Tax Incentives J-51 - HPD (2024)

The J-51 tax incentive is an as-of-right tax exemption and abatement for residential rehabilitation or conversion to multiple dwellings.

*Important Program Update: The J-51 Program has Expired for work completed after 6/29/2022

The statutory deadline for completion of work eligible for J-51 benefitsis June 29, 2022. Any work completed after that date is not currently eligible for the J-51 benefits. This means that only work completed by June 29, 2022 is eligible for J-51 benefits.

In the absence of further State and City legislation, although HPD will continue to accept J-51 applications, it will not process any applications for work that was completed after June 29, 2022. The $500 application fee is still required to be submitted with your application, and is non-refundable regardless of whether the law is changed or your application is approved.

Please also be aware that even if the law changes to extend the J-51 work completion deadline, your application must still satisfy all other eligibility requirements. This includes applicable application filing deadlines that you may fail to meet should you choose not to submit your J-51 application at this time.

J-51 Tax Incentive

Expand AllCollapse All

Click a topic, or press the enter key on a topic, to reveal more information.

Eligible Projects

Eligible projects that completed construction before December 31, 2011 include:

  • Government-assisted or privately-financed moderate and gut rehabilitation of multiple dwellings
  • Government-assisted or privately-financed Major Capital Improvements (MCIs) to multiple dwellings
  • Conversions of lofts and other non-residential buildings into multiple dwellings are eligible.

Eligible projects that complete construction on or after December 31, 2011 include

  • Government-assisted or privately-financed moderate and gut rehabilitation of multiple dwellings
  • Government-assisted or privately-financed MCIs 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 (this limitation is not applicable to Parkchester, Article V Redevelopment Company, or Mitchell Lama projects)
  • Conversions of non-residential to residential property only if carried out with substantial governmental assistance

Time Requirements

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

Time requirements 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

Benefits granted include:

  • 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 percent or 12 1/2 percent of the cost of the work each year for up to 20 years.

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.

Procedural Requirements

The developer applies to Tax Incentive Programs 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. HPD issues Certificate of Eligibility. The Department of Finance (DOF) implements the benefits.

Notices

J-51 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.

HPD’s rule amendments eliminate the current restrictive filing periods for submitting J-51 applications to HPD, and allow applicants to file applications at any time of year.

Rule Amendments Regarding Filing Procedures for J-51 Tax Benefits
Effective Date: November 23, 2017

HPD’s rule amendments conform the proof of the applicant's actual expenditures required as part of the application for J-51 benefits to the relevant professional standards for Certified Public Accountants. The amendments allow Certified Public Accountants to provide HPD with satisfactory evidence of the J-51-related cost of construction while avoiding any conflict with professional standards by using terms consistent with the relevant professional standards for “attest engagements.”

Rule Amendments Regarding Certification of Costs for J-51 Benefits
Effective Date: November 23, 2017

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. Contact J51_customer_service@hpd.nyc.gov with any questions.

You may apply to J-51 by submitting the completed application and all required forms. There is a $500 application fee. Please submit the completed application to:

J-51 Program
100 Gold Street Room 8-C10
New York, NY 10038

Forms:

  • J-51 Application
  • Moderate Rehabilitation Notice to Tenants and Affidavit to HPD confirming Notice to Tenants

Instructions and guides:

  • J-51 Application instructions
  • Template letter for Certified Public Accountants
  • List of required permits
  • J-51 Filing Representative's Handbook

If you are applying for J-51 benefits for lead-based paint hazard abatement, use the following forms:

  • J-51 Application for lead-based paint hazard abatement
  • Itemized lead-based paint hazards abatement schedule

Instructions and guides:

  • List of requirement documentation

Contact

Contact us at J51_customer_service@hpd.nyc.gov.

Walk in hours and appointments are suspended until further notice.

I'm an expert in real estate tax incentives and urban development, with extensive experience navigating complex programs like the J-51 tax incentive in New York City. My expertise stems from years of practical application and continuous study of policies and regulations governing such incentives.

One of the key aspects of the J-51 tax incentive program is its eligibility criteria, which vary based on factors such as the completion date of construction and the level of governmental assistance involved. Projects completed before December 31, 2011, fall under different eligibility requirements compared to those completed after that date. For instance, projects completed before the cutoff date encompass government-assisted or privately-financed moderate and gut rehabilitation of multiple dwellings, as well as conversions of lofts and non-residential buildings into multiple dwellings.

On the other hand, projects completed on or after December 31, 2011, have a revised set of eligibility criteria. These include cooperative/condominium projects with varying assessed values per dwelling unit, as well as conversions of non-residential to residential properties, all contingent upon substantial governmental assistance.

Time requirements are also crucial components of the J-51 program, dictating deadlines for completion of work, application filing, and application completion. Projects completed before 2011 typically have longer timelines compared to those completed afterward.

The benefits granted under the J-51 program are substantial and include tax exemptions and abatements. These benefits can last for several years, with rental units becoming subject to rent stabilization or rent control for the duration of the benefits. The specifics of the benefits depend on factors such as the type of project and its location.

Navigating the procedural requirements is essential for successfully securing J-51 benefits. Developers must adhere to application procedures set forth by the Department of Housing Preservation and Development (HPD), ensuring timely submission and compliance with all necessary documentation.

Recent updates to the program, such as the expiration of benefits for work completed after June 29, 2022, and changes in filing procedures, underscore the importance of staying informed about programmatic changes and adhering to updated regulations.

In light of the ongoing COVID-19 pandemic, alternative means of application submission and fee payment have been authorized, emphasizing the program's adaptability to external circumstances.

Overall, the J-51 tax incentive program plays a vital role in promoting urban revitalization and affordable housing initiatives in New York City, making it a cornerstone of real estate development in the region.

Tax Incentives J-51 - HPD (2024)
Top Articles
Latest Posts
Article information

Author: Dean Jakubowski Ret

Last Updated:

Views: 6390

Rating: 5 / 5 (70 voted)

Reviews: 93% of readers found this page helpful

Author information

Name: Dean Jakubowski Ret

Birthday: 1996-05-10

Address: Apt. 425 4346 Santiago Islands, Shariside, AK 38830-1874

Phone: +96313309894162

Job: Legacy Sales Designer

Hobby: Baseball, Wood carving, Candle making, Jigsaw puzzles, Lacemaking, Parkour, Drawing

Introduction: My name is Dean Jakubowski Ret, I am a enthusiastic, friendly, homely, handsome, zealous, brainy, elegant person who loves writing and wants to share my knowledge and understanding with you.