Buying an Apartment in NYC - Beginner's Guide 2024
Staking a claim in the Big Apple is a feat anyone can be proud of.However, navigating the NYC real estate market can be demanding, even for the most seasoned home buyers. From building rules to specific layouts to city regulations about what you can and cannot do, the hoops to understand and jump through will give you a run for your money.Couple those challenges with New York City’s infamous price points, and you’re looking at a complex journey when buying an apartment in one of the world’s most legendary cities.Luckily, buying an apartment in NYC is not as herculean a feat as one might think, especially if you partner with an expert agent who can guide you through all the complexities of the market while utilizing all the necessary tools at your disposal.Below, the Prevu team will guide you through a step-by-step process for preparing to buy an apartment in New York City, from exploring neighborhoods and deciding on a budget to selecting the right property type and working with an agent who can help you save money.Buying an apartment in NYCHire an experienced buyer’s agentLeverage commission rebates to saveChoose the right neighborhoodDecide on a condo or co-opConsider new constructionGet a mortgage pre-approvalCreate a structured budgetPrepare for property tours and open housesMake an offerThe building application processClosing on your NYC apartmentHire an experienced buyer’s agentHats off to anyone deciding to tackle NYC’s intense real estate market on their own, but as much as you might like a challenge, this is one undertaking that can benefit from the help of a professional real estate agent.NYC’s housing market has a life of its own, largely due to the landscape of the metropolis and the various rules and regulations surrounding the apartment scene in the Big Apple. Working with a real estate agent who has seen the ins and outs of this real estate jungle will save you a ton of pressure during every step of your apartment-buying process.An expert NYC buyer’s agent will have experience with various New York City property types, including layouts, building rules, and where to find the apartment that best suits your needs.Professional agents also have unique access to multiple listing services (MLS), which gives them special insight into a wider range of available listings.An agent well-versed in negotiating will be an invaluable asset when it’s time to make an offer. This is especially the case when negotiating terms for new construction, securing you the best terms, and helping you make a comparative market analysis of similar property types.The right buyer’s agent will also be vital to saving money when you buy.Leverage commission rebates to save on your purchaseIf you’re going to shell out the funds to buy an apartment in one of the most expensive cities in the world, you’ll want to have every available tool at your disposal to help you save. Commission rebates, also known as buyer rebates, are among the most effective, but you’ll have to work with a brokerage that offers them.A rebate is a portion of your buyer’s agent’s commission fee given back to you after closing on a home. Brokerages that work with commission rebates invest heavily in technology to empower buyers and unlock these extra savings, helping to make homebuying more affordable. For instance, Prevu Real Estate offers the largest rebate in NYC, allowing buyers to potentially receive up to 1% of an apartment’s final purchase price once they close via the firm’s Smart Buyer Rebate.The brokerage also gives buyers access to a digital homebuying platform to give them more control over their search, including direct access to expert salaried agents. Combining these tools helps Prevu provide effective rebates for buyers.These savings can help offset expensive closing costs in NYC, replenish funds after a sizable down payment, or jumpstart a furnishing budget for your new apartment. Choose the right neighborhoodThe biggest challenge when deciding where to live in NYC is to avoid becoming overwhelmed by the variety of New York City apartments available.From the five boroughs to Manhattan itself, the selection of the best places to live in NYC is diverse and all-encompassing. Do you want to escape to the idyllic neighborhoods surrounding Prospect Park or the legendary areas that line the famous Central Park?Maybe you prefer the quaint streets of the Upper East Side or the famous brownstones that line the Upper West Side. And if Manhattan starts to feel overwhelming, the historic neighborhoods of Brooklyn and Queens offer an entire universe of diverse colors and vibes that can satisfy almost any lifestyle preference.Having enough options won’t be a problem, of course, but deciding which works best for you – and your wallet – will be the biggest challenge for any NYC homebuyer.Apartment prices skyrocket significantly the minute you cross the Hudson into the gridlock of NY’s most famous island. However, you may find more affordability by branching out into the boroughs, depending on the location and the apartment you want to buy.Location, especially in the city, is arguably the biggest factor that affects apartment prices. The closer you are to famous attractions and coveted neighborhoods, the higher the price tag. The next factor is space. City apartments can be notoriously small, so you may find yourself juggling between choosing a larger unit or a more pleasing locale.Decide on a condo or co-opOne of the critical decisions you’ll face when buying an apartment in NYC is whether