Understanding Affordable New York, the new 421a tax break program, is no easy task, here is a quick checklist to cover the basics of what you need to know.
Who Qualifies for the New 421a Tax Break?
- Projects that began construction on or after 01/01/2016 may qualify for the new 421a program. Additional participation and extension options are available for previous construction and projects under the old 421a program.
- The new program is set through 06/15/2022. However, changes to procedure or extension may apply.
- Developers need to set aside 25% to 30% of total units as affordable units.
- Any applicants earning 40% to 130% of the Area Median Income(AMI) are eligible for an affordable unit. This is approximately $117,780 for a family size of three.
Why Developers Care?
- Buildings can get 100% tax exemption benefits for 35 years in exchange for compliance with rent stabilization for 40 years on affordable units.
- Even with increase requirements on average wages, developers can expect more profitable returns on participating construction projects.
- Although the pattern is not yet clear, there is a possibility of increasing construction project in NYC. There was a 18% increase in construction permits filing before old 421a expired in 2015, compared to the year before. Therefore, we expect to see similar increases as people become more familiar with this new program.