entrances and common areas as the market rate units in such eligible multiple dwelling and shall not be isolated to a specific floor or area of an eligible multiple dwelling. 
  • The building service employees prevailing wage requirements are enforced by the New York City Comptroller and provide that all building service employees employed by an applicant at an eligible site must receive the applicable prevailing wage for the entire restriction period (35 or 40 years, as applicable) unless:
    • the eligible multiple dwelling contains less than thirty dwelling units; or
    • all of the dwelling units in the eligible multiple dwelling are affordable housing units and not less than 50% of such affordable units are affordable to and restricted to occupancy by persons or families at or below 125% of Area Median Income.
  • If the land on which an eligible site is located contained ANY dwelling units three years prior to the project’s commencement date, such eligible site must contain at least one affordable housing unit for each dwelling unit that existed on such date and was thereafter demolished, removed or reconfigured.
  • On or before May 31, 2021, the Commissioner of the Division of Housing and Community Renewal will issue a report examining the economic impact of the Affordable New York Housing Program. 

How to Apply In light of the current COVID-19 outbreak, HPD is authorizing alternative means of application submission and fee payment. See the About Tax Incentives webpage for more information.

*Important COVID-19 Update*
In light of the current COVID-19 outbreak, HPD is authorizing alternative means of application submission and fee payment. See the About Tax Incentives webpage for more information.

A fee of $3,000 per dwelling unit must be submitted at the time of application submission.

421-a (17) Affordable Housing New York Program

Click a topic, or press the enter key on a topic, to reveal its answer.

421-a(17) Program

Chapter 20 of the Laws of 2015, which took effect on June 15, 2015, made the following changes to Real Property Tax Law Section 421-a:

  • Created a new option for owners of some projects that are currently receiving 421-a benefits to extend the exemption for 10 to 15 years in return for agreeing to both preserve the existing affordable units and provide additional affordable units during that period ("421-a(17) Program").
The 421-a(17) Program is only available to rental projects that began construction prior to July 1, 2008 and qulified for a 20-year or 25-year 421-a tax exemption.

Owners who elect to participate would receive either:
  • An additional 10 years of 50% exemption (for 25-year benefit properties) or
  • An additional 15 years of 50% exemption (for 20-year benefit properties)

During this additional benefit period, the owner would be required to:

  • Rent at least 20% of the units to households whose income does not exceed 100% of AMI (and whose average income does not exceed 80% of AMI) and
  • Rent at least 5% of the units to households whose income does not exceed 130% of AMI

The first requirement is identical to the existing affordability requirement applicable to such projects (it simply extends that requirement for an additional 10 or 15 years).  The second requirement is an increase over and above the existing affordability requirement.

How to Apply

*Important COVID-19 Update*
In light of the current COVID-19 outbreak, HPD is authorizing alternative means of application submission and fee payment. See the About Tax Incentives webpage for more information.

A fee of $3,000 per dwelling unit must be submitted at the time of application submission.

The first requirement is identical to the existing affordability requirement applicable to such projects (it simply extends that requirement for an additional 10 or 15 years). The second requirement is an increase over and above the existing affordability requirement.