to purchase a co-op or a condo. Each property type has unique quirks, benefits, and challenges; understanding these differences is key to making the right choice for your lifestyle.Condos, or condominiums, are the more straightforward option of the two.When you buy a condo, you own your unit outright and share common areas with other residents. This means you can renovate or rent out your space without jumping through too many hoops. The buying process is straightforward: get your mortgage pre-approval, make an offer, conduct an inspection, and proceed to closing if all goes well. Condos often come with condo associations (sometimes referred to as COAs or HOAs) that handle maintenance and amenities, overseen by a condo board. You’ll pay monthly common charges, which cover anything from building maintenance to fancy perks like a rooftop pool or a 24-hour doorman.Co-ops, or cooperatives, are where things get more interesting.When you buy a co-op apartment, you purchase shares in a corporation that owns the building. Instead of owning your unit, you own a share in the entire building and have a proprietary lease for your apartment. This communal ownership means a co-op board makes decisions about the building collectively. The buying process is more rigorous, requiring a thorough application, financial scrutiny, personal references, and a sometimes nerve-wracking interview with the co-op board. It’s like applying for college, but the stakes are your living situation.Co-ops tend to have stricter rules. Want to remodel your kitchen? You may have to get board approval. Thinking about subletting your place while you travel the world? The board may have a say in that, too.Co-ops and condos can vary widely in terms of layout. Co-ops, especially in older buildings, often feature charming, traditional layouts with separate kitchens and formal dining rooms that whisper tales of New York’s architectural past. Condos, especially those in newer developments, boast modern, open-concept designs with shiny new amenities like gyms, pools, and rooftop terraces.So, how do you decide? A condo might be your perfect match if you crave autonomy and fewer restrictions. But if you’re drawn to the idea of a close-knit community and potentially lower costs, a co-op could be your new home sweet home.Consider new constructionNew construction can be an enticing option when buying an apartment in NYC, offering a fresh start in a brand-new space. But, like everything in this city, it has its own pros and cons.One of the biggest perks of new construction is that you’re the first person to live in the unit. Everything is sparkling new, from the appliances to the fixtures, with no traces of past occupants. Modern designs, state-of-the-art amenities, and energy-efficient systems can make your life easier and more comfortable. Buildings often come with high-end perks like fitness centers, rooftop terraces, and concierge services that add a touch of luxury to everyday living.Of course, all these benefits come at a price. These units tend to come with a higher price tag than older properties. And, if the building is still under construction or newly completed, you might have to deal with ongoing construction noise and the occasional inconvenience. Navigating the world of new construction can be much smoother with an experienced buyer’s agent by your side. They know the ins and outs of these deals and can guide you through the complexities. An agent can help you assess the developer's reputation, the quality of construction, and the long-term prospects of the building and neighborhood. They can also give you the inside scoop on exclusive listings and early-bird opportunities you might otherwise miss.When negotiating new construction, there’s more on the table than just the price. While the unit's base price might be set in stone, many other aspects are up for discussion. Think upgrades or customization options to better suit your taste—like selecting premium finishes or requesting specific layout modifications. Developers might also be willing to cover some of your closing costs or throw in incentives like free storage units or parking spaces.It’s crucial to review the developer’s contract with a fine-tooth comb, however. These contracts can be long and detailed, often favoring the developer. Having your buyer’s agent and a real estate attorney review the terms can help you spot any potential pitfalls and ensure your interests are protected.Get a mortgage pre-approval with a mortgage brokerSecuring a pre-approval is crucial when buying an apartment in NYC. It clarifies your budget and signals to sellers that you are a serious and qualified buyer. Additionally, be aware of the mortgage recording tax, which is a percentage of the mortgage amount and part of the closing costs in NYC.The process starts with a lender reviewing your financial background. They’ll look at your credit score, income, and debt-to-income ratio to determine how much they will lend you. This results in a pre-approval letter stating the maximum loan amount you qualify for.For an even stronger position, consider going for a fully underwritten pre-approval. This step takes the basic pre-approval process and kicks it up a notch. The lender does a deep dive into your financials, verifying your documents—like tax returns, pay stubs, and bank statements—and fully underwriting your loan before you even make an offer.Why go through this extra hassle? Because it reduces the chances of any financing hiccups down the line. Sellers love the certainty that comes with a fully