Calculation of Abatement.
19 RCNY § 36-10
in effect§ 36-10 Calculation of Abatement.
a. Abatement amount. The abatement amount is equal to the product of the abatement base times the percentage for the applicable year indicated in the applicable schedule set forth in 19 RCNY § 36-12.
b. Abatement base. The abatement base is the amount that the post completion tax liability exceeds 115% of the initial tax liability for each type of abatement except for the additional industrial abatement as defined in 19 RCNY § 36-11.
c. The calculation of initial and post completion tax liability is based on the lower of the actual or transitional assessed value of the building.
d. The initial tax liability is the liability for the building or structure on the tax roll with a taxable status date preceding the first building permit or commencement of construction if no permit is required.
e. Calculation of initial tax liability. The product of the taxable assessed value ("AV") for the building or structure (without regard to any tax exemption that may be applicable to the property) for the assessment roll with a taxable status date preceding the first building permit or commencement of construction if no permit is required is multiplied by the initial tax rate. The initial tax rate is the final tax rate applicable to the assessment roll with a taxable status date immediately preceding the issuance of the first building permit. If no building permit was required, the initial tax rate shall be determined based on the assessment roll with a status date immediately preceding the commencement of construction.
f. If the initial tax or the post-completion tax attributable to a mixed-use property must be apportioned to determine the tax attributable to a particular use for any purpose under these rules, the tax will be apportioned using the same method used by the department to value property for tax and assessment. This includes, but is not limited to, determining the abatement base or the minimum required expenditure, or if the tax must be apportioned among newly apportioned tax lots, Methods that may be considered, individually or in combination include:
(1) the land area of each portion;
(2) the square footage of the building or structure used or dedicated to each purpose;
(3) the market value of the building situated on each portion;
(4) the location of each portion on the lot;
(5) the topography of the lot;
(6) zoning and other land use restrictions applicable to the lot or portion thereof;
(7) analyses of income factors relating to each portion;
(8) analyses of cost factors; and
(9) other relevant factors.
If any tax lot included in a project that is the subject of a pending or approved final application for ICAP benefits is subdivided, the applicant must file an amendment to the final application designating the tax lots that constitute the property that is the subject of the application. The Department shall allocate the initial and, if applicable, the post construction assessed values based on the allocation of the historical assessments made pursuant to Subdivision 5 of Section 1805 of the real property tax law.
g. At no time during the abatement benefit period may the abatement reduce the amount of taxes imposed on the land portion of the assessment, nor may it reduce the initial tax liability imposed on the building or structure, except for the additional industrial abatement as described in 19 RCNY § 36-11.
Example: Commercial construction work outside of a special commercial abatement area. Preliminary application filed 7/1/2008; first building permit issued 8/1/2008. Project consists of commercial construction work to renovate and modernize the building.
In this case, the initial tax liability is based on the FY2008/09 tax liability (assessment roll with a taxable status date preceding the first building permit)
Section 1805 of the real property tax law requires that certain changes to assessed valuation ("AV") be phased in over a number of years rather than one year. This is transitional AV.
Actual AV Transitional AV
Total AV $1,100,000 $900,000
Land AV $400,000 $300,000
Building AV $700,000* $600,000*
Initial Tax Liability $60,000** $600,000 x 0.10
* The initial tax liability will be based on the lower of the building actual AV or building transitional AV.
** FY 2008/09 Tax Rate Assume an initial tax rate of 10% for 2008/09 for illustrative purposes
h. The post-completion tax liability is the tax liability for the building or structure on the tax roll with a taxable status date immediately following the earlier of completion of construction, or four years from the date of issuance of the first building permit or commencement of construction, if no building permit was required, multiplied by the initial tax rate.
Example: In this case, the construction was completed by November 2011; therefore, the post completion tax is based on the 2012/13 AV roll (taxable status date January 5, 2012). The AV for the building on that assessment roll was:
Actual AV Transitional AV
Building AV $1,100,000 $1,000,000
FY 2008/09 Tax Rate of 10% .10 .10
Post Completion Tax $110,000* $100,000*
* Post completion tax is based on the lower of the actual AV or transitional AV.
The abatement base is equal to the post-completion tax liability less 115% of the initial tax liability.
Post Completion Tax Liability $100,000
Initial Tax Liability $60,000
115% of Initial Tax Liability $69,000
Abatement Base $31,000
i. Abatement benefits will not in any year exceed the property taxes imposed on such property.
j. If a tax lot has multiple structures with both eligible and non-eligible uses, the initial tax will be apportioned and only the eligible portion will receive the abatement.
k. (1) The availability of ICAP benefits for retail use is limited in the following cases:
(i) No more than 10 percent of gross square footage in industrial and commercial buildings in special commercial abatement areas used for retail purposes is eligible to receive a 25 year abatement benefit. If more than 10 percent of the property is used for retail purposes, the portion exceeding the 10 percent retail use will be eligible for a 15 year abatement benefit.
(ii) For renovation areas in Manhattan, any retail use in excess of 5 percent of the building(s) gross square footage will be ineligible for ICAP benefits, except in the Lower Manhattan renovation area, as set forth in 19 RCNY § 36-02(c)(1), where there will be no limit on portion of gross square footage dedicated to retail use.
