New J-51 Tax Break to Benefit 166,000 Co-op and Condo Owners

Like Lazarus, the cherished J-51 tax break has risen from the grave — and some 166,000 co-op and condo apartment owners citywide stand to gain from the resurrection.

After a two-year absence, the tax break, which helps defray the cost of repairs to certain multifamily buildings, was revived by a vote of the city council. The new version of J-51 would cover as much as 70% of the costs of renovations completed between June 2022 and July 2026 through tax abatements lasting as long as 20 years. The tax break will likely help many co-op and condo boards struggling to bring their buildings into compliance with carbon-emission caps set by Local Law 97.

Eligible buildings include co-ops and condos where the average assessed valuation is under $45,000 per unit. (The assessed valuation is a calculated fraction of a property's market value.) Also eligible are rental buildings where more than half the units are affordable, they are operated by limited-profit housing companies, or they receive substantial governmental assistance.

Pierina Sanchez, the Bronx councilwoman who sponsored the bill, says it will reduce costs for some 166,000 families living in co-ops and condos. “We can upgrade our housing, put money back into the pockets of everyday New Yorkers, and green our city,” Sanchez tells Crain's.

After the original J-51 abatement lapsed in 2022, both houses of the state Legislature passed a bill in June 2023 that enabled New York City to revive the J-51 tax break, and Gov. Kathy Hochul signed it into law on October 23, 2023. Finally, after more than a year of debate and delay, the city council has revived the cherished tax break.

The council's foot-dragging is likely to complicate matters, and there are still many unanswered questions. The New York Apartment Association, a landlord group, noted that the city’s department of Housing Preservation and Development (HPD) still needs to release rules spelling out which construction costs can be covered by J-51. Previous versions of J-51 were “woefully misaligned with actual prices, meaning housing providers recouped far less than the actual cost of the upgrade,” the association said in a statement.

Some co-op and condo boards and rental landlords have a narrow window to apply. Building owners who have already completed renovations since 2022 now have four months to file for the tax break, but it’s unclear whether HPD will finalize the new rules before that deadline. And any not-yet-completed renovation must be finished before July 2026, giving building owners just  19 months to carry out projects.

Despite these hiccups, the return of J-51 is welcome news to the boards and residents of affordable co-ops and condos across the city. For once, the little guys have caught a break.