NYC Affordability

Why this matters before you even see a tax bill

Every NYC condo’s monthly carrying cost has three pieces: common charges, the mortgage payment, and property tax. Of those, property tax is the one most likely to change dramatically over time in a new-construction building, because many new buildings are constructed under a tax exemption that phases out — sometimes fully, sometimes on a step-up schedule — over a fixed number of years. Buying into a building’s exemption period without understanding when it ends can mean budgeting for a materially higher tax bill down the road.

421-a’s replacement: 485-x

New York’s FY2025 state budget, enacted April 20, 2024, replaced 421-a with 485-x (formally, Affordable Neighborhoods for New Yorkers, or ANNY) for new residential construction. Both programs trade a property tax exemption for a share of income-restricted units, but 485-x is structured to last longer and require more:

• Exemption length: up to 40 years, roughly five years longer than 421-a’s typical term.
• Affordability requirement: larger projects generally must set aside 20-25% of units as income-restricted, weighted toward 60-80% AMI depending on project size and location — see how AMI bands work for what those percentages mean in practice.
• Permanence: income-restricted units under 485-x are required to stay affordable permanently, rather than reverting to market rate once the tax exemption itself expires — a meaningful difference from how many 421-a buildings were structured.
• Construction wage requirements: 485-x also added wage requirements for construction workers on qualifying projects, tied to project size, which 421-a did not have in the same form.

What to actually check before buying

A low current tax line on an abated unit isn’t a stable input for a 20-30 year mortgage. Before treating it as a permanent assumption, ask for (or have your attorney request):

1. The exemption’s start date and full schedule — some abatements are a flat exemption for the full term, others step down gradually before expiring.
2. The unabated projected tax bill — most offering plans and many listings disclose what the tax would be without the exemption, which is the number to budget against for a long hold.
3. Whether the building is under 421-a or 485-x specifically, since the two have different remaining terms and different sunset behavior — a building’s certificate of occupancy date is a useful clue, since 485-x only applies to projects that started construction after June 2024.

Worked comparison

A $6,000/month all-in carrying cost on an abated unit, with $800/month currently allocated to property tax, could see that line rise substantially once the exemption phases out — turning a $6,000/month unit into a noticeably more expensive one on the same mortgage, with no change in the loan itself. Run both the current and projected-unabated tax figures through the Condo Affordability Calculator to see the difference in required income under each scenario, rather than budgeting only against today’s bill.