The J51 tax incentive program is designed for renovations and conversions on existing residential buildings. The J51 program provides 2 distinct benefits:
Text Exemption The J51 exemption portion effectively freezes a building’s increase in assessed value, resulting from the alteration or improvement of a building or structure, except insofar as the gross cubic content of the building is increased thereby and for the prorated commercial area of the building. The exemption will last for a period of fourteen years, with 100% exemption for ten years followed by a 20% phase-out in each of the succeeding four years.
Tax Abatement The J51 abatement benefits serve to reduce the property’s tax liability otherwise payable. For renovation of a residential building, the abatement is calculated and determined based on 90% of the lesser of: 1) the “Certified Reasonable Cost” (CRC) of the eligible alteration or improvement as established by the NYC Department of Housing Preservation and Development (HPD); or 2) a maximum allowance of $15,000 per one-bedroom apartment with a per-apartment increase of $2,400 for each additional bedroom. Resulting abatement benefits are reduced by ineligible portions of the converted structure. The total approved abatement amount is then administered at 8.33% per annum up until 90% of the CRC is exhausted, for no more than 20 years.