485-x Tax Exemption Applications and Compliance in NYC

485-x, the Affordable Neighborhoods for New Yorkers program, is a property tax exemption for qualifying residential development in New York City. 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 post-construction benefit can run for up to 40 years, with option-specific construction-period benefits. MGNY Consulting runs the 485-x filing sequence: the option analysis, the HPD registration, the units workbook, marketing monitoring, and the application itself. Compare 485-x with ICAP before the first building permit, and review construction-wage notice requirements before construction on sites of 100 or more units. Call (212) 343-1111 before then.

Bring the site plan into the tax review early. Have the borough-block-lot number, unit count, proposed uses, permit status and construction timetable ready. Call (212) 343-1111 to review the applicable option and the filings that need to precede construction.

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, subject to all of Option B’s affordability, permanent stabilization and filing requirements. Compare the different benefit lengths with those continuing obligations.

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 determines the option review?

This table identifies the review path; the detailed affordability, wage and benefit conditions below still apply. Use the same unit schedule and areas in the program analysis, workbook and tax projections.

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. Unless another applicable housing program preempts the rule, 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, each such unit later demolished, removed or reconfigured must be replaced by an affordable unit; for a small rental project, the replacement is a restricted unit. 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?

Covered building service employees must receive prevailing wages and supplements for the full benefit period, even if benefits are revoked or terminated, 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. Labor-agreement exclusions require review of the applicable agreement and the Comptroller’s exclusion-notice instructions.

For covered construction on sites of 100 or more units, the owner must notify the Comptroller and HPD at least three months before work commences. Starting without the required notice forfeits benefits and can lead to fines of up to $5,000 per day. The Comptroller describes exclusions for labor agreements with express statutory waivers, but an exclusion must still be reported to that office. Confirm which work and notice obligations the agreement covers.

Current wage reference, checked September 14, 2026: the dollar figures above are the 2024 starting rates. The Comptroller’s 485-x schedule lists the rates effective July 1, 2026, including a $42.03 hourly floor for sites with 100 or more units. Apply the relevant zone, classification and effective date when evaluating a project.

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.

Homeownership filing update: an HPD rule effective September 13, 2026 allows a homeownership application after the first assessment following completion, with the required offering plan and executed purchase contracts for at least 50 percent of the units. Executed purchase contracts for every unit must be submitted before approval. The one-year application deadline still applies.

Which dates should be on the project filing calendar?

1. Before permits and construction: resolve the incentive route and the separate construction-wage notice where required.
2. At commencement: record the qualifying date and calendar HPD registration.
3. Before affordable marketing: complete the applicable workbook and marketing submissions.
4. At completion: assemble the option-specific application, affidavits and restrictive-declaration record.

For the affordable-unit workflow, coordinate HPD lottery management with ongoing marketing monitoring. For existing projects under the earlier program, use 421-a (16) filing and compliance.

How does 485-x work alongside ICAP?

485-x exempts new residential construction; ICAP abates taxes on industrial and commercial construction and renovation, and excludes property where 20 percent or more of total rentable square footage is or will be residential, subject to the statute’s tax-lot and condominium aggregation rules.

485-x prices commercial space rather than forbidding it. If counted commercial, community facility and accessory-use space exceeds 12 percent of the site’s aggregate floor area, the exemption is reduced by that excess percentage. The statute excludes parking located no more than 23 feet above curb level from that counted space and apportions the reduction to non-residential tax 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 must be filed on or before the first permit issuance date when a permit is required; ICAP has a separate no-permit procedure. Covered 485-x sites have their own advance construction-wage notice. 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 review of the Department of Finance benefit record. 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 with the site plan and permit status to discuss the filing support your project needs.

Official references, checked September 14, 2026: HPD 485-x options and filing instructions, RPTL 485-x, and ICAP residential-use and filing conditions. Review the current option-specific instructions before relying on a timetable.

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 qualifying new residential buildings and eligible conversions of six or more units that commence construction after June 15, 2022 and on or before June 15, 2034 and complete by June 15, 2038.

Is 485-x an abatement or an exemption?

An exemption. 485-x exempts qualifying new value, while an abatement, such as ICAP, reduces the tax bill. The owner generally continues paying taxes on the pre-commencement assessed valuation at the applicable tax rate; very large rental projects have an exception during their construction period.

What are the 485-x affordability requirements?

Options A and B require affordable units: generally 25 percent for large rentals and 20 percent for modest rentals, at an average of 80 percent of AMI. Very large projects in Zones A and B use a 60 percent average. The income bands and unit mix must meet the selected option. Affordable units stay affordable and rent stabilized permanently. Eligible Option C small rentals instead rent stabilize at least half the units permanently, without the same AMI set-aside. Option D homeownership uses an assessed-value cap of $89 per square foot and separate ownership conditions.

What changes at 99 versus 100 units?

At 100 rental units, a project moves from Option B to Option A and the affordable share increases from 20 to 25 percent. Construction-wage and advance-notice requirements also apply, subject to labor-agreement exclusions. The scheduled 100-unit hourly floor is $42.03 from July 1, 2026, with separate formulas for sites of at least 150 units in Zone A or Zone B. Review the current schedule and any claimed exclusion before construction.

Can a building get both 485-x and ICAP?

An eligible multiple dwelling receiving 485-x benefits cannot receive another property tax exemption or abatement. Commercial space within a 485-x project is subject to the program’s 12 percent floor-area rule. Separately assessed components require a project-specific review; separate tax-lot numbers alone do not establish that both programs can be used. Call (212) 343-1111 before the first permit to review the property and proposed uses.

Did 485-x replace 421-a?

Yes, for new construction starts. Eligible earlier projects remain under 421-a (16). Its ordinary completion deadline was June 15, 2026; qualifying projects that filed a Letter of Intent by September 12, 2024 under Affordability Option A, B, D, E or F have until June 15, 2031. 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 for commencements on or after April 20, 2024; earlier projects had until December 14, 2024. Late registration can draw a penalty up to the application fee. Covered sites also have a separate construction-wage notice due at least three months before commencement; labor-agreement exclusions must be reviewed and reported.

The tiers, the affordability options and the wage rules are explained in what 485-x is.

For related zoning background, our guides to City of Yes and the Universal Affordability Preference cover the floor area side, and the 467-m exemption for an office to residential conversion in NYC has its own guide.

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