Exemption Administration Manual, Part 2: Multiple dwellings and urban renewal—Section 4.07 - RPTL Section 489

Assessor Manuals

Section 4.07 - RPTL Section 489

Calculation of exemption and abatement under RPTL §489

Calculation of exemption and abatement under RPTL §489
Location of project
A. City in which Multiple Dwelling Law applies (New York City)
Type of project
Alterations or improvements to eliminate fire or health hazards (including asbestos abatement to the extent required by law), energy conservation alterations or improvements, or historic preservation alterations or preservation alterations or improvements to exterior walls where project is carried out with substantial assistance of grants, loans, or subsidies from any federal, state, or local agency or any not-for-profit philanthropic organization one or whose primary purpose is providing low- or moderate-income housing, with mortgage insurance by the Rehabilitation Mortgage Insurance Corporation or the State of New York Mortgage Agency in a neighborhood preservation area designated as such by the NYC Planning Commission as of 6/1/83, provide that the area in which the property is located has been approved by the NYC Council, or pursuant to a program established by the Federal Housing Administration, Federal National Mortgage Association, Federal Home Loan Mortgage Corporation, or Government National Mortgage Association for the rehabilitation of existing multiple dwellings for persons of low or moderate income, a program of mortgage insurance for the rehabilitation of existing multiple dwellings under National Housing Act §23-f, or a program of mortgage insurance established by the Federal Housing Administration for the rehabilitation of existing multiple dwellings for persons of low or moderate income. Properties receiving benefits under any of these programs must be located in a neighborhood strategy area as defined by the U.S. Department of Housing and Urban Development or a neighborhood preservation area as designated by the NYC Planning Commission as of 6/1/83.
Exemption*
Amount
Property located in Manhattan south of or adjacent to the south side of 110th Street:
Amount depends on total assessed value (TAV) per dwelling unit, which equals the total assessed value of the property after completion of improvements divided by the number of dwelling units. Exemption is allowed only for dwelling units with an assessed value of less than $38,000. Exemption amount equals the sum of the following: First $18,000 of TAV: 100% of portion which represents increase in assessed value. Next $4,000 of TAV: 75% of portion which represents increase in assessed value. Next $5,000 of TAV: 50% of portion which represents increase in assessed value Next $4,000 of TAV: 25% of portion which represents increase in assessed value. Next $8,000 of TAV: 0% of portion which represents increase in assessed value. In calculating exempt value, the full amount of total assessed value that does not represent increased assessed value must be applied in the above formula prior to the inclusion of any amount of increased assessed value. Where the property is used in part for residential purposes and in part for non-residential purposes, the assessed value of the property must be appropriately allocated between the residential and non-residential portions. In computing the total assessed value per dwelling unit, only the amount of value so allocated to the residential portion should be considered. The exempt amount remains constant for 10 years (see footnote).
Other property
Increase in assessed value due to conversion, alterations, or improvements (see footnote).
Abatement**
Amount
1. Project described by #1 or 2 under Type of Project at left or project described by #4(c) that is located in a neighborhood strategy area in census tracts in which 75% or more of the population live in households which earn 50% or less of the median household income of the city in which such census tracts are located: Total abatement must not exceed 150% of the certified reasonable cost of the alterations or improvements, as determined by the local housing agency. Annual abatement must not exceed 12-1/2% of such certified cost, nor may annual abatement exceed the amount of taxes payable for the year. 2. Project described by #3, 4(a), or 4(b) under Type of Project at left: Total abatement must not exceed the certified reasonable cost of the alterations or improvements, as determined by the local housing agency. Annual abatement must not exceed 8-1/3% of the total costs of the alterations or improvements, nor may annual abatement exceed the amount of taxes payable for the year.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
B. City in which Multiple Dwelling Law applies (New York City)
Type of project
Alterations or improvements to eliminate fire or health hazards (including asbestos abatement to the extent required by law), energy conservation alterations or improvements, or historic preservation alterations or improvements to exterior walls where project is carried out under conditions other than those described in A above.
Exemption*
Amount
See A above.
Duration
No more than 14 years.
Abatement**
Amount
Total abatement must not exceed the certified reasonable cost of the alterations or improvements, as determined by the local housing agency. Annual abatement must not exceed 8-1/3% of the total cost of the alterations or improvements, nor may annual abatement exceed the amount of taxes payable for the year. Certified reasonable cost must not exceed $15,000 for a dwelling unit of 3-1/2 rooms and a comparable amount for dwelling units of other sizes. Certified reasonable cost may exceed these amounts, but not be more than 25%, upon application of the housing owner and a determination by the housing agency that in the case of alterations or improvements to eliminate fire or health hazards, the increased cost is necessary to eliminate the unhealthy or dangerous conditions or replace the inadequate and obsolete facilities in a satisfactory manner, in the case of energy conservation alterations or improvements, the increased cost is necessary to conserve energy in a satisfactory manner, or in the case of historic preservation alterations or improvements to exterior walls, the increased cost, to the extent such cost is not offset by any tax credits received as a result of the alterations or improvement, is necessary to comply with any provision of law regulating historic or landmark buildings or structures.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
C. City in which Multiple Dwelling Law applies (New York City)
Type of project
Conversion of building or other structure to Class A multiple dwelling not used for single-room occupancy, including conversion of residential units in "interim multiple dwelling" (former manufacturing, commercial or warehouse space used as residence by three or more families but not in compliance with Multiple Dwelling Law) to units complying with fire and safety standards or to Class A multiple dwelling where project is undertaken by a not-for-profit philanthropic organization or undertaken on properties which receive mortgage insurance from the Rehabilitation Mortgage Insurance Corporation or state of New York Mortgage Agency, provided the project is located in a neighborhood preservation area designated as such by the NYC Planning Commission on 6/1/83, has been vacant since 1/1/82, and prior to becoming vacant, was last used for governmental, educational, hospital, or nursing home purposes
Exemption*
Amount
See A above.
Duration
No more than 14 years.
Abatement**
Amount
Total abatement must not exceed the certified reasonable cost of the conversion, as determined by the local housing agency. Annual abatement must not exceed 8-1/3% of the total cost of the conversion, nor may annual abatement exceed the amount of taxes payable for the year.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
D. City in which Multiple Dwelling Law applies (New York City)
Type of project
Conversion of a building or other structure to Class A multiple dwelling not used for single-room occupancy, including conversion of residential units in "interim multiple dwelling" (former manufacturing, commercial, or ware-house space used as residence by three or more families but not in compliance with Multiple Dwelling Law) to units complying fire and safety standards or to Class A multiple dwelling where project is undertaken under conditions other than those described in C above.
Exemption*
Amount
See A above.
Duration
No more than 14 years.
Abatement**
Amount
Total abatement must not exceed the certified reasonable cost of the conversion, as determined by the local housing agency. Annual abatement must not exceed with 8-1/3% of the total cost of the conversion, nor may annual abatement exceed the amount of taxes payable for the year. Certified reasonable cost must not exceed $15,000 for a dwelling unit of 3-1/2 rooms and a comparable amount for dwelling units of other sizes. Certified reasonable costs may exceed these amounts, but not by more than 25%, upon application by the housing owner and a determination by the housing agency that the increased cost is necessary to comply with applicable laws.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
E. City in which Multiple Dwelling Law applies (New York City)
Type of project
Rehabilitation (substantial) of Class A multiple dwelling or conversion of building or other structure to Class A multiple dwelling as part of a program to provide housing for low- or moderate-income households, provided that: the rehabilitation or conversion is aided financially by a government agency, and the property was a building or buildings conveyed by the city for purposes of such rehabilitation or conversion.
Exemption*
Amount
See A above.
Duration
No more than 34 years.
Abatement**
Amount
See G below.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
F. City in which Multiple Dwelling Law applies (New York City). In Manhattan, benefits are available only in a designated area, as defined under RPTL §489 (1-a) (b).
Type of project
Expansion of gross cubic content of existing buildings and structures that are altered converted or improved under any of the types of project listed above (A through E), except for asbestos abatement projects.
Exemption*
Amount
See A above.
Duration
Varies according to type of project (see A through E).
Abatement**
Amount
None.