underwritten pre-approval. It shows you’re serious, prepared, and less likely to encounter issues that could derail the deal.To get started, shop around for lenders. Different lenders offer different rates and terms, so it’s worth comparing shopping to find the best fit for your financial situation. Be prepared to provide detailed information about your finances. Having all your documents organized and ready can speed up the process and get you that all-important pre-approval letter faster.Create a structured budgetYou can start this step by determining your maximum purchase price. This figure can be based on your mortgage pre-approval, which gives you a solid idea of the loan amount you qualify for. While it might be tempting to push to the top of your range, it’s wise to set your sights slightly lower to allow for flexibility and unexpected costs that might pop up along the way.Next, let’s talk about down payments. In NYC, down payments typically range from 10% to 20% of the purchase price, depending on the property and your lender’s requirements. Having these funds readily available is crucial, as this will be one of your largest upfront expenses.Closing costs in NYC are another significant expense to factor into your budget. These can include appraisal fees, inspection fees, title insurance, attorney fees, and mortgage origination fees. In New York City, closing costs can range from 2% to 5% of the purchase price. For a $1,000,000 apartment, for example, you might need an additional $20,000 to $50,000. Budgeting for these costs is essential to avoid any last-minute financial strain. Don't forget to factor in monthly maintenance fees if you're considering a co-op, as these cover the building's taxes and operating costs.Additionally, having a financial cushion for bidding wars is smart. Setting aside extra funds can allow you to increase your offer if you are in a competitive situation. This extra financial padding can make all the difference between securing your dream apartment and losing out to a higher bid.Lastly, don’t forget about an emergency fund. This is your safety net for any unexpected expenses arising after moving in. Think of immediate repairs or maintenance issues that weren’t apparent during the inspection. For instance, you might discover that the plumbing needs urgent attention or the heating system requires servicing.Prepare for property tours and open housesGetting ready for property tours and open houses is a key part of your NYC apartment-buying adventure. They allow you to see potential homes up close and personal, helping you decide which one feels just right. Research and shortlist apartments that tick your boxes and then work with your buyer’s agent to map a schedule that lets you hit multiple spots in one go. Since weekends are prime time for open houses, plan your days to maximize these opportunities.Bring along a checklist. Jot down the must-have features you’re looking for, like the number of bedrooms, the layout, building amenities, and proximity to the subway. As you tour each property, use this checklist to stay focused. Take notes and snap photos to capture the details that catch your eye.Keep an eye on the condition of the apartment and the building. Look for signs of wear and tear, potential maintenance issues, or recent renovations. Check the quality of fixtures, appliances, and finishes. And don’t be shy—chat with current residents to get the inside scoop on the building’s management and community vibe.Ask plenty of questions and gather all the information you can. Inquire about the building’s rules, fees, and any upcoming assessments or projects that might affect your living experience or financial commitment. The more you know, the better equipped you’ll be to make a smart decision.After making the rounds, take some time to review your notes and compare your options. Discuss your impressions with your buyer’s agent to narrow down your choices and figure out which apartments deserve a second look. Their insights can help you weigh the pros and cons and guide you toward the best fit.Make an offerThis step is where the excitement ramps up, but it's also where strategy and savvy negotiation skills come into play. Start by determining a competitive offer price. Work with your buyer's agent to analyze comparable sales in the building and neighborhood. This will ensure your offer is in line with current market conditions. Consider factors like the apartment’s condition, amenities, and unique features when setting your offer price.For condos, the offer process is fairly straightforward. You’ll submit a written offer that includes the proposed purchase price, desired closing date, and any contingencies, such as financing or inspection. Your agent will present this offer to the seller or their agent. Be prepared for potential counteroffers and be ready to negotiate terms until you reach a mutually acceptable agreement.Making an offer on a co-op has its own set of challenges. Besides the standard offer letter, you may need to provide a REBNY Financial Statement including details about your income, assets, and liabilities. Co-op boards are known for their rigorous application processes, so demonstrating financial stability is crucial. Once your offer is accepted, brace yourself for the infamous co-op board application and interview. Leverage your buyer’s agent expertise to help you prepare, and don’t shy away from asking the seller about what their experience was like when they bought the co-op and if they can offer any tips.Regardless of the property type, consider