Practice Areas

420-c Real Estate Tax Benefits

The 420-c program provides a complete or partial real estate tax exemption as an incentive to construct and/or rehabilitate low income housing accommodations. A complete real estate tax exemption is available to properties that meet the section's requirements and which are used for residential purposes, ancillary residential purposes or certain community facility purposes.

420-c Requirements:

The following are the essential requirements of the 420-c program.

a) Eligible Property
The 420-c real estate tax exemption is available only for Eligible Property, which is Real Property containing Housing Accommodations and which "has been acquired and/or rehabilitated and/or constructed with a Loan,"; is bound by a regulatory agreement, and has been allocated tax credits. A Loan must be "for the acquisition and/or construction and/or rehabilitation and/or permanent financing of Housing Accommodations provided by the City, the State or the Housing Trust Fund Corporation.";

"Housing Accommodations"; is defined as real property used for residential purposes, ancillary residential purposes including management, administrative and social service offices and facilities used to provide social services primarily for Persons of Low Income (as defined in § 2 of the Private Housing Finance Law) residing in such Housing Accommodations, and certain community facility uses. Ancillary residential purposes and allowable community facility uses may not exceed 25% of the floor area of the property.

b) Regulatory Agreement
The Real Property must be owned by an Eligible Owner and be bound by a regulatory agreement. Such agreement must restrict the use of the property to Housing Accommodations for Persons or Families of Low Income and impose the rental and occupancy restrictions established by Section 42 of the Internal Revenue Code.

c) Tax Credits
The Eligible Owner of the property must be a participant in the federal low income housing tax credit program, established pursuant to Section 42 of the internal revenue code. An Allocation Document issued by a Housing Credit Agency indicating that either the property has received a binding reservation for tax credits or that such property has been allocated tax credits pursuant to Section 42 must be submitted with the 420-c application.

420-c Duration:
Eligible Property is entitled to a real estate tax exemption for the duration of the regulatory agreement.

Please contact Jay G. Seiden at .(JavaScript must be enabled to view this email address) or Alvin Schein at .(JavaScript must be enabled to view this email address) to discuss your project's eligibility for 420-c benefits.