The J-51 Tax Incentive program is an as-of-right tax exemption and abatement for residential rehabilitation or conversion to multi-family housing. Eligible projects for this program include: New York City Department of Housing Preservation and Development (HPD)- or privately-financed moderate and gut rehabilitation, privately-financed and governmentally-assisted major capital improvements to multiple dwellings, and conversions of lofts and other non-residential buildings into multiple dwellings. The tax benefit is a 34-year (30 years full tax benefit and then an additional four-year phasing out of the program) or 14-year (10 years tax benefit and then an additional four-year phasing out of the program) exemption from the increase in real estate taxes resulting from the work. Affordable housing projects generally get the 34-year exemption, while other projects receive the 14-year exemption. In addition, existing real estate taxes receive an abatement of up to 8.3 percent or 12.5 percent of the cost of the work each year for up to 20 years. Privately-financed projects in Manhattan south of 110th Street and co-ops and condominiums generally receive some limited benefits.
All rental units become subject to rent stabilization for the duration of the benefits. In rental buildings, the landlord must also reduce the Major Capital Improvement (MCI) rent increase allowed under rent stabilization as a result of the work, by a portion of the value of the tax abatement.