including contingencies in your offer to protect your interests. Common contingencies include financing (if you are obtaining a mortgage), inspection, and review of the building's financials and bylaws. These contingencies give you an exit strategy if any issues arise during the due diligence period.Negotiation is a critical part of the process. Sellers may counter your initial offer, and you’ll need to decide whether to accept their terms or counter again. Remember your maximum budget and priorities during this process to avoid overextending yourself.Once both parties agree on the terms, you’ll sign a purchase agreement, reviewed by both parties' attorneys. This legally binding contract outlines all the agreed-upon terms and conditions. The building application processIn the city that never sleeps, neither do the paperwork and regulations. The application process for condos and co-ops can be a formidable maze, packed with requirements that can test the patience of even the most seasoned homebuyers. From financial disclosures to personal references, the hoops you’ll need to jump through can make you feel like you’re training for an Olympic event. Be prepared to disclose ongoing costs such as property taxes, which are a significant part of your financial commitment when buying an apartment in NYC.Regarding condos, the process is slightly more straightforward but still no stroll in Central Park. You’ll need to submit a thorough application package, including financial statements, tax returns, and mortgage pre-approval. Condos typically have a board review, but it’s more of a formality compared to co-ops. They’ll want to ensure you’re financially stable and a good fit for the building, but they won’t grill you like an overzealous detective as condos only have right of first refusal.Co-ops, on the other hand, take the cake for rigorous scrutiny. Prepare yourself for an in-depth application that rivals a college admission process. Expect to provide detailed financial documents, personal and professional references, and a letter of introduction explaining why you’re the perfect addition to their community. Once your paperwork is in, brace yourself for the infamous co-op board interview.Both condos and co-ops will require you to adhere to building-specific rules and regulations. These can include renovations, subletting policies, and pet ownership guidelines. Familiarizing yourself with these rules early on is essential to ensure they align with your lifestyle and long-term plans.Partnering with an experienced buyer’s agent can make this process much smoother. They can help you compile your application, navigate the building’s specific requirements, and prepare you for the board interview if you’re aiming for a co-op. With their guidance, you’ll have a better chance of completing the application process and securing your new home in the city.Closing on your NYC apartmentThis last leg of your journey is a mix of excitement and a dash of paperwork frenzy, but at least you have the finish line in sight.Once you are cleared to close, it’s time for the final walkthrough. Check that all repairs have been made, appliances are functioning, and no new issues have popped up since your last visit.Next is the closing day, which typically includes the buyer, seller, real estate agents, attorneys, and a closing agent. You’ll review and sign a stack of forms, from the mortgage documents to the final closing disclosure, which outlines all your costs and loan terms.Speaking of costs, be ready to tackle the closing costs. These can include fees for the appraisal, inspection, title insurance, and any attorney fees. For some NYC apartments, you might also encounter the mysterious "flip tax," a fee some co-op boards charge when an apartment changes hands. Ensure your pockets are prepared for this, as it can be a surprise expense.Once all the signatures are in place and the funds are transferred, the deal is done—literally. The deed will be transferred to your name for condos, and you’ll officially be the owner. You’ll receive the stock certificates and proprietary lease for co-ops, symbolizing your ownership stake in the cooperative corporation.
The Pros and Cons of a Ground Floor Apartment in NYC
When it comes to renting or buying an apartment in New York City, there are a lot of important factors to consider. You have to think of the neighborhood, your commute, and what kind of apartment you want. And one of the most important considerations when searching for apartments is weighing whether you would consider a ground floor unit or not. Some people love them, while others would never consider a spot on the street level if they live in Manhattan. Below, we outline some of the pros and cons to help you decide if that ground floor apartment listed for sale is right for you.Photo by Christian Koch on UnsplashWhat is a ground floor apartment?A ground floor apartment in New York City is the first floor of a building, and it typically overlooks the street. In some cases, the ground floor apartment may be below street level, with stairs leading down to the front door. Ground floor apartments are usually less expensive than those on higher floors, but they can be noisy and may not have as good of views. Some apartments, like the first floor of a brownstone, sit slightly above the street. Spaces like this provide a perfect view for people watching as folks go about their day in the Big Apple. Pros of a ground floor apartment in NYCLower pricesLess flights of stairsGarden or courtyard accessLower pricesWhen it comes to