Calculation of exemption and abatement under RPTL §489
Location of project
G. New York City only.
Type of project
Rehabilitation (moderate) of substantially occupied Class A multiple dwelling where project is: carried out with substantial assistance of grants, loans, or subsides from any federal, state, or local agency or any not-for-profit philanthropic organization one of whose primary purpose is providing low- or moderate-income housing, financed with mortgage insurance by the Rehabilitation Mortgage Insurance Corporation or the State of New York Mortgage Agency, or carried out pursuant to a program established by the Federal Housing Administration for rehabilitation of existing multiple dwellings in a neighborhood strategy area as defined by the U.S. Department of Housing and Urban Development
Exemption*
Amount
See A above
Duration
No more than 34 years.
Abatement**
Amount
Total abatement must not exceed 150% of the certified reasonable cost of the rehabilitation, as determined by the local housing agency. Annual abatement must not exceed 12-1/2% of such certified cost, nor may annual abatement exceed the amount of taxes payable for the year.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
H. New York City only
Type of project
Rehabilitation (moderate) of substantially occupied Class A multiple dwelling where project is carried out or financed under conditions other than those described in F above.
Exemption*
Amount
See A above.
Duration
No more than 34 years.
Abatement**
Amount
Total abatement must not exceed the certified reasonable cost of the rehabilitation, as determined by the local housing agency. Annual abatement must not exceed 8-1/3% of the total cost of the rehabilitation, nor may annual abatement exceed the amount of taxes payable for the year.
Duration
No more than 20 years.

