What is the NYC tax abatement and prevailing wage affidavit?

Property taxes in New York City can be challenging, especially for building owners. However, condo and co-op owners have access to a valuable financial benefit through tax abatements.

What's the NYC co-op and condo tax abatement?

Introduced in 1996, the NYC tax abatement levels the playing field with single to three-family homes (taxed at significantly lower rates) by reducing property taxes for qualifying NYC apartment owners/shareholders.

Due on February 15 of each year, qualified buildings can reduce their property taxes anywhere from 17.5% to 28.1% based on the average assessed value (not to be mistaken with market value). For example, own a 1,000-square-foot condo in Chelsea with an average assessed value of $121,000? You’d qualify for 17.5%. 

Here are the percentages, neatly calculated for you. And you can learn more here.

Average assessed value:        Abatement percentage:

$50,000 or less                                28.1%

$50,001 to $55,000                       25.2%

$55,001 to 60,000                          22.5%

$60,001 or more                               17.1%

‍Who qualifies for the tax abatement?

Does your unit check all the boxes? Get that money!

• You use your unit as your primary residence (in other words, investment properties don’t count)
• You own fewer than four units in the building
• Your unit isn’t owned by a business, sponsor, or trust
• Your building submits a prevailing wage affidavit with the abatement application.
• You purchased the unit before January 5th, 2024‍
• New Requirement: Starting in 2025, all applicants must provide proof of primary residence as part of their tax abatement application. Accepted forms of proof include:     
  - A current utility bill listing the unit address.
  - Voter registration linked to the unit address.
  - A government-issued ID matching the unit address.

• New condo owner? Be sure you file a real property transfer tax (RPTT) form or deed with the Division of Land Records at www.nyc.gov/acris 

What's a prevailing wage affidavit?

The city requires every condo and co-op seeking NYC’s tax abatement to provide a prevailing wage affidavit. This certificate is proof your building’s paying its building employees the prevailing wage, the annual wage and benefit rate set by the city comptroller (not to be mistaken for minimum wage).

• What buildings qualify: Buildings with 30 or more residential units and an average assessed unit value of more than $60,000 or buildings with less than 30 residential units and an average assessed unit value of more than $100,000
• Who constitutes as a building employee: Anyone who’s regularly employed to take care of your building eight hours or more each week, including supers, cleaners/porters, door persons, elevator operators, and more‍
• What do you submit: Submit this form alongside your tax abatement application

‍Can a building not qualify for the tax abatement?

Short answer: yes.

Buildings that already participate in these programs won’t qualify for the co-op and condo tax abatement:

• Urban Development Action Area Program (UDAAP)
• Housing Development Fund Corporation (HDFC)
• Mitchell-Lama buildings
• Buildings in the Division of Alternative Management Programs (DAMP)

Buildings receiving these abatements won’t qualify, either:

• J-51 exemption
• 420c, 421a, 421b, or 421g
• Clergy property tax exemption (click here if you'd rather receive this abatement than the clergy exemption)

‍Your building qualifies - congrats! Now what?

Your co-op/condo board is responsible for submitting the tax abatement application for the entire building. Here are a few things to note:

• Confirm the number of units in your building that qualify (check the checklist above) to ensure you receive the highest reduction
• File your application by February 15 of each year through the co-op/condo abatement portal (and don’t forget the prevailing wage affidavit!)‍
• Ensure your building’s budget reflects the correct property tax obligation after accounting for abatements. Many buildings make the mistake of budgeting only for net taxes due and fail to allocate funds to distribute abatements to shareholders, which can create cash flow issues.
• Keep an eye out for tax benefit letters mailed out every December
• Part of a co-op? Look into a co-op tax abatement assessment to collect and use these tax savings toward maintenance and improvements without having to directly charge your shareholders more money‍
• Educate shareholders on their abatement credits to avoid confusion or disputes. Consider an infographic or video to explain how abatements work and why they’re distributed individually for co-ops but handled collectively for condos.

Have questions or need some guidance on taxes, tax abatements, prevailing wages, or more? Daisy's here to help!