The Return & Demise of the 20-Year Tax Abatement in Manhattan's Market

Updated December 2025

Key Takeaway: The 421-a tax abatement program expired in June 2022, meaning no new Manhattan condos can receive these benefits. However, buildings that secured exemptions before the deadline—including One Manhattan Square, Waterline Square, Hudson Yards, One West End Avenue, One Riverside Park, 242 Broome, The Kent, and Brooklyn Point—continue to offer buyers significant tax savings through the 2030s and beyond.

What Is a Tax Abatement in NYC Real Estate?

A tax abatement is a property tax exemption or reduction that lowers your annual carrying costs for a set period, typically 10 to 35 years. In New York City, the 421-a program offered developers tax breaks in exchange for building affordable housing—and those savings were passed along to condo buyers.

Example: A $2.7 million two-bedroom at The Kent on the Upper East Side could generate approximately $300,000 in tax savings over 12 years during the full exemption period—not including additional savings during the 8-year phase-out.

For investors focused on maximizing yield, these reduced carrying costs directly improve net operating income and overall profitability.

How Does the 421-a Tax Abatement Work?

The 421-a tax abatement reduces property taxes on qualifying new construction in New York City. Here's how the most common structures work:

Important: When you purchase a resale unit in a 421-a building, you inherit the remaining abatement period tied to the building's certificate of occupancy—not a fresh 20 or 25 years.

Why Did the 421-a Program End?

The 421-a tax abatement program expired on June 15, 2022. New York State legislators allowed it to lapse due to:

• Political pressure from housing advocates who viewed it as a subsidy for luxury developers
• Affordability concerns that the program wasn't creating enough low-income housing
• Wage disputes between developers and construction unions over minimum pay requirements

The program was replaced by 485-x (Affordable Neighborhoods for New Yorkers) in April 2024, which focuses primarily on rental housing and largely excludes Manhattan condominiums.

What Is the 485-x Tax Abatement Program?

The 485-x program, enacted in April 2024, is New York's replacement for 421-a. Key differences include:

• Rental focus: Primarily benefits rental developments, not condos
• Permanent affordability: Affordable units must remain affordable forever (unlike 421-a)
• Higher wage requirements: Projects with 100+ units must pay construction workers $40+/hour
• Extended exemptions: Up to 40 years for qualifying rental projects
• Condo exclusion: Homeownership projects only qualify outside Manhattan with assessed values under $89/sq ft

Bottom line: Manhattan condo buyers cannot benefit from 485-x. The pipeline of new condos with significant tax abatements has effectively ended.

Which Buildings Still Have 421-a Tax Abatements?

Several luxury developments in Manhattan and Brooklyn secured 421-a exemptions before the program expired. These buildings continue to offer substantial tax savings for resale buyers:

One Manhattan Square

This 80-story glass tower on the Lower East Side waterfront features over 100,000 square feet of amenities including a 75-foot swimming pool, basketball court, bowling alley, Turkish baths, golf simulator, and private theater. Meyer Davis designed interiors with floor-to-ceiling windows and panoramic East River views.

Waterline Square (Upper West Side)

Three starchitect-designed towers with 263 condo units sharing 90,000+ square feet of amenities and a 3-acre private park.

15 Hudson Yards

The first residential building at Hudson Yards, this 70-story tower connects directly to the retail complex anchored by Neiman Marcus.

35 Hudson Yards

Includes the Equinox Hotel, 60,000-square-foot fitness facility, and 137 private residences with interiors by Yabu Pushelberg.

The Kent (Upper East Side)

Art Deco-inspired 30-story building with 83 residences, one avenue from the 96th Street Second Avenue subway. Designed by Beyer Blinder Belle with interiors by Champalimaud, the building is located near elite private schools including Dalton, Sacred Heart, and Chapin.

One West End Avenue

This 42-story luxury tower at the corner of West 59th Street offers panoramic Hudson River views and direct access to Riverside Park South. Designed by Pelli Clarke Pelli Architects with interiors by Jeffrey Beers International, the building features a private motor court, 75-foot indoor swimming pool, and over 20,000 square feet of amenities.

One Riverside Park (50 Riverside Boulevard)

Another Extell development along Riverside Boulevard, One Riverside Park features 219 residences with interiors by Shamir Shah Design. The building offers over 50,000 square feet of amenities including LA PALESTRA, a 40,000-square-foot athletic club and spa with a 75-foot swimming pool, rock-climbing wall, basketball and squash courts, and golf simulator.

242 Broome (Essex Crossing)

The first condominium at Essex Crossing, this 14-story building designed by SHoP Architects features 55 residences with interiors by DXA Studio. Kitchens include Calacatta marble countertops, custom walnut cabinetry, and Gaggenau appliances. Residents enjoy direct access to Essex Crossing's 300,000 square feet of retail, the revitalized Essex Street Market, and the Market Line food hall.

Brooklyn Point (Downtown Brooklyn)

Brooklyn's tallest tower at 720 feet, Brooklyn Point offers one of the last 25-year tax abatements available in New York City. Designed by Kohn Pedersen Fox with interiors by Katherine Newman, the 68-story building features 458 residences and over 40,000 square feet of amenities, including the highest residential rooftop infinity pool in the Western Hemisphere. Located atop City Point, residents have direct access to Dekalb Market Hall, Target, and Alamo Drafthouse Cinema. Multiple subway lines (2, 3, B, Q, R, A, C, G) are steps away.

How Much Can You Save with a 421-a Tax Abatement?

Tax abatement savings vary based on property value and building assessment, but the difference is substantial:

During the phase-out period, taxes increase incrementally:

• Years 13–14: 20% of full taxes
• Years 15–16: 40% of full taxes
• Years 17–18: 60% of full taxes
• Years 19–20: 80% of full taxes

What Should Buyers Know Before Purchasing a 421-a Condo?

