Tax Exemptions and Zoning Incentives
Maximizing Real Estate Tax Benefits and Zoning Incentives in New York
Navigating New York City’s complex tax exemptions and zoning incentives requires specific expertise and practical experience. Our dedicated team provides strategic guidance to developers, property owners, investors, licensed professionals, including architects and engineers, and not-for-profit organizations, helping them maximize available development benefits while ensuring full regulatory compliance.
Our Services
- Strategic Planning: We align tax benefits with zoning incentives to optimize investment strategies.
- Eligibility Assessment: We identify and structure ground-up, conversion and enlargement projects to qualify for all available benefits.
- Approval Management: We handle the required filings, navigate the regulatory procedures and secure all necessary approvals.
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Key Property Tax Exemption and Abatement Programs
421-a “Affordable New York Housing Program”
Although expired for new projects, this program remains relevant for previously qualified developments, offering a potential 100% exemption from real estate tax increases due to new residential construction for up to 40 years. Affordable units remain rent-stabilized for the exemption period, while market-rate units may be exempt from rent stabilization if rents exceed certain thresholds.
Key requirements include:
- 25%-30% of the residential units must be affordable at income levels ranging from 40%-130% of the Area Median Income (AMI), depending on the selected option; and
- Projects with 300+ units located in certain areas must comply with minimum average construction wage requirements.
485-x “Affordable Neighborhoods for New Yorkers”
The successor to the 421-a program provides a 100% exemption from real estate tax increases due to new residential construction for up to 40 years, with the benefit period ranging from 10 to 40 years depending on the project type.
Key requirements include:
- 20%-25% of the residential units must be affordable at income levels averaging 80% AMI;
- Affordable units remain permanently rent stabilized;
- Construction wage requirements based on project size and location; and
- MWBE participation requirements (good faith efforts to allocate 25% of the total costs of construction and design contracts to City-certified Minority/Women-Owned Business Enterprises).
467-m “Commercial-to-Residential Conversion Incentives”
This program offers a property tax exemption of up to 35 years to encourage the conversion of underutilized office buildings into residential developments with affordable housing, providing an exemption of up to 90% of the project’s tax liability. The exemption period ranges from 20 to 35 years depending on the conversion’s commencement date.
Key requirements include:
- Building, or portion thereof, must be at least 90% non-residential before conversion;
- 25% of the residential units must be affordable at an average of 80% AMI, with at least 5% at 40% AMI;
- Affordable units remain permanently rent stabilized; and
- Minimum wage requirements for building service workers on projects with 30+ units.
Industrial and Commercial Abatement Program (“ICAP”)
Provides property tax abatements for up to 25 years for commercial and industrial developments that comply with the following:
- Located in eligible zones and involve renovations or new construction;
- Strict application filing timelines apply, requiring preliminary applications to be submitted before the issuance of any construction permit;
- Minimum required expenditures; and
- Mandated compliance with M/WBE outreach requirements.
J-51 (Tax Incentive Program)
The J-51 R program supports the rehabilitation of Class A multiple dwellings, offering a tax exemption for renovations that enhance affordability and energy efficiency.
- Eligible projects include:
- Rental buildings (i) in which 50% of the units have rents at or below 80% AMI and registered with DHCR, (ii) that are owned and operated by a Mitchell Lama limited profit housing company or redevelopment company or (ii) that receive substantial governmental assistance; and
- Homeownership buildings that have an average assessed valuation of $45,000 or less per unit.
- Eligible projects receive an abatement of property taxes equal to a percentage of the certified reasonable costs of construction.
420-c “Tax Exemption for Affordable and Nonprofit Housing”
Designed to support nonprofit-led affordable housing, 420-c offers a full property tax exemption for qualifying projects.
Key requirements include:
- Development and operation by a not-for-profit organization or not-for-profit organization partnership;
- Income-restricted rental housing for low- and moderate-income tenants; and
- Long-term affordability commitments, typically 30+ years.
Article XI “Affordable Housing Preservation”
Allows the City of New York to grant a full or partial tax exemption for up to 40 years in exchange for deeper affordability commitments in existing residential buildings. Unlike other tax exemptions, this is granted based, in part, on demonstrated need.
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Zoning Incentives
NYC zoning incentives allow developers to increase building size or density in exchange for providing affordable housing.
Universal Affordability Preference (UAP)
Replacing Voluntary Inclusionary Housing (VIH) under the City of Yes for Housing Opportunity zoning text amendment adopted in December 2024, this program allows developers to build with higher floor area ratios (FAR) in exchange for including affordable units.
Key requirements include:
- Available to developments located in middle and high-density residential zoning districts;
- Affordable units must average 60% AMI, with no more than three AMI bands; and
- Affordable units remain permanently affordable and rent stabilized.
Mandatory Inclusionary Housing (MIH)
Applies to residential developments in areas where zoning has been modified to allow residential or increased residential density.
- Compliance required in areas that have been rezoned or upzoned for residential use.
- 20%-30% of residential floor area must be affordable at income levels averaging between 40%-115% AMI, depending on the MIH option.
Voluntary Inclusionary Housing (VIH)
Replaced by UAP, but still applicable to projects that have vested or are seeking to vest under the previous zoning regulations.
- Zoning floor area bonus of 1.25 or 3.5 square feet of market-rate development per square foot of affordable floor area.
- Required affordability levels at or below 60% AMI.
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Strategic Integration: Maximizing Your Benefits
The true value lies in understanding how these programs work together.
Our team specializes in:
- Integrating zoning incentives (UAP, VIH, MIH) with tax exemptions (485-x, 421-a, 467-m, ICAP);
- Structuring projects to capture multiple benefits simultaneously;
- Ensuring full compliance across all applicable programs; and
- Creating tailored strategies based on your specific development goals.
Our firm’s deep expertise allows us to navigate these complex frameworks effectively, ensuring your project takes full advantage of available benefits while meeting all regulatory requirements.
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Contact Us
Belkin · Burden · Goldman, LLP provides the full scope of real estate development services, including land use, zoning, affordable housing, registrations, leasing, tax exemptions and zoning incentives matters, with an emphasis on how to realize development expectations and maximize the value of property.
The experienced members of our team navigate projects from site analysis through New York City’s complex regulatory landscape. Contact us today to explore how we can support your real estate development goals.
