J51 Tax Abatement

If your property doesn’t qualify for the 421-a tax abatement, it might be eligible for a J51 tax abatement, a property tax exemption and abatement for renovating a residential apartment building. The benefit varies depending on the building’s location and the type of improvements that have been made.

Eligible Projects

For projects that complete construction before December 31, 2011:

  • Government-assisted & privately-financed rehabilitation and major capital improvements of properties.
  • Conversions of lofts and other non-residential buildings into residential properties.

For projects that complete construction on or after December 31, 2011:

  • Government-assisted & privately-financed rehabilitation and major capital improvements of properties.
  • Government-assisted & privately-financed cooperative/condominium projects.
    Conversions of non-residential to residential property only if carried out with substantial governmental assistance.

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 construction commencement.
  • Must complete application within 24 months.

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 and complete application within 12 months.
  • May be subject to inspection penalty fee if work is incomplete at time of inspection.

Benefits Granted

  • 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% or 12 1/2% 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.