Establishes an exemption from local taxation in cities having a population of one million or more for newly constructed housing with 3 or less dwelling units

2 Co-sponsors

• Andrew J. Lanza
• Diane J. Savino

BILL NUMBER:S4381A

Title of bill

An act to amend the real property tax law, in relation to exemption of newly constructed private homes from local taxation in cities with a population of one million or more

Purpose

This bill would provide a tax exemption for new multiple dwellings with three or fewer units to further incentivize the construction of new housing.

Summary of provisions

This bill would add a new section 421-1 to the Real Property Tax Law that would exempt newly constructed private homes containing not more than three dwelling units in cities with a population of one million or more from all local and municipal taxes, other than assessments for local improvements. For private homes containing less than four dwelling units, there would be two years of one hundred percent exemption followed by a six year phase-out. Such projects would continue to pay taxes on the value of the land appearing on the assessment roll in the first year after completion of construction. The maximum purchase price, for which a dwelling could be eligible for an exemption would be defined pursuant to the maximum purchase price for one to three family dwelling units as set by the State of New York Mortgage Agency. Currently these limits for affordable housing in New York city are set at $656/000 for a single family home, $840,000 for a two family building, and $1,016,000 for a three family building. In the case of a condominium, the maximum purchase price would be set at $400,000. Any tax lot which previously contained a private or multiple dwelling which has been demolished within the last three years would be ineligible for the exemption. The bill would sunset on April 1,2014.

Justification

Real Property Tax Law Section 421-b formerly provided a similar eight year tax exemption for certain one- and two-unit multiple dwellings, but that exemption is only available to projects that commenced construction before July 1, 2006 and complete construction no later than July 1, 2010. Similarly, Real Property Tax Law Section 421-a formerly provided a similar fifteen-year tax exemption for three-unit multiple dwellings, but Local Law 58 of 2006 of the City of New York, which took effect on December 28, 2007, limits such benefits for such multiple dwellings to those projects that receive substantial governmental assistance pursuant to an affordable housing program. This amendment would enable certain one- two-, and three-unit newly constructed private homes that are owner-occupied to continue to receive an eight-year tax exemption (two year full; six year phase-out). Such private homes must meet the purchase price restrictions and will only be able to avail themselves of the exemption for initial purchasers. In order to ensure that the tax benefit accrues to the homeowner, the benefit period would not begin until the later to occur of the completion of construction or the sale to the initial purchaser. The tax exemption also may be

revoked for illegal occupancy and nonresidential use of such private homes. This tax exemption program for owner-occupied one- to three-family dwelling units will provide an essential economic stimulus to the housing market in New York City

Legislative history

New Bill.

Fiscal implications

None to state.

Effective date

This act shall take effect immediately and shall sunset on April 1, 2014, provided no exemption shall be allowed for any construction which is commenced after April 1, 2014.