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NYC developers explore condo splits to stay below unit limits

A revived affordable housing tax incentive is paired with stricter labor wage rules, including wage requirements once projects hit at least 100 apartments.

Reported · Written up by our desk · Residential

Developers are looking at ways to work within New York Citys revived affordable housing tax incentive limits, after the program effectively capped how many units developers can build under prevailing labor wage requirements.

According to Bisnow, the incentive has encouraged projects up to 99 units under the 485-x program, while developers are exploring a different structure, splitting a multifamily rental building into multiple condo units to remain under the thresholds.

At a New York Multifamily Operations and Development conference, real estate advisers said the approach would involve paying full taxes on units not within a condo, while claiming exemptions on the remaining units under New York tax code, and partner David Shamshovich said it is not a loophole.

Bisnow also notes that 485-x is largely unpopular compared with its predecessor, 421-a, and that the program provides real property tax exemptions up to 40 years but with stricter requirements for larger developments.

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