De Blasio wants to nix 421a for condos, raise mansion tax

Mayor claims the measures will create 60,000 affordable units over the coming decade

TRD New York /
May.May 07, 2015 08:00 AM

After months of anticipation, Mayor Bill de Blasio has revealed details about his affordable housing policy moving forward, including his stance on reforms to 421a.

Under the mayor’s proposal, the tax abatement would no longer apply to condo projects. In rental projects, developers receiving the tax break would be required to set aside 25 to 30 percent of the units as affordable, and the abatement would extend 35 years rather than the current 25, the New York Times reported. However, de Blasio now estimates the subsidy per unit at less than $400,000, from almost $600,000 today.

Additionally, the proposal calls for the establishment of a “mansion tax” on home sales over $1.75 million. This would be an additional 1 percent tax on top of the 1 percent already taxed on home sales over $1 million. For sales of over $5 million, there would be a 1.5 percent tax charged. De Blasio estimates the revenue generated from the new taxes would be $200 million a year, which would be set aside for housing programs.

The proposals would have to be approved by the State Legislature before going into effect. The current 421a program, along with a package of rent-stabilization laws, expire June 15. In terms of rent-stabilization, de Blasio has voiced his support for scaling back vacancy decontrol, which allows landlords to hike rents when tenants leave.

“No more tax breaks without building affordable housing in return,” the mayor said in a statement. “This can’t be a city of just penthouses and luxury condos. We are turning the page, and making sure the same pressures that have pushed New Yorkers out of their neighborhoods are harnessed to build the next generation of affordable housing.”

The Real Estate Board of New York gave its support for the plan.

“We’re going to support it, including the mansion tax,” said Steven Spinola, REBNY president. “We’re not happy about everything, but we think it will lead to building more affordable housing.”

Uncertainty over the future of 421a has recently been giving developers pause and may have led to a drop in building permits last month. [NYT] — Tess Hofmann


Related Articles

When Bill de Blasio announced the end of his campaign, the industry reacted largely with relief but not surprise (Credit: Getty Images and Pixabay)

De Blasio’s campaign is dead, and real estate is happy

Gary Barnett says luxury market is crowded, WeWork IPO woes continue: Daily Digest

The issue came to light after some owners realized they were incorrectly billed in June (Credit: iStock)

“A big, big, big success,” NYC Finance Department says of new system that overcharged building owners on property tax

The blackout impacted a 42-block stretch of Manhattan between the Hudson River and Fifth Avenue (Credit: Getty Images)

Con Ed still searching for answers in Manhattan blackout

Mayor Bill de Blasio and Rikers Island (Credit: Getty Images)

Real estate development not coming to Rikers Island, mayor says

With the elimination of vacancy decontrol, landlords can't deregulate units in buildings receiving 421a until the tax break expires (Credit: iStock)

Collateral damage? Real estate sounds alarm on rent regs’ impact on condos, 421a

100 Riverside Boulevard is one property whose tax abatements are ending

With 421a ending, more condo owners are selling their apartments

Mayor Bill de Blasio and Frank Carone (Credit: Getty Images)

City tapped De Blasio donor to take over foreclosed properties