The Fight to Fix the J-51 R Tax Abatement
By Emily Myers
Co-op and condo advocates are sounding the alarm about the looming expiration of the revived J-51 R tax abatement program — an incentive viewed by many as crucial to paying for major building repairs. The current program is set to expire on June 30, 2026, and advocates say this could leave more than a thousand coops and condos without a viable way to recoup the costs of essential upgrades.
Reinstated last year, J-51 R allows eligible owners to offset 70% of qualifying capital improvement costs, including facade repairs and roof replacements, against their property tax bill over a minimum of 12 years, with up to 8.3% of the cost applied annually. However, the program currently only covers projects completed between June 30, 2022 and June 30, 2026, a narrow window for buildings that have not begun either planning or construction. “Housing affordability is a top concern for all New Yorkers, and the J-51 program is key to helping co-ops make improvements to their buildings while saving money,” says Priya Mulgaonkar, director of the Green Co-op Council, which is campaigning for the program to be renewed and updated. (cont. below)
Under current rules, co-ops and condos only qualify if the average assessed value of apartments is $45,000 (roughly equivalent to a $450,000 market value) or below. “If the program is extended, and the $45,000 threshold isn’t inflationadjusted, more and more co-ops and condos will become ineligible,” says Benjamin Williams, head of the property tax department at Rosenberg & Estis. Lawmakers, including Senator Brian Kavanagh, support raising these limits. “We need to renew this critical program, expand it to make many more buildings eligible, and reduce application fees and other barriers to getting projects approved,” Kavanagh said at a Green Co-op Council event last week.
The program’s application fees are another sticking point, especially for large, campus-style co-ops. J-51 R charges $1,000 plus $75 for each unit for buildings with more than six apartments, a fee that is non-refundable even if the Housing Preservation and Development agency rejects the application. For Penn South, a 15-building, 2,820-unit limited equity co-op in Chelsea, that would amount to more than $200,000. “At $200,000 minimum it doesn’t work to our benefit to use the J51,” says board president Ambur Nicosia. (cont. below)
Another challenge is the tight timeline for completing work. The co-op is half way through a major roof replacement project, but the work is unlikely to be completed by the June 2026 deadline. “We need improvements to the program so that large, campus-style co-ops like ours can participate,” says Edward Yaker, chair of the Coordinating Council of Cooperatives and a shareholder at Amalgamated Housing in the Bronx.
Without an extension, an estimated 1,358 co-ops and condos risk losing the ability to offset costs associated with Local Law 97 compliance. “Co-ops like mine face a lot of headwind when it’s time to make any large-scale improvements to our building,” says Elaine O’Brien, a shareholder at a prewar co-op in Jackson Heights that hopes to electrify to cut emissions. “We need the J-51 tax abatement to help us make our building and our city healthier.”
Some buildings have already used the revived program successfully. “The benefit is real,” says David Halvorsen, treasurer of a 71-unit Queens co-op that recently recouped funds for new elevators and facade repairs. But its uncertain future makes long-term planning difficult for others. "Our ability to raise capital for these improvements hinges on this key tax abatement,” says Luis Farias, a shareholder at an HDFC in the Bronx.
A final challenge is the two-step process required to renew the program. The state must pass a Real Property Tax Law amendment, and the city must then pass a local law to activate it. That gap previously caused a 14-month delay between state approval and the city’s implementation. “I’d have the state legislators directly amend both the Real Property Tax Law and the NYC Administrative Code to extend the program and strike the enabling provision,” Williams says. This would make the extension immediate and prevent administrative dead zones in which buildings cannot apply.
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