What Is 421-a? The NYC Tax Exemption, What Happened to It, and What Owners Still File
421-a expired June 15, 2022 and 485-x replaced it. The exemption itself, the 2031 deadline for vested projects, and what owners still file.
Updated September 2026. 421-a stopped accepting new projects on June 15, 2022, and 485-x replaced it. Vested projects were given until June 15, 2031 to finish, but only where the owner filed a Letter of Intent with HPD by September 12, 2024 and chose affordability option A, B, D, E or F. Everyone else kept the original June 15, 2026 date, which has now passed.
421-a is the most consequential property tax program in recent New York City history and the most misremembered. The law calls it an exemption, everyone else calls it an abatement, and although it closed to new construction in 2022, the buildings on DOF’s 2026/2027 exempt-property files remain inside a benefit period.
What is the 421-a tax exemption?
In the Department of Housing Preservation and Development’s words, “the 421-a Tax Incentive is a partial tax exemption for new multiple dwellings.” It sits in Section 421-a of the New York State Real Property Tax Law, titled Affordable New York Housing Program. A developer builds new units, and for a fixed term the city taxes the property as though much of the added value were not there.
Two agencies split the work, and owners routinely write to the wrong one. HPD decides eligibility and issues the Certificate of Eligibility; the Department of Finance puts the benefit on the roll. DOF states the order: apply to HPD first, then “submit the Department of Finance’s 421a application along with the Certificate of Eligibility you received from HPD.”
The phrase “421-a tax abatement” is worth correcting: the two sit in different places on a tax bill. As DOF and HPD describe it, an exemption keeps value off the taxable assessment before the rate applies; an abatement is a credit against the tax after it is calculated, the way the co-op and condo benefit in our tax abatements guide works.
What affordable housing did 421-a require?
That depends on the version. 421-a (1-15) covered projects commencing on or before December 31, 2015, requiring affordable units mainly inside the Geographic Exclusion Area. The 2017 rewrite, 421-a (16), made affordability the price of entry for every rental project, as lettered options.
Option A: 25% of units affordable, with at least 10% at up to 40% of AMI, 10% at up to 60% of AMI and 5% at up to 130% of AMI. Option B: 30% affordable, at least 10% at up to 70% of AMI and 20% at up to 130% of AMI. Option C: at least 30% affordable at up to 130% of AMI. Homeownership projects took a different test: an average assessed value not exceeding $65,000 per unit.
None of it ends at completion. HPD sets the compliance period at 35 years, or 40 on the enhanced benefit, and the application carried a $3,000 per unit fee. Our 421-a (16) application page covers that filing.
When did 421-a expire, and what happened to projects already under way?
421-a (16) was open only to projects commencing between January 1, 2016 and June 15, 2022, and nothing has vested since. New York State’s housing agency calls it “the now-expired 421-a incentive program” in its April 22, 2024 budget announcement.
The original completion deadline was June 15, 2026, and many vested projects were going to miss it. The budget enacted April 20, 2024 moved it. HPD’s notice reads: “the 421-a(16) completion deadline of June 15, 2026 was extended to June 15, 2031 for projects that submit a Letter of Intent no later than September 12, 2024 and that select Affordability Options A, B, D, E, or F.”
Two limits still decide cases. Options C and G were excluded, and a project that did not file by September 12, 2024 kept June 15, 2026, now behind us. Our post on the firm’s page on the old 421-a program records the program at its previous expiration.
485-x vs 421-a: what is the successor program?
Real Property Tax Law Section 485-x, the Affordable Neighborhoods for New Yorkers program, was adopted on April 20, 2024, the same day as the extension. Its benefits run to projects that “commence construction after June 15, 2022, and on or before June 15, 2034, and that complete on or before June 15, 2038,” so it begins where 421-a stopped.
The structural difference matters: 421-a set benefit length largely by affordability option, 485-x by project size. Rentals of 100 or more units get 35 years at 25% affordable, averaging 80% of AMI; 150 or more units in Zones A and B get 40 years at 25% affordable, averaging 60% of AMI; 6 to 99 units get 35 years at 20% affordable; 6 to 10 units get 10 years; and homeownership projects get 20 years, with assessed valuation capped at $89 per square foot. One deadline catches new projects early: the registration notice is due within six months of a commencement date on or after April 20, 2024. Our 485-x explainer covers the zones and wage rules.
What does an owner with a 421-a benefit still have to do?
