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How to Calculate Property Taxes After an Abatement Expires

New York City

Property taxes, tax abatements, co-ops and condos, 421-a.
Feb. 4, 2022

In co-ops and condos with property tax abatements in place, residents either do not owe any property taxes, or only a fraction of what they would ordinarily be charged, for a specific period of time. There are several different types of abatements, each with its own set of requirements. One of the more common types of abatements is 421-a, typically given to new condos in exchange for the developer including a certain number of affordable apartments. For co-op shareholders, condo unit-owners and their boards, Brick Underground reports, it's critical to know when these abatements expire — and what happens after they do.

(The 421-a program is set to expire in June, but Gov. Kathy Hochul has proposed continuing it with minor reforms, claiming it's vital to the construction of affordable housing units. Opponents want to see it scrapped because they see it as "welfare for developers.") 

For those buying in condos with abatements, it's a bit easier to figure out what they'll be paying once the tax break expires. "The offering plans of those condominiums will state what the full taxes are at the end of the abatement," says Deanna Kory, a broker with Corcoran. "Bear in mind that the tax number is based on the full taxes at the time of the plan. To figure out the unabated taxes, you can find the current assessed value of a condominium online on the Department of Finance website."

There, condo owners will find a formula that allows them to calculate their current taxes, without the abatement, based on the assessed value

For co-op residents, it's a bit trickier, because they are not technically owners but shareholders in the building's corporation. "Look at the Department of Finance website for the taxes on the entire co-op," Kory says. "You should see there is an abatement on that bill. Next, figure out what percentage of the total shares your apartment represents. For this, you need to go to the original offering plan and see how many total shares there are, and divide the number of your shares by the total." 

That will give you the percentage of the tax you owe. You'll need to apply a formula to establish your taxes without the abatement based on the assessed value, Kory adds. 

If all this calculation is making your head spin, there may be faster routes to getting a sense of the taxes you'll owe after the abatement expires. You could speak to the co-op's managing agent or a board member for insight. You could also take a look at similar units in the area.

"The short answer is to find a comparable unit to what you're looking at in the neighborhood and see what the taxes are on it, or have your broker do the legwork," says Dean Roberts, a partner at the law firm Norris McLaughlin. He adds that most tax abatements taper off rather than ending abruptly, so it's likely that your property taxes will be increased gradually once the abatement expires. But they will increase — and it's to your advantage to know by how much, and how fast.

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