NYC real estate, the lower the floor, the lower the price. There are a few reasons for this. First of all, ground floor units are often smaller than those on upper floors, and they may not have as many features or amenities. Additionally, ground floor apartments may be less private than units on higher floors, and they may be more susceptible to noise from street traffic or neighboring businesses. You are also going to hear all the comings and goings of people throughout the day and night. Plus, depending on the construction of the home, you may end up hearing each step taken by your upstairs neighbors. For these reasons, ground floor apartments tend to be less expensive than those on higher floors. However, they can still be a great option for budget-minded renters or buyers who don't mind a little extra noise.Less flights of stairsPart of living in NYC is dealing with stairs. You face them on the subway and you can certainly face them in the home. Anyone who has lived in a fifth floor walk-up apartment can attest to the difficulty of move-in day when you have to lug furniture up several flights of stairs. That is why one of the main advantages of a ground floor apartment is that you won't have to deal with as many stairs. This can be especially convenient if you are coming and going a lot, have large items to move in or if you're carrying groceries. But of course, many buildings offer elevators and the benefit of being on the first floor means you do not need to wait for an elevator to take you up to your floor.Garden or courtyard accessGround floor apartments sometimes have private outdoor spaces that can take the form of garden spaces, backyards, or patios. In a bustling city like NYC, you can’t deny the benefits of having outdoor space like fresh air, natural light, and the ability to garden. Not many people in the city are able to invite a host of people over and have an outdoor oasis to entertain them in.Overall, the benefits of having outdoor space usually outweigh the downsides. If you're looking for an apartment with outdoor space, be sure to ask about the floor level when you're touring potential units.Cons of a ground floor apartment in NYCLess privacy and more street noiseGreater risk of break-insGreater risk of floodingPotential for unwelcome crittersLess privacy and more street noiseOne downside of living on the ground floor is that you may have less privacy than if you were living on an upper floor. Your windows are at or just slightly above eye-level, so while you can people watch to your heart’s content, folks on the street can take a peek in at your place, too. Luckily, a nice set of blinds, shades, or drapes go a long way to ensure privacy and safety. Greater risk of break-insStreet level apartments are usually the first choice for thieves looking to break and enter because of easier access to windows and doors. Thieves don't typically scale tall buildings, so the further up you live, the less of a target your apartment is. However, this doesn't mean that break-ins can't happen on upper floors - it's just less likely. If you live on an upper floor, be sure to keep your windows and doors locked at all times. If you are planning to buy or rent a ground floor unit, you should consider investing in a security system as an extra precaution. You can also secure yourself a home insurance policy to help give you peace of mind if anything were to happen. Greater risk of floodingGround floor apartments have a greater risk of flooding than apartments on higher floors for a few reasons. First, if you remember the 2021 super storm, most of the damage and flooding in the city occurred on the ground floors of buildings. This is because the water rose quickly and had nowhere else to go but into the ground floors of buildings. Potential for unwelcome crittersLiving at street level or on the first floor, there is a higher risk of unwelcome critters finding their way in to your home. This is especially true if the entry door to your apartment is near trash and recycling cans that attract bugs, mice, or even worse - rats.Be sure to keep your doors closed, make sure your windows have sealed screens, and speak to your building super about any other preventive measures to avoid any unwanted guests.Interested in buying an apartment in NYC? Browse listings and see how much you can save with Prevu's Smart Buyer Rebate.
NYC Tax Abatements Guide - 421a, J-51 and More
If you started your search to buy an apartment or home in NYC, you’ve likely come across countless mentions of tax abatements in the various listing descriptions you’ve read online. Whether or not you are familiar with the concept of property tax abatement in NYC, you would probably prefer to pay less in property taxes if possible.For that very reason, below the team from Prevu Real Estate compiled a NYC Tax Abatements Guide for buyers to learn more about these cost-saving property benefits - including most widely known real estate tax abatements and exemptions.What is a property tax abatement vs exemption in NYC?A residential tax abatement program is a reduction of a real property tax bill, often referred to as a tax break, imposed on specific properties by a local government like New York City. Typically, the goal of these programs is to encourage development or renovation of residential properties in specific areas of the city.Proponents of tax abatements argue that real estate tax abatements create construction jobs, revitalize neighborhoods, and increase the tax base in a region by creating additional affordable housing units for