Calculation of exemption and abatement under RPTL §489
Location of project
I. City in which Multiple Dwelling Law does not apply (not New York City)
Type of project
Alterations or improvements to eliminate fire or health hazards
Exemption*
Amount
See A above.
Duration
No more than 12 years.
Abatement**
Amount
Total abatement must not exceed the certified reasonable cost of the alterations or improvements, as determined by the local housing agency. Annual abatement must not exceed 8-1/3% of the total cost of the alterations or improvements, nor may annual abatement exceed the amount of taxes payable for the year. Certified reasonable cost must not exceed $15,000 for a dwelling unit of 3-1/2 rooms and a comparable amount for dwelling units of other sizes. Certified reasonable costs may exceed these amounts, but not by more than 25%, upon application by the housing owner and a determination by the housing agency that the increased cost is necessary to comply with applicable laws.
Duration
No more than 20 years.

* The local housing agency may reduce or remove these limitations on exemption with respect to a particular property undergoing alteration or improvement, upon application of the property owner and a determination by the agency that: (1) the increased benefit will increase the number of dwelling units or improve the quality of dwelling units that will be affordable to persons of low or moderate income and (2) the increased benefit is necessary to make economically viable the increase in the number of dwelling units or improvements in the quality of dwelling units that will be affordable to persons of low or moderate income.

The duration of the exemption is no more than 30 years for multiple dwellings containing a total of 10,000 or more units which were developed as a planned community and are owned as two separate condominiums. Alterations and improvements made may not directly or indirectly result in an equalization increase in the assessed valuation of any multiple dwelling forming part of the planned community where such alterations or improvements were completed.

In the case of the 14-year, 30-year, and 34-year exemptions, the amount of exemption in the first 10 or 30 years, whichever is applicable, is equal to the increase in assessed value due to improvements. After that period of time, the amount of exemption is reduced by 20% each year until the improvements are fully taxable.

** The amount of tax abatement is further limited for any alterations or improvements begun three years or more after a building's conversion to cooperative or condominium ownership; for such projects, abatement received in any tax period must not exceed $2,500 of the certified reasonable cost of the project per dwelling unit. Abatement is also further limited for property owned by limited-profit housing companies. Generally, abatement only applies to such properties when:

the alterations or improvements are not financed with grants, loans, or subsidies from any governmental agency,
the total abatement does not exceed 90% of the certified reasonable cost of the alterations or improvements,
the annual abatement does not exceed 8-1/3% of such certified reasonable cost, and
annual abatement does not exceed 50% of the amount of taxes or payments in lieu of taxes payable for the year. Such properties may be eligible for abatement, notwithstanding the fact that the alterations or improvements are financed with grants, loans, or subsidies from any governmental agency, when the housing company enters into a binding and irrevocable agreement to stay in the Mitchell-Lama Program for an additional period of not less than 15 years. Such properties also may be eligible for abatement, notwithstanding the value of the dwelling units when construction of the eligible improvement begins, when the housing company enters into such a binding and irrevocable agreement for a period of not less than 15 years.

The total abatement for multiple dwellings containing a total of 10,000 or more units which were developed as a planned community and are owned as two separate condominiums may not exceed the greater of

150% of the certified reasonable cost of the alteration or improvement, as determined by the local housing agency or
the construction cost of the alterations or improvements identified in local regulations. Additionally, the annual abatement must not exceed 10% of the total abatement granted, nor may it exceed the amount of taxes payable for the year. Abatement benefits granted for this group must be apportioned among all of the condominium tax lots within the condominium in which the alterations or improvements were made, even though such alterations or improvements may have been made to one or fewer of all of the multiple dwellings comprising the condominium. The duration of the abatement is limited to 20 years. The annual abatement of taxes in any consecutive12-month period may not exceed 10% of the total abatement granted, and may not exceed the amount of taxes payable in that same period.

Note: Property eligible for exemption is also entitled to a limited assessment on that portion of the property not eligible for exemption. During the period of exemption for alterations or improvements begun before August 7, 1987 the assessed value of the non-exempt portion must not exceed:

the value of the previously existing dwelling appearing on the assessment roll after the taxable status date immediately preceding the commencement of alterations or improvements plus
the value of the land, any improvements other than those made under RPTL 489, and the proportion of increased assessed value that is not exempt under RPTL 489.

During the period of exemption for alterations or improvements begun on or after August 7, 1987, after the first three years of exemption the assessed value of the property may be increased, but it must be prorated between the exempt and taxable portions so that throughout the exemption period the exempt portion bears the same relationship to the taxable portion as it did on either

the final tax roll on which a 489 exemption was first available for the building or
the last tax roll on which such ratio was changed because of additional improvements, whichever results in the greater percentage of exempt assessed value; however, additional improvements that do not qualify for a 489 exemption, increases in the value of nonresidential portions of the building, and non-exempt additions to cubic content must not be prorated and are fully taxable. If the assessed value of the building is reduced, the value of the exemption may not be reduced to an amount less than that appearing on the first tax roll following the granting of the exemption.

Please send general questions or comments to ORPTS.

Updated: May 4, 2023