Sunnyside Co-op Taps J-51 R Tax Break to Ease Cost of $600K Repairs

They didn’t know it at the time, but when 41-15 44th St. Owners Corp. committed to two big renovation projects last year, the timing was perfect. The 71-unit co-op in Sunnyside, Queens, bit the bullet on nearly $600,000 in combined elevator upgrades and facade repairs, which was paid through a line of credit as well as a four-year assessment. Now, having recently completed the work, the co-op has found an unexpected silver lining — the new J-51 R tax incentive. Reintroduced a few months ago, the abatement program offers tax breaks to qualifying co-ops and condos for major building renovations. “It’s definitely a bonus,” says the co-op’s property manager, Mike Malagic, with All Area Realty Services.

The J-51 R abatement is limited to buildings with an average assessed apartment value at or below $45,000. Owners can offset 70% of capital improvement costs against their NYC property tax bill, which can be spread out over a minimum of 12 years, with a maximum of 8.3% of the cost applied annually. Qualifying projects, which include energy-efficiency retrofits like boiler and HVAC system upgrades as well as window and roof replacements, must be completed between June 30, 2022 and June 30, 2026. Applications to offset renovation costs are due within four months of the work’s completion. For buildings that did qualifying work between June 30, 2022 and Dec. 30, 2024, this means applications are due by April 30.

At 41-15 44th St., which was built in 1940, the aging elevator needed frequent repairs and was overdue for replacement. Shareholder frustration was compounded by the fact that parts were no longer manufactured and could only be sourced from salvaged equipment. “Last summer we had an outage and the elevator was down for quite a while,” says David Halvorsen, the co-op’s board treasurer. Making the repairs even more urgent were local laws mandating specific elevator upgrades.

Exterior brickwork was also in need of repair. “Numerous apartments were having water coming in from the outside,” Halvorsen says. The original facade is solid masonry, lacking features like cavity walls or weep holes to prevent water reaching the interior. “We replaced the brick in those parts of the building, and new construction has allowed for weep holes,” Halvorsen says.

As for the co-op’s financial windfall, Benjamin Williams, head of the property tax department at Rosenberg & Estis, helped the management at 41-15 44th St. Owners Corp. figure out its J-51 R eligibility, and estimates the co-op could get $190,628 as a tax abatement for the elevator project alone over the next decade. “There are certain factors that may limit the maximum abatement per year — for example, J-51 R can’t abate more than 50% of a co-op’s tax,” he explains.

Realizing the building would qualify for the tax abatement has been a game-changer for the board. “We are looking at whether this could incentivize us to do other things that we are putting off,” Halvorsen says, citing a roof replacement as the next big project. Williams says it makes sense to push these types of projects forward. “There is no guarantee the program will be extended past June 2026,” he says.

A key decision for the board is how to distribute the tax savings once approved. One option is to lower operating costs for shareholders by reducing maintenance to reflect the lower quarterly property tax adjustments. This can lower fees for the duration of the abatement, but risks a big increase when the tax break expires. “You have to think about people’s financial situation,” Halvorsen says.

Another option is to keep annual maintenance increases the same and put the savings generated toward future capital projects. Halvorsen is inclined to opt for this route. “Shareholders will still get the benefit because they won’t have to pay as much for a future capital improvement project,” he says, “Instead of having to raise $750,000 to $1,000,000 for the roof, it could be significantly less.”