(2) The determination of the percent of gross square footage used for retail purposes shall be based on the gross square footage of the entire building in all cases, including those where the ICAP application relates to one or more condominium units in the building.
(3) In a building in which at least 10% of the gross square footage is dedicated exclusively to industrial or commercial purposes other than retail purposes, the gross square footage of retail space shall not include space used for common building mechanical equipment, maintenance or circulation.
l. Inflation Protection.
(1) Inflation protection for industrial construction projects. Inflation protection is available during years 2 through 13 of the abatement period if in such year there is an increase in the tax over the immediately preceding year resulting from an increase in the property's total taxable assessed value. The new increase in tax liability, based upon the increase in taxable assessed value, will be added to the abatement base using the initial tax rate.
For industrial construction projects the inflation protection is the full amount of the increase in taxes based upon the initial tax rate, unless there is a physical change from the immediately preceding year and the increase in taxable assessed value due to such physical change is more than 5 percent of the taxable assessed value for the immediately preceding year. Under such circumstances, none of the increase in tax liability, whether the increase in taxable assessed value is solely the result of a physical change or a combination of physical change and non-physical change, may be added to the abatement base. For industrial projects the percentage of retail use does not have any impact on eligibility for inflation protection.
(2) Inflation protection for commercial projects in special commercial abatement areas. Inflation protection is available during years 2 through 13 of the abatement period if in any such year there is an increase in taxable assessed value of more than 5 percent of the initial tax rate. The increase in tax liability based upon the increase in taxable assessed value that is more than 5 percent calculated using the initial tax rate will be added to the abatement base.
However, no inflation protection will be provided for commercial projects in special commercial abatement areas where there is a physical change from the immediately preceding year and the increase in taxable assessed value due to such physical change is more than 5 percent of the taxable assessed value for the immediately preceding year. Under such circumstances, none of the increase in tax liability, whether the increase in taxable assessed value is solely the result of a physical improvement or a combination of physical improvement and equalization, may be added to the abatement base. For commercial projects in special commercial areas the percentage of retail use does not have any impact on eligibility for inflation protection. If the building is currently receiving inflation protection for one ICAP project and any additional ICAP projects are approved that qualify for inflation protection, the inflation protection for the current ICAP project will be terminated and inflation protection benefits for the most recently approved ICAP project will commence upon such termination.
Hotels located in special commercial abatement areas are eligible for the inflation protection set forth in this paragraph.
Examples: In the examples below, inflation protection is provided on the calculation of total abatement base for commercial construction projects in a special commercial abatement area when the retail portion of the square footage of the project is not more than 10% (Example 1), as well as when the retail portion is more than 10% of the square footage of the project (Example 2).
Example 1: Commercial construction in special commercial abatement area – retail not more than 10% of square footage (equalization increases in taxable assessed value).
Percent Increase in Taxable Assessed Value Benefit Period Post Completion Tax Liability Initial Tax Rate Addition to Abatement Base Due to Inflation Protection Total Abatement Base Yearly Abatement Percentage
YR 1 100,000 10% 31,000 100%
3% YR 2 103,000 10% 31,000 100%
6% YR 3 109,180 10% 1,030 32,030 100%
6% YR 4 115,731 10% 1,092 33,122 100%
4% YR 5 120,360 10% 33,122 100%
3% YR 6 123,971 10% 33,122 100%
2% YR 7 126,450 10% 33,122 100%
6% YR 8 134,037 10% 1,265 34,387 100%
3% YR 9 138,058 10% 34,387 100%
1% YR 10 139,439 10% 34,387 100%
1% YR 11 140,833 10% 34,387 100%
2% YR 12 143,650 10% 34,387 100%
3% YR 13 147,960 10% 34,387 100%
4% YR 14 153,878 10% 34,387 100%
2% YR 15 156,956 10% 34,387 100%
4% YR 16 163,234 10% 34,387 100%
3% YR 17 168,131 10% 34,387 90%
2% YR 18 171,494 10% 34,387 80%
4% YR 19 178,354 10% 34,387 70%
5% YR 20 187,272 10% 34,387 60%
6% YR 21 198,508 10% 34,387 50%
3% YR 22 204,463 10% 34,387 40%
2% YR 23 208,552 10% 34,387 30%
1% YR 24 210,638 10% 34,387 20%
2% YR 25 214,851 10% 34,387 10%
Example 2: Commercial construction in special commercial abatement area – retail more than 10% of square footage (equalization increases in taxable assessed value). The retail space is 25% of square footage.
Percent Increase in Taxable Assessed Value Benefit Period Post Completion Tax Liability Initial Tax Rate Addition to Abatement Base Due to Inflation Protection Total Abatement Base Abatement Base for Commercial Plus 10% Retail Yearly Abatement Percentage Abatement Base for Retail over 10% Yearly Abatement Percentage
YR 1 100,00 0 10% 31,000 26,350 100% 4,650 100%
3% YR 2 103,00 0 10% 31,000 26,350 