residents. Critics contend that abatement programs have the potential to spur rampant development which in turn may cause long-term owners and residents to be driven out of communities.On the other hand, real estate tax exemptions are a reduction of a property tax bill for specific property owners that meet certain requirements - including household income thresholds or other requirements. In most cases, property owners need to apply to receive such tax exemptions.What NYC tax abatements and exemptions are available?There are various types of tax abatement and exemption programs to be aware of in New York City. The most common abatements discussed by apartment buyers are 421a, 421g, J-51, the co-op and condo tax abatement, and the condominium property tax abatement. Additionally, the most common tax exemptions discussed are STAR, Enhanced STAR, and SCHE exemptions.Types of tax abatements and exemptions in NYC421a abatement421g abatementJ-51 exemption and abatementCooperative and condominium tax abatement Eco-friendly abatementsSTAR, Enhanced STAR exemptionsSCHE exemptionVeteran, Good Samaritan, and Clergy exemptionsWhat is a 421a tax abatement?The most widely discussed tax abatement NYC buyers benefit from is the 421a tax abatement. The reason for this is that today there are almost twice as many buildings receiving 421a abatements compared to the next most common type of residential abatement.The 421a program dates back to 1971 and derives its name from the section number of the New York Property Tax Law. The original goal of the program was to encourage real estate developers to construct multi-unit residential buildings thus creating more affordable housing throughout New York City. The 421a program requires a minimum of 20% of units to be designated as affordable units.The 421a tax savings last between 10 years and 25 years depending on approval. The New York City Department of Housing Preservation and Development (HPD) administers the 421a program.The program is associated with housing preservation and has a significant impact on affordable housing development in New York City.Term lengths of 421a tax abatements and codes10-year term (Code 5110, 5117)15-year term (Code 5113, 5118)20-year term (Code 5116)25-year term (Code 5114)421a tax abatement benefitsThe key 421a tax abatement benefit in NYC is the reduction in property taxes you owe for the term of the program. The longer the term of the abatement (i.e. 10 years vs. 25 years), the larger the savings you receive during your period of ownership. The post-construction tax benefits phase out over time based on a set schedule, and the property becomes fully taxable upon expiration of the abatement.In order to understand the true benefit of a 421a abatement, you need to know the original term of the building’s abatement and when the abatement will expire. This will allow you to understand which phase out schedule applies before your taxes return to normal. Ask your real estate attorney to verify the 421a tax abatement expiration before you sign a purchase contract.How are 421a tax abatements in NYC calculated?The amount of a 421a abatement is determined by the percentage of property tax that is abated in the benefit year. For all term lengths, the abatement percentage starts at 100% in benefit year 1 and phases out based on a set schedule over the 10-year, 15-year, 20-year, or 25-year term. Following the expiration of the abatement term, the property is considered fully taxable. You will be able to fact check tax abatements during your due diligence with you real estate attorney via property records and information provided by the managing agent.In the grid below, the post-construction phase out schedule is shown for each 421a abatement term length.Benefit Year10-year Term15-year Term20-year Term25-year Term1100%100%100%100%2100%100%100%100%380%100%100%100%480%100%100%100%560%100%100%100%660%100%100%100%740%100%100%100%840%100%100%100%920%100%100%100%1020%100%100%100%11Fully Taxable100%100%100%1280%100%100%1360%80%100%1440%80%100%1520%60%100%16Fully Taxable60%100%1740%100%1840%100%1920%100%2020%100%21Fully Taxable100%2280%2360%2440%2520%26Fully TaxableWhat is a 421g tax abatement?The 421g tax abatement was a relatively new program compared to 421a. Beginning in the mid 1990’s, the 421g program provided property tax incentives to encourage the conversion of commercial buildings into residential space in Downtown Manhattan. Specifically, these conversion projects are occurring below City Hall and south of Murray Street in Tribeca.Abatements under 421g lasted 12 years for non-landmark buildings and 13 years for landmark buildings. Property taxes on non-landmark buildings were fully abated for the first 8 years post-construction and decreased by 20% per year thereafter until the property is fully taxable. Landmark buildings were fully abated for 9 years and decreased by 20% per year thereafter until fully taxable.The deadline for new 421g applications was December 30, 2007 and the last buildings that benefited from these tax breaks are nearing their final expiration in 2020.What is a J-51 abatement?The J-51 tax abatement is unique for many reasons. First of all, the J-51 abatement is rare compared to the more famous 421a program. Second, the J-51 program is a combination of both a tax exemption and a tax abatement. Similar to a 421a, the J-51 abatement is to promote the development of multiple-dwelling affordable housing, however a J-51 is more complex given its structure and is more focused on the renovation of rundown residential properties