Taxing Questions A Look at J-51 and 421-a Abatements

Perhaps Benjamin Franklin said it best: “In this world, nothing can be said to be certain except death and taxes.”

And taxes aren’t just a certainty for co-op and condo buildings—they’re a complicated part of keeping a building community financially solvent and sound. Navigating the property tax waters and making sure your building gets every penny’s-worth of rebates and abatements owed it is a big job—for boards, management, and their hired financial professionals. Fortunately, there’s plenty of information available on which programs and givebacks your building may be able to take advantage of. Here’s a look at two programs that can save your building money at tax-time.

A Capital Idea

The J-51 tax abatement program was implemented in 1955 as a way to encourage building owners to install hot water plumbing in their properties. Since then, the program has expanded to include just about every major capital improvement you could name, including things like window replacements, elevator replacements and upgrades, electrical rewiring, major roof repair, plumbing overhauls, major façade work, and sewer line repairs. In addition to benefiting landlords, the J-51 abatement is also available to developers converting commercial or industrial buildings to residential, and to rental buildings converting to co-op or condo.

“[The J-51 abatement] is just a lovely gift from the city, started in the 1950s, to keep the city viable,” says Mary Ann Rothman, president of the Council of Cooperatives and Condominiums (CNYC). “Originally, the government allowed three years of J-51 eligibility after a building closed as a co-op or condo,” recalls Rothman. “It was clear to [the council] that first of all, it took a co-op a length of time to learn what physical improvements were needed and to accumulate the money to do that. Three years wasn’t nearly long enough, so we got to work lobbying to make our representatives understand that just because people owned a co-op didn’t mean they immediately knew how to deal with the program.”

In 1988, the council won an important victory: there is now no limit on the number of times co-ops or condos can apply for the abatement program.

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3 Comments

  • Is the shareholder or the coop management eligibl for the J51 tax exempt
  • We own 2 condominium units which we have combined and use as our primary residence, but did not change the CO to a single block and lot. May we apply for the STAR exemption on both units?
  • a shareholder and his accountant want to claim the individuals tax abbatemen for credit on his tax return. He has already been given the figure for the credit on his portion of the real estate taxes based on the number of shares that he owns. Is he entitled to claim the abatement on his Federal, city or State returns? Do we owe him any other explanation?