The J51 tax incentive program is designed for renovations and conversions on existing residential buildings. The J51 program provides 2 distinct benefits:
Tax 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.