or the conversion of commercial structures in to residential structures.The mechanics of a J-51 abatement are as follows: 1) a tax exemption locks in the assessed value of the property at the level determined prior to construction or renovation, and 2) a tax abatement then reduces the property taxes owed post construction.What is the NYC cooperative and condominium tax abatement?The NYC cooperative and condominium property tax abatement, commonly referred to as the co-op and condo tax abatement for short, allows the owners of a co-op or condo in NYC to have their property taxes reduced. The reduction percentage is between 17.5% and 28.1% if the owners meet certain requirements to apply for the abatement.The abatement is solely for a co-op and condo owner that uses the unit as their primary residence. If you purchased a condo unit as an investment property, you will not be eligible.Requirements of the co-op and condo tax abatementThe unit must be the owner’s primary residenceThe unit must be purchased prior to January 5th to be eligible for that tax yearThe unit owner cannot own more than three units in a buildingThe unit owner cannot be receiving a J-51, 421a, 421b, 421g, or 420c abatementThe unit cannot be owned by a business entity or trust The unit cannot be located in an HDFC buildingIf the owner of a co-op or condo meets the necessary requirements and is approved for the abatement, the annual property taxes on the unit could be reduced annually by between 17.5% and 28.1% depending on the average assessed value of the unit.NYC co-op and condo tax abatement savings per yearAssessed value $50,000 or less: 28.1%Assessed value $50,001 to $55,000: 25.2%Assessed value $55,001 to $60,000: 22.5%Assessed value $60,001 or more: 17.5%Eco-friendly property tax abatements in NYCThere are two eco-friendly abatements for environmentally conscious installations completed by eligible property owners: 1) green roof abatement, and 2) solar roof abatement.The green roof abatement is a one-time property tax abatement for properties that have green roofs. According to the NYC Department of Finance, a green roof is defined as a roof that has “vegetation that absorbs rainwater, provides insulation and combats ‘the heat island effect’, where urban environments can have higher temperatures than surrounding areas.” The green roof abatement amount is calculated at a rate of $4.50 per square foot of the area considered as green roof space. The abatement is limited to the lesser of $100,000 or the taxes due for the property in that taxable year.The solar roof abatement is a property tax abatement for properties that use solar panels located on the roof of a building as a renewable source of electricity, and potential receipt of such an abatement is determined by the Department of Buildings. Properties that currently receive a 421-a, 421-b, or 421-g tax abatement are not eligible to receive the abatement.Property tax exemptions NYC owners can apply forBasic STAREnhanced STARSenior Citizen’s Homeowner’s Exemption (SCHE)Veteran, Good Samaritan, and ClergyBasic STARThe School Tax Relief (STAR) exemption provides owners of houses, co-ops, or condos in NYC that have an annual household income of $250,000 or less with property tax savings of approximately $300 per year.Enhanced STARThe enhanced version of the STAR exemption provides owners of houses, co-ops or condos in NYC that are 65 years of age or older and have an annual household income of $88,050 or less with property tax savings of approximately $650 per year.SCHEThe Senior Citizen’s Homeowner’s Exemption (SCHE) provides owners of houses, co-ops or condos in NYC that are 65 years of age or older and have an annual household income of $58,399 or less with property tax savings by a reduction of up to 50% on the assessed value of the property.Veteran, Good Samaritan, and ClergyThere are additional exemptions available for owners that are veterans of the United States military, owners that became disabled during a crime or in the attempted prevention of a crime, or owners that are members of the clergy. These exemptions vary in amount.For a full list of tax exemptions and abatements, visit the NYC Department of Finance website.How to verify a tax abatement in NYC?When searching through property listings, you are likely to see real estate agents mention tax abatements in listing descriptions. After all, abatements can be an attractive selling point to prospective buyers.But you don’t have to take the listing agents word for it. Buyers can independently verify an abatement via the NYC Department of Finance website.What you need to input for NYC abatement verificationNYC BoroughBuilding numberStreetApartment #When you arrive at the search result for the specific apartment after entering the address information, click on “Benefits - Business & Construction” on the left hand menu bar and you will see if there is an exemption. Also, you will see the amount for the current tax period and the proposed amount for the next tax period.Interested in buying in NYC this year? Browse listings and see how much you can save with Prevu's Smart Buyer Rebate.DISCLAIMER: This material was provided for informational purposes only, and is neither intended to provide, nor should be relied upon as tax, legal, or accounting advice. Prevu and its subsidiaries do not provide tax, legal, or accounting advice. Consult your personal tax, legal, or accounting professionals before considering any transaction as your individual situation may vary.
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