485-x

485-x, the Affordable Neighborhoods for New Yorkers program, is the tax exemption New York City residential development runs on now. It covers new multiple dwellings and eligible conversions of 6 or more units that commence construction after June 15, 2022 and on or before June 15, 2034, and complete by June 15, 2038. The benefit runs as long as 40 years, and the paperwork starts earlier than most developers expect. MGNY Consulting runs the 485-x filing sequence: the option analysis, the HPD registration, the units workbook, marketing monitoring, and the application itself. One decision on that list, 485-x or ICAP, expires the day the first building permit is issued, and on sites of 100 or more units a required notice comes three months before construction. Call (212) 343-1111 before then.

What is the 485-x exemption?

Real Property Tax Law Section 485-x was adopted on April 20, 2024 as the successor to 421-a, and HPD implemented it through Chapter 63 of Title 28 of the Rules of the City of New York in December 2024. It grants a real property tax exemption for the construction of new multiple dwellings and eligible conversions. Hotels are excluded. A construction period benefit runs in front of the main term. HPD administers eligibility; the Department of Finance implements the benefit on the roll.

The exemption applies to the new value. Taxes on the pre-commencement assessed valuation of the land and any improvements stay payable throughout the benefit, except for very large rental projects during the construction period.

Which option fits the project?

The program sorts projects by size, location and tenure. The option is chosen in the first workbook and application submission, and the statute does not allow it to be changed afterward.

Option A, large rentals. Projects of 100 or more units receive a 35-year benefit plus up to 3 years of construction period benefits, with 25 percent of units affordable at a weighted average of 80 percent of AMI.

At 150 or more units the terms change again, but only inside two mapped zones. Zone A is Manhattan entirely south of 96th Street, plus Greenpoint, Williamsburg, South Williamsburg, East Williamsburg and Long Island City-Hunters Point. Zone B covers nine designated Brooklyn and Queens neighborhood areas, from Downtown Brooklyn, Brooklyn Heights, Fort Greene and Park Slope to Old Astoria and Queensbridge. A project of that size in either zone receives a 40-year benefit, with 25 percent of units affordable at a weighted average of 60 percent of AMI, and construction period benefits run up to 5 years in Zone A and up to 3 in Zone B. The zones are defined lot by lot, so a borderline site deserves a map check, not an assumption.

Option B, modest rentals. Projects of 6 to 99 units receive a 35-year benefit, full for 25 years and then at the affordability percentage for the final ten, plus up to 3 years of construction period benefits, with 20 percent of units affordable at a weighted average of 80 percent of AMI. In Options A and B the averages allow no more than three AMI bands, with the highest band capped at 100 percent of AMI.

Option C, small rentals. Projects of 6 to 10 units outside Manhattan, on zoning lots permitting no more than 12,500 square feet of residential floor area, receive a 10-year benefit plus up to 3 years of construction period benefits, with at least half the units rent stabilized. Option C is elective: a project that meets these tests may instead take Option B, trading half the units rent stabilized for 20 percent affordable and 25 more years of benefit.

Option D, homeownership. Condo and co-op projects of 6 or more units outside Manhattan qualify with an assessed valuation, at the project’s first assessment after completion, of no more than $89 per square foot. The benefit runs 20 years, full for fourteen and at 25 percent for the final six, plus up to 3 years of construction period benefits. Each unit owner agrees in writing to keep the unit a primary residence for the first five years.

What does the affordability commitment mean?

In the rental options the commitment runs in perpetuity: Affordable Housing Units stay affordable and restricted units stay rent stabilized permanently. For a homeownership project the restriction period ends on the twentieth anniversary of completion. Market units are not made stabilized by the program.

Affordable units must share the same entrances and common areas as market units, and cannot be isolated to one floor or wing. Their mix must track the building: bedroom counts proportional to the market units, or at least half the affordable units at two bedrooms or more with no more than a quarter smaller than one bedroom.

If the site held dwelling units on the date three years before commencement, the project must replace them one for one with affordable units; for a small rental project the replacement is one restricted unit for each. HPD can revoke benefits, and can also fine violations of the affordability and stabilization requirements even after the benefit period ends.

What are the wage requirements?

Building service employees get prevailing wage for the full benefit period, enforced by the NYC Comptroller. Two exceptions: buildings under 30 units, and buildings that are entirely affordable with at least half the units at or below 90 percent of AMI.

Construction wages start at 100 units, at floors set in 2024 that escalate 2.5 percent every July 1: $40 per hour as enacted from 100 units, and from 150 units the lesser of $72.45 per hour or 65 percent of the greatest prevailing rate within a classification in Zone A, and the lesser of $63 per hour or 60 percent of that rate in Zone B. Sites where all construction work runs under a project labor agreement are exempt.

The wage rules come with their own tripwire. On any site of 100 or more units, the owner must notify the Comptroller and HPD at least three months before construction work commences. Commencing without that notice forfeits the exemption outright, on top of penalties that can reach $5,000 per day, and nothing in the later application process catches the miss.

What must be filed with HPD, and when?

