ICAP Application

The Industrial and Commercial Abatement Program (ICAP) abates New York City property taxes for up to 25 years on eligible industrial and commercial buildings that are built, modernized, expanded, or otherwise physically improved. The application sequence is unforgiving: the preliminary application must be submitted before the first building permit is issued, and the benefit must then be renewed for its entire life. MGNY Consulting handles ICAP from eligibility review through application, completion, and every renewal after it.

Not sure the project qualifies? Our free NYC ICAP eligibility check screens it in about a minute, new construction or renovation, and names the minimum spend it has to meet.

What is ICAP?

ICAP is the Department of Finance abatement that replaced the Industrial and Commercial Incentive Program (ICIP) in 2008. ICIP granted exemptions; ICAP instead abates a portion of the property tax attributable to eligible construction work, on a schedule that can run 15 to 25 years depending on project type and location. Existing ICIP benefits granted before 2008 continue under their own rules and their own annual renewal obligation. The abatement base is determined by subtracting 115% of the pre-construction tax from the post-completion tax on the building. The post-completion tax on the land is not abated.

Which projects are eligible?

Eligibility turns on three tests, and all three must be met.

• Location. New commercial construction qualifies anywhere in the city except Manhattan south of 96th Street (and north of Murray, Frankfort and Dover Streets). Commercial renovation projects qualify anywhere except Manhattan between 59th and 96th Streets. Additional benefits apply in designated areas, including the Garment District and parts of Lower Manhattan.
• Minimum required expenditure. The project must spend at least 30 percent of the property’s taxable assessed value within four years of the building permit date (or the start of construction where no permit is required). Industrial projects that spend 40 percent can qualify for additional benefits.
• Timely completion. The project must be completed within five years of the first permit to receive ICAP inflation protection benefits.

For a detailed walk-through of eligible property types, see our guide: Which properties are eligible to receive ICAP tax benefits?

Limitations to check before you build

Three categories trim or reshape the benefit. Retail space can place the property on a different abatement schedule depending on the percentage of the building used for retail. Residential space is capped: no more than 20 percent of total rentable square footage may be residential, and apportionment is required where residential use exists. A project that is primarily residential belongs in 485-x instead. Utility property is generally excluded, with an exception for electricity-generating peaking units. These limits are where projects most often lose benefit value, and they are best analyzed before the design is final.

The application sequence and its deadlines

The order of operations is fixed by DOF:

• Preliminary application, before any building permit is issued. A permit pulled first forfeits the benefit. Preliminary applications are accepted until March 1, 2029, and no benefits are granted where the first construction permit issues after April 1, 2029. Chapter 332 of the Laws of 2024 set those dates, and the FY2026 state budget signed May 9, 2025 left them in place while narrowing the program: licensed parking facilities and consumer storage warehouses are now excluded, and Governors Island becomes a special commercial abatement area on January 1, 2026.
• Final application, after the steps described in the preliminary application are completed.
• Notice of completion when construction finishes.

DOF filing fees are $150 for the preliminary application, $500 for the final application, and $1,000 for the notice of completion.

Larger projects carry an additional obligation: where project cost reaches a certain threshold, ICAP brings requirements to promote contracting opportunities among minority- and women-owned business enterprises (M/WBE). If a project also contains areas that are not eligible for ICAP, the availability of other exemption and abatement programs should be considered alongside it.

Keeping the abatement: the Certificate of Continuing Use

An ICAP benefit is not self-sustaining. DOF requires a Certificate of Continuing Use every two years for the life of the abatement, filed through the SmartFile portal. DOF has accepted late renewal filings until March 1, but an unfiled renewal jeopardizes the abatement for succeeding tax years, and the Department of Finance can suspend the benefit pending the filing. MGNY tracks each client’s renewal cycle so the abatement earned at construction is still there in year 20.

How does MGNY handle ICAP?

MGNY Consulting reviews eligibility before permits are pulled, prepares the preliminary and final applications and the notice of completion, and maintains the renewal calendar afterward. If a project also involves other DOF programs, such as 421-a or tax projections for underwriting, the filings are coordinated under one plan. Call (212) 343-1111 to review a project’s eligibility.

Frequently asked questions about ICAP

What is the ICAP tax abatement in NYC?

ICAP is a Department of Finance program that abates property tax on eligible industrial and commercial construction, renovation and expansion projects for up to 25 years. It replaced ICIP in 2008.

How long does an ICAP abatement last?

Up to 25 years, depending on project type and location, under DOF’s benefit schedule. Renovation projects and projects in different areas of the city carry different terms.

When must the ICAP preliminary application be filed?

Before the first building permit is issued. Filing after the permit forfeits eligibility. If no permit is required, the application must precede the start of construction.

Is ICAP still available for new projects?

Yes. Preliminary applications are accepted until March 1, 2029, and no benefits are granted where the first construction permit issues after April 1, 2029. Chapter 332 of the Laws of 2024 set those dates, and the FY2026 state budget signed May 9, 2025 left them in place while narrowing the program: licensed parking facilities and consumer storage warehouses are now excluded, and Governors Island becomes a special commercial abatement area on January 1, 2026.

What is the ICAP certificate of continuing use?

The biennial renewal filing that keeps an ICAP abatement in force. It is filed through DOF’s SmartFile portal every two years for the life of the benefit. Failure to file jeopardizes the abatement for succeeding tax years, and DOF can suspend the benefit pending the filing.

The difference between an abatement and an exemption, and where ICAP sits among the city’s programs, is covered in NYC tax abatements explained.

For the eligibility tests, the filing deadlines and the benefit schedule that runs up to 25 years, in plain terms, read our guide, What Is ICAP?

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