J51 Tax Abatement - An OverviewReal estate tax abatement benefits are provided through the J51 tax abatement program to residential real property owners, who do work in the nature of rehabilitation on their properties. Through this program, tax abatement benefits are also passed on to non-residential building owners, who convert buildings for residential use. As-of-right benefits are made available to eligible project owners through the J-51 program. The J-51 tax abatement program grants two types of benefits, namely tax exemption and tax abatement. The J-51 tax abatement benefit reduces last levied property taxes by a certain percentage of the value of the new rehabilitation work done. The J-51 tax exemption benefit is in the nature of a temporary exemption from payment of any property tax on the increase in assessed value of property, due to significant renovation work performed. A majority of projects are eligible to partake of both tax abatement and tax exemption benefits. J-51 benefits are available to listed MCIs to multiple dwellings, listed MCIs to private dwellings, moderate rehabilitations of multiple dwellings, and substantial rehabilitations of originally city-owned buildings. They are also available to landmarks projects, conversions of non-residential buildings into multiple dwellings, and conversions of class B multiple dwellings and class A SRO multiple dwellings into regular class A multiple dwellings. They are also available to conversions of non-profit institutions with sleeping accommodations into regular class A multiple dwellings. They are also available to conversions of private dwellings into multiple dwellings and rehabilitation work on class B and class A SRO multiple dwellings. Limitations on eligibility of projects: A project usually cannot become eligible for grant of J-51 benefits, if it is not completed within 36 months of its initiation. Exceptions to this rule exist. J-51 benefits cannot be provided in the case of a building, which is already in receipt of benefits of certain other programs. Limitations in respect of J-51 tax abatement benefits: In the case of a cooperative/condominium, the benefit is subject to certain conditions if the cooperative/condominium is not completed within 36 months after establishment of the cooperative or condominium. Such establishment date is the date of sale of the first unit sold in the building. In this case, abatement benefit is provided to the work only if the average assessed value of the building is $40,000 or less and the average per room sale price is not in excess of $88,450 during the first three years prior to the start of the work. For qualifying condominiums and cooperatives, only listed MCIs (major capital improvements) get the benefit and the total tax abatement per dwelling unit in any tax period cannot exceed $2,500. Further, the tax abatement is subject to a maximum ceiling. In the case of any project, the total CRC (certified reasonable cost) per studio apartment cannot exceed $12,600, with $2,400 added on per bedroom. This J-51 tax abatement ceiling usually affects only major rehabilitations and conversions. It is not applicable in case of moderate rehabilitations of multiple dwellings. |