The J-51 Tax Abatement

It is painful to think about how much of your earned income goes to income taxes, whether you spend your days juggling 1099 gigs or whether you have a cushy job that pays you so much that you still have enough money left for some fun splurges even after the IRS claims its share.  It is either inspiring or frustrating to think about all the tax breaks businesses get, depending on your immediate prospects of entrepreneurship.  From the perspective of tax deductions and tax credits, being a commercial landlord is a sweet deal; in real estate law, the owners of buildings that rent out more than four residential units are considered commercial landlords, as are landlords that rent out non-residential properties such as warehouses and retail stores.  Of course, cashing in on those tax incentives is harder than it sounds, and you must jump through a lot of hoops just to become eligible for it.  The J-51 tax exemption and abatement is one of the most lucrative tax incentives you can get, if you can manage to get it.  For help reducing your tax burden as a commercial landlord, contact a Bronx real estate attorney.

How to Get the J-51 Tax Exemption

The J-51 tax abatement and exemption is available to the landlords of rent controlled and rent stabilized properties.  When landlords make improvements to these buildings, the appreciation in the properties’ values that results from these renovations is tax exempt.  The J-51 tax abatement is not a get rich quick scheme; you do not feel its effects until after you have renovated a rental property at your own expense and at least one year has gone by since you finished the renovations, long enough to get a new appraisal of the property’s value.

The first step is to get a preliminary approval from the New York City Department of Housing Preservation and Development.  The next step is to submit your application, including the certificate of approval from the Department of Housing Preservation and Development, to the Department of Finance.

Landlords of Rent-Stabilized Properties Sue Department of Finance Over Delayed J-51 Approval

Two landlords in the Bronx have been involved in a dispute over J-51 tax abatement applications for nearly two decades.  Finkelstein Timberger and Morgan Group have been trying to get J-51 status for several rent stabilized buildings they own in the Bronx since 2005.  The delays have cost the landlords millions of dollars, and not only because their tax bills fail to reflect the added value caused by their renovations.  The lack of J-51 approval has caused them to lose out on loan funding and has even required them to sell properties at a loss in order to avoid even more severe financial losses.

Schedule a Confidential Consultation With a Bronx Real Estate Attorney

A real estate lawyer can help you navigate the complexities of renting out multiple residential units in New York City while the IRS is never far away.  Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.

Sources:

therealdeal.com/new-york/2024/01/04/bronx-landlords-blame-citys-j51-delays-for-10m-in-lost-sales-revenue/

nyc.gov/site/finance/property/benefits-j51.page