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(Tax
Abatement & Exemption Programs)
My
building is subject to rent stabilization because my landlord receives
a tax break from the City. Will rent stabilization coverage continue after
the landlord no longer benefits from the tax break?
If
a new building is constructed or an old building is fully rehabilitated the
owner can receive an abatement/exemption from real estate taxes for a prescribed
period from the City. In return for this tax benefit, the building is placed
under rent stabilization. After the benefits expire, rent stabilization coverage
may expire IF the landlord follows the correct procedure.
If
the building was rehabilitated or converted from another use, the abatement
is known as a J-51 tax abatement. If it is newly constructed, the
abatement is known as a 421-a tax abatement.
The
expiration of J-51 benefits does not always affect the stabilization
status of buildings. If the building was rent stabilized before the tax benefits
were applied, then the expiration of those benefits would not affect the
building's regulated status. But if the units received stabilization status
as a result of its J-51 tax benefits, then whether or not the building loses
rent stabilization protection would depend on whether the owner gave proper
notices in the lease and each renewal.
ONLY
when a building was converted from nonresidential space to residences or
was fully rehabilitated does the expiration of benefits mean the end of stabilization
in the building. If your building falls into one of these categories, the
owner may deregulate the apartment if the lease and each renewal contains
a prominent notice (in 12 point type) informing the tenant that:
a) the unit
shall be subject to deregulation upon the expiration of the tax benefits;
and
b) the approximate date on which the tax benefits are to expire.
If
the lease contains the proper notice, coverage expires when the last lease
commencing during the benefit period expires.
If no such notice is included, a tenant in occupancy retains the full benefits
of rent stabilization, including the right to renewal leases.
Under the 421-a program, if the apartment became subject to rent stabilization
after July 1, 1984, the apartment will undergo deregulation if the owner has
included a prominent notice in the lease and each renewal that stabilization
coverage will expire following expiration of the tax benefit and the approximate
date of such expiration. As with the J-51 program, protection will continue
until the end of the last lease signed while the benefit period was in effect.
However, apartments in buildings constructed under the 421-a program which
became subject to rent stabilization before July 1, 1984, remain rent-stabilized
tenants until the first vacancy occurs after the expiration of the tax benefits,
even if the vacancy occurs long after the tax benefits have expired. This vacancy
deregulation does not occur if the vacating tenant was forced out through harassment.
To
find out if your building is a part of the J-51 or 421-a programs call the
Department of Housing, Preservation and Development at 212-863-5517 or the
NYC Dept. of Finance, at 212-669-4567 or 669-4597. If you have any further
questions about the expiration of tax abatements call the
NYS Division of Housing and Community Renewal (DHCR) at 718-739-6400 or 212-961-8930.
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When
a tax exemption expires on my building, will I still be stabilized if my
rent exceeds $2,000 per month?
If the rent goes above $2000, and the building was rent stabilized prior to
receiving J-51 tax benefits, it is possible that the apartment may be deregulated
if allowed under high rent/high income decontrol procedures. And regardless
of the buidling's status prior to receiving J-51 benefits, once the abatement
expires, the apartment can be deregulated if the landlord follows the proper
procedures. Contact the NYS Division of Housing and Community Renewal (DHCR)
for further clarification at 718-739-6400 or 212-961-8930.
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How
do I find out when the abatement expires? Is it always 10 years?
In
Manhattan it is common for the exemption to last ten years. In the outer
boroughs the length of time is generally greater. Your landlord should have
included a clause in your lease indicating the date of expiration. Without
this notice, the landlord may not be entitled to deregulate the apartment.
To find out the length of the exemption, and the period it is effective,
call the NYC Department of Finance (Property Division, Manhattan) at 212-669-4567
or 669-4597, or visit their office in person.
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How
high can the landlord raise my rent once my apartment has been deregulated?
Once
deregulated, the landlord may negotiate a market rate lease.
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I
live in a 421-a building. May the landlord charge rent in addition to the
guideline increases?
Landlords
of 421-a buildings are allowed to tack on an additional 2.2% increase for
the decrease in the value of the tax exemption over the period of the abatement.
Once deregulated, the landlord may negotiate a market rate lease.
If
you believe you are being overcharged, you may file a rent overcharge complaint
with the New York State Division of Housing and Community Renewal. Call them
at 718-739-6400 or 212-961-8930.
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Can
I fight the increase when the tax abatement on my building expires?
While
there is no mechanism to stop the expiration of a tax benefit, under some
circumstances tenants will remain under stabilization after the tax benefits
expire. We suggest that you consider the following:
- Confirm that
the the tax benefits are about to expire by calling the NY City Department
of Finance (212-669-4567/97) or by visiting their office;
- In J-51 buildings,
find out if the building became rent stabilized because the landlord accepted
the benefits. The most common examples would include gut rehabilitation
projects, commercial spaces converted to residential use, and buildings
with less than six units. If the building was already stabilized, the expiration
of the tax benefits should not result in deregulation.
In 421-a buildings, units entering stabilization before July 1, 1984 are
subject to deregulation only after the first vacancy following expiration
of the benefits - unless the vacancy was the result of harassment.
- Check your
leases. They should contain language regarding the tax benefits, the approximate
date of expiration of the benefits, and the fact that your unit would be
destabilized when the benefits expire.
If
you find that there is anything out of order, you could retain an attorney
or investigate further. Otherwise, if the landlord has followed the correct
procedures, it is his/her right to deregulate the apartments.
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Disclaimer: By
providing answers to frequently asked questions the staff of the Rent
Guidelines Board attempts to clarify the often complex programs and
regulations governing landlord tenant relations in NYC. However the
information provided herein does not represent official policies
or opinions of the City of New York or the Rent Guidelines Board. Nor
should this information be used to substitute for advice of legal counsel.
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