The Real Deal New York

Almost tax-free Manhattan condos are quickly dwindling

Owners of units with 421a tax break use abatement as a big selling point
April 26, 2018 11:15AM

15 Hudson Yards

Buyers looking for luxury condominiums in the city can still swoop on multi-million dollar listings and pay almost no property taxes, but the deals in Manhattan are quickly evaporating.

When the state legislature approved a new version of the 421a tax abatement (now called “Affordable New York”), it eliminated the break for early all new condominiums. And although the break still applies to condo projects that secured 421a before it was eliminated for Manhattan condos, many projects are nearing the end of the abatement term, the Wall Street Journal reported. Those that still have it — like Related Companies’ 15 Hudson Yards — are using it to attract buyers attracted to decades of absurdly low taxes.

A $32 million duplex on the 88th floor of 15 Hudson Yards, for example, pays just .01 percent of its assessment in property taxes, or 46 cents per square foot a year. But a $1.1 million Westchester County home forces the owner to cough up $15 a square foot, or $3,400 a month.

At One57, the Extell Development high-rise that holds Michael Dell’s $100 million penthouse, the city stood to lose $65.6 million in property tax revenue, according to a 2015 Independent Budget Office. Extell secured a 10-year abatement on that tower, and is now receiving a 20-year abatement on One Manhattan Square, its $1.9 billion tower that will stand adjacent to the Manhattan Bridge.

“Even if you are a billionaire purchaser you appreciate a savings on an expense you know you will have on an ongoing basis,” said Anna Zarro, director of residential sales and leasing for Extell.

In March, officials at the Department of Housing and Preservation said that 1,788 properties didn’t comply with the requirements of 421a by failing to file a final certificate of eligibility. Based on HPD data, the owners of all 145 units at luxury tower 56 Leonard had their 421a benefits suspended. The project’s developer Alexico Group told The Real Deal in March that it expects the abatement to be reinstated. Other projects hit by the HPD crackdown were the Oosten in Williamsburg and the Parkside Tower in Flushing. [WSJ]David Jeans