1. Calculate Remaining Abatement Years

Abatements are tied to the building's certificate of occupancy date, not your purchase date. A building completed in 2019 has approximately 14 years remaining in 2025—with some of those years in the phase-out period.

2. Plan for the "Tax Cliff"

When the abatement expires, your property taxes will jump to full market rates—potentially increasing $20,000–$50,000+ annually. Smart buyers:

• Factor full taxes into long-term affordability analysis
• Set aside savings during low-tax years
• Consider abatement expiration when planning a future sale

3. Understand the Resale Premium

Studies by the NYC Independent Budget Office found Manhattan condo buyers pay approximately 0.43% of the sales price for each additional year of 421-a benefits remaining. This means:

• Units with more years remaining command higher prices
• The premium diminishes annually as benefits decrease
• Buyers should calculate whether the premium justifies the remaining savings

4. Verify the Building's Specific Terms

Not all 421-a exemptions are identical. Before purchasing, verify:

• Exact expiration date of the building's exemption
• Whether you're in full exemption or phase-out period
• Current year's actual tax bill (offering plans can be misleading)

What Other Tax Abatement Programs Exist for NYC Condo Owners?

Cooperative and Condominium Property Tax Abatement

This annual program provides tax reductions of 17.5% to 28.1% for eligible condo and co-op owners based on assessed value. Requirements include:

• Unit must be your primary residence
• Cannot own more than three units in the same development
• Unit cannot be owned by an LLC or business entity
• Building cannot already receive 421-a, 421-g, or J-51 benefits
• Building must pay prevailing wages to staff

Note: Buildings with 421-a abatements are not eligible. Once 421-a expires, owners may apply for this program.

J-51 Tax Abatement

The J-51 program provides tax benefits for buildings undergoing renovation. Recently revived for buildings with average assessed values at or below $45,000 per unit (approximately $450,000 market value). Primarily used for rental buildings but available to co-ops and condos for capital improvements.

Frequently Asked Questions About NYC Tax Abatements

What is the 421-a tax abatement?

The 421-a tax abatement was a New York City property tax exemption program that reduced taxes on new residential construction for 10 to 35 years. The program expired on June 15, 2022, but buildings that qualified before the deadline continue to receive benefits.

Can I still buy a condo with a 421-a tax abatement in Manhattan?

Yes, but only as a resale purchase in buildings that secured the exemption before June 2022. No new Manhattan condo developments can qualify for 421-a benefits. Buildings like One Manhattan Square, Waterline Square, Hudson Yards, One West End Avenue, One Riverside Park, 242 Broome, The Kent, and Brooklyn Point still offer remaining abatement years to buyers.

How long do 421-a tax abatements last?

Most Manhattan condo 421-a abatements last 20 years: 12 years of full (100%) exemption followed by an 8-year phase-out where taxes increase 20% every two years. Some buildings received 25-year abatements with 21 years at full exemption.

What replaced the 421-a program?

The 485-x program (Affordable Neighborhoods for New Yorkers), enacted in April 2024, replaced 421-a. However, 485-x primarily benefits rental developments and largely excludes Manhattan condominiums.

Do I get a full 20-year abatement when I buy a resale condo?

No. You inherit the remaining years tied to the building's original certificate of occupancy date. If the building's abatement started in 2019 and you purchase in 2025, approximately 14 years of benefits remain.

What happens when the tax abatement expires?

Your property taxes increase to full market rates. For a typical luxury Manhattan condo, this can mean an annual increase of $20,000–$50,000 or more. Plan ahead by factoring full taxes into your long-term budget.

Can I get both a 421-a abatement and the Co-op/Condo Tax Abatement?

No. Buildings receiving 421-a benefits are not eligible for the NYC Cooperative and Condominium Property Tax Abatement. However, once the 421-a expires, owners may apply for the co-op/condo abatement if they meet eligibility requirements.

How do I check if a building has a 421-a tax abatement?

Visit the NYC Department of Finance 421-a Exemption Lookup and search by address or borough-block-lot number. The database shows all properties currently receiving 421-a benefits.

The Future of Tax Abatements in Manhattan Real Estate

The expiration of 421-a represents a fundamental shift in NYC housing policy:

For new development: Without meaningful tax incentives for condo construction, expect fewer new condo buildings in Manhattan. Developers may pivot to rentals (which qualify for 485-x), all-affordable projects, or reduce development activity.

For existing 421-a buildings: These represent a shrinking pool of opportunity. As years pass, remaining benefits decrease, and eventually no Manhattan condos will carry 421-a exemptions.

For buyers: If tax benefits matter to your purchase decision, the window is narrowing. Buildings that secured 421-a before 2022 offer genuine value—but that value diminishes annually.

Contact a Manhattan Real Estate Expert

Understanding tax abatements is essential for making informed investment decisions in New York City real estate. Whether you're interested in One Manhattan Square, Waterline Square, Hudson Yards, One West End Avenue, One Riverside Park, 242 Broome, The Kent, Brooklyn Point, or other buildings with remaining 421-a benefits, working with an experienced broker can help you calculate the true value of these tax savings.

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Contact us for personalized guidance on Manhattan condos with tax abatements.

Recursos relacionados

• NYC Department of Finance: 421-a Exemption
• NYC HPD: Tax Incentive Programs
• Cooperative and Condominium Tax Abatement
• Manhattan Condo Market Analysis
• Comprar un Apartamento en Nueva York

This article is for informational purposes only and does not constitute tax, legal, or financial advice. Consult with qualified professionals regarding your specific situation. Information current as of December 2025.