Rent regulation is the obligation owners underestimate. Under 421-a (1-15), “all market rate rental units become subject to rent stabilization for the duration of the benefits, with initial rents approved by HPD,” and affordable units are stabilized for 35 years. Under 421-a (16), income-restricted units stay affordable and stabilized for 35 years from completion, or 40 years in buildings of 300 or more apartments in the Enhanced Affordability Areas. Stabilized units are registered annually with New York State Homes and Community Renewal, and every lease must carry a rider that “indicates the approximate date when the 421-a benefits will expire.”
Certificates are the second live obligation. HPD issued a preliminary certificate at the start and a Final Certificate of Eligibility after completion, and DOF publishes lists of “Properties with 421-a Benefits Required to File FCES” because buildings have run for years on a preliminary certificate alone. HPD’s Division of Compliance and Enforcement handles that at 212-863-7676, and our 421-a (1-15) compliance page covers final certificates, suspensions and revocations.
One rent rule tracks the phase-out. A building in its phase-out years “may be allowed to add an annual 2.2% surcharge to the rent for some units,” but it is not collectible from any rental unit in a 421-a (16) building.
How does a 421-a benefit phase out?
The Department of Finance recognizes eleven types of 421a exemption benefit, each with a published schedule; the capped and uncapped 10-year and 15-year variants share a schedule, so the table below merges each pair. Most end the same way, full exemption, a step-down, then full taxes, though the two extensions never reach a full exemption and the uncapped 35-year benefit never steps down. These are the post-construction schedules, after up to three years of construction exemption.
| Benefit | Full exemption | Phase-out | Fully taxable |
|---|---|---|---|
| 421-a (1-15), 10-year | Years 1 to 2 | 80/60/40/20%, two years each | Year 11 |
| 421-a (1-15), 15-year | Years 1 to 11 | 80/60/40/20% in years 12 to 15 | Year 16 |
| 421-a (1-15), 20-year | Years 1 to 12 | 80/60/40/20%, two years each | Year 21 |
| 421-a (1-15), 25-year | Years 1 to 21 | 80/60/40/20% in years 22 to 25 | Year 26 |
| 421-a (16), 35-year | Years 1 to 35 | None | Year 36 |
| 421-a (16), 35-year capped | Years 1 to 25 | Years 26 to 35 at the percentage of affordable units | Year 36 |
| 421-a (16), 20-year homeownership | Years 1 to 14 | 25% in years 15 to 20 | Year 21 |
| 421-a (17), 10-year extension | None | 50% in years 1 to 10 | Year 11 |
| 421-a (17), 15-year extension | None | 50% in years 1 to 15 | Year 16 |
The capped 35-year row surprises people: in years 26 through 35 the exemption equals the share of units that are affordable, so a building at the 25% minimum falls from a full exemption to a quarter of one in a single year.
How do I check whether a building has 421-a?
Three checks, in order of speed. The Department of Finance’s Property Benefit Lookup shows whether a property is currently receiving the exemption; HPD tells tenants to start there. DOF also publishes the exempt properties by borough, block and lot for each tax year, currently the 2026/2027 file, and a separate list of every property that has received the exemption from tax year 2013-14 through June 30, 2026. And the Certificate of Eligibility at DOF states the commencement date, which fixes the version of the law that applies.
A fourth document cross-checks the rest: the lease rider naming the approximate date the benefits and stabilized status expire. If the rider, the certificate and the tax bill disagree, one is wrong, and the next few tax bills depend on which.
What does it cost to ask MGNY?
Nothing. A real person answers at (212) 343-1111, right away, and the consultation is free. You engage us only if you want the filing handled for you. MGNY has worked NYC property tax since 2008, across 900+ tax abatement developments, with $23.6M in tax refunds secured for owners.
Buying or refinancing a 421-a building? Know what the exemption is worth each remaining year.
Call (212) 343-1111 or see the 421-a filings and compliance page.
Sources, all read September 2026: NYC HPD, 421-a Tax Incentive, 485-x and the 421-a and Rent Stabilization Tenant Fact Sheet; NYC Department of Finance, 421a partial tax exemption and its benefit schedule; NYS Real Property Tax Law Section 421-a, June 5, 2026 revision; NYS Homes and Community Renewal, April 22, 2024 budget announcement. MGNY Consulting is a private consulting firm and is not affiliated with the NYC Department of Finance or the NYC Department of Housing Preservation and Development.
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