A registration notice opens the file. It is due no later than six months after the commencement date for projects commencing on or after April 20, 2024; for earlier commencements reaching back to the program’s June 15, 2022 start, the deadline was December 14, 2024. A late registration can draw a penalty of up to the full application filing fee. HPD then assigns a docket sequence.

Option A and B projects submit the 485-x Units Workbook, and after HPD approves it, a Notice of Intent to begin marketing, followed by an executed Marketing Monitoring Contract with an HPD-approved Marketing Monitor. MGNY holds that HPD approval as an approved Marketing Monitor.

Every project then files the application for its option no later than one year after the completion date, with the MWBE participation affidavit, reflecting the program’s goal of 25 percent of applicable costs to minority- and women-owned businesses, and a draft restrictive declaration.

How does 485-x work alongside ICAP?

485-x exempts new residential construction; ICAP abates taxes on industrial and commercial construction and renovation, and caps residential space at 20 percent of a building’s rentable area.

485-x prices commercial space rather than forbidding it. If commercial, community facility and accessory space exceeds 12 percent of a site’s aggregate floor area, the exemption is reduced by the excess, and on a multi-lot site that reduction lands on the non-residential lots first.

The statute then closes the door on stacking: an eligible multiple dwelling receiving ANNY Program benefits “shall not receive any exemption from or abatement of real property taxation under any other law.”

The trap is in the calendars. ICAP’s preliminary application has to precede the first building permit, and 485-x’s own wage notice precedes construction on larger sites. A developer who starts thinking about incentives after the permit has not narrowed the menu; on the wrong site, the menu is already empty. That comparison belongs at the design stage: residential share against commercial share, unit count against wage exposure. On a site that divides into separately assessed components, working out which benefit attaches where is its own analysis, and it has to happen before anything is filed.

How does MGNY handle 485-x?

We model the options against the project’s real numbers, on the same tax projections we build for owners, then keep the calendar: the pre-construction notice where the unit count requires it, registration inside the six-month window, the workbook, the marketing monitoring contract, the application with its affidavits and the restrictive declaration your counsel records, and confirmation that the Department of Finance has applied the benefit to the roll. If a portfolio also holds 421-a projects finishing under the old rules, or ICAP candidates, the filings run under one plan. Call (212) 343-1111 before the first permit, while every option is still on the table.

Frequently asked questions about 485-x

What is the 485-x tax exemption?

485-x is the Affordable Neighborhoods for New Yorkers program, adopted April 20, 2024 as Real Property Tax Law Section 485-x. It grants up to 40 years of property tax exemption on new residential buildings of six or more units that commence construction by June 15, 2034 and complete by June 15, 2038.

Is 485-x an abatement or an exemption?

An exemption. 485-x keeps the new construction’s assessed value off the taxable roll for the benefit term, while an abatement, the way ICAP works, is a discount applied to the tax bill itself. Searchers type 485-x abatement either way, but the mechanics matter when reading a tax bill, because the taxes the site paid before commencement stay payable under 485-x.

What are the 485-x affordability requirements?

It depends on the option. Rentals of 6 to 99 units set aside 20 percent of units at a weighted average of 80 percent of AMI. At 100 units and up the set-aside is 25 percent, and the average drops to 60 percent for projects of 150 or more units in Zone A or Zone B. Small rentals of 6 to 10 units outside Manhattan instead rent stabilize at least half their units, and homeownership projects qualify on the $89 per square foot assessed valuation cap rather than an AMI set-aside. Restricted rental units are permanently affordable and permanently rent stabilized, in no more than three income bands, with the highest capped at 100 percent of AMI.

What changes at 99 versus 100 units?

At 100 units a 485-x project moves from Option B to Option A. The affordable share rises from 20 to 25 percent of units, the pre-construction wage notice to the Comptroller and HPD becomes mandatory, and construction wage floors begin: $40 per hour as enacted, escalating 2.5 percent every July 1 since 2025, with higher floors at 150 units inside Zone A and Zone B. A 99-unit project carries none of the construction wage requirements, which makes the unit count a genuine design decision.

Can a building get both 485-x and ICAP?

Not on the same building. The statute bars an eligible multiple dwelling receiving ANNY Program benefits from any other exemption or abatement, so a mixed-use building takes one program or the other, and commercial space inside a 485-x project is handled by the program’s own 12 percent rule instead. On a site that divides into separately assessed tax lots, the answer can differ lot by lot, and that analysis has to happen before the first building permit is issued. Call (212) 343-1111 to run it.

Did 485-x replace 421-a?

Yes, for new starts. Projects that commenced construction on or before June 15, 2022 continue under 421-a (16), completing by June 15, 2026, or by June 15, 2031 for those that filed the Letter of Intent by September 12, 2024 under Affordability Option A, B, D, E or F. The old 421-a (1-15) continues on its own schedules.

When is the 485-x registration deadline?

Six months after the project’s commencement date, filed with HPD, for commencements on or after April 20, 2024; projects that commenced earlier had until December 14, 2024. Late filing can draw a penalty up to the amount of the application fee, and on sites of 100 or more units the separate wage notice must precede construction by at least three months.

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