NY Creates New Affordable Housing, Conversion Tax Breaks
Real Estate partner, Brett Gottlieb, spoke to Law360 Tax Authority about the tax abatement programs for building affordable housing and converting office buildings into affordable housing units under the New York state budget that Gov. Kathy Hochul signed into law in April of 2024.
Brett told Law360 that while 485-x may not provide the same amount of tax benefits as 421-a, which offered about $1.6 billion in annual tax abatements, the housing package should entice more development to take place, "Now we have the programs in place to facilitate the much-needed housing that New York requires," he said.
Brett also noted that 485-x has a lower area median income requirement for some tenants than 421-a, which will result in lower rents, and that the higher wage requirements will increase the cost of development, "There might be concerns about the underwriting of these particular projects and whether or not from a risk analysis perspective they pencil out." He added that midsize projects may stand to benefit the most from the new program.
The new abatement program for converting commercial space into affordable housing units in New York City will also provide tax breaks for up to 35 years. Brett called that portion of the bill a "hidden gem" in the legislation, saying that conversions generally wouldn't be feasible without some form of tax benefit.
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