If you’re buying a condo in a building with a 421a tax abatement in NYC, you might want to know how much the un-abated taxes will be once the abatement expires. Most buyers rely on a listing agent or buyer’s agent to obtain this information. But, looking up this information yourself is actually really easy, and it probably takes less time to just do it yourself than asking an agent.
Let’s start with a quick refresher of the 421a program. The original 421a tax abatement program began in 1971 and is named after section 421-a of the New York Property Tax Law. The tax abatement is meant to encourage developers to build multi-family residential buildings, with an emphasis on affordable housing, in New York City.
There are multiple variations of the 421a tax abatement, ranging from terms of 10 to 25 years. If you see a condo for sale with ridiculously low monthly taxes, like $15/month, chances are that the building has a 421a tax abatement.
Here’s one such example:
As you can see, this apartment is asking over $2 million dollars, yet the monthly taxes are ridiculously low at just $15/month.
The first step in calculating the unabated taxes is to download the property tax bill on the NYC Department of Finance website (accessible here). Once you’re on this page, click the button “Download Your Property Tax Bill, as shown below:
On the next page, select ‘Property Address Search’ as shown below:
Input the property address, which in this case is 1 Grand Army Plaza #14A in the Borough of Brooklyn:
On the left side of the results page, click on ‘Property Tax Bills’:
Go ahead and select the most recent tax bill:
On the second page, we see a billable assessed value of $65,043 and a tax rate of 12.267%:
If the building did not have the abatement, the annual taxes would be calculated by multiplying the full billable assessed value of $65,043 by the tax rate of 12.267%, which comes out to $7,979/year or $665/month.
However, we see that the 421a actually reduces the billable assessed value by $63,554. This means that the taxable value is just $1,489 instead of $65,043.
Therefore, property taxes are currently just $1,489 x 12.267% = $183/year.
So the 421a abatement is currently reducing the annual taxes for this unit by $7,979 – $183 = $7,796/year.
Another way to calculate the current savings from the 421a abatement is by multiplying the reduction in assessed value associated with the abatement by the tax rate. In this example, the math is $63,554 x 12.267% = $7,796/year.
So that’s it! Pretty simple, right?
Finally, we want to remind you that there is no way to predict the future property tax liability for an apartment with absolute certainty.
This is because both the city’s property tax rate and the billable assessed value will change unpredictably over time.
So in other words, while we can calculate the current savings associated with the 421a abatement, and the amount of unabated taxes today, we cannot predict exactly what the abated or unabated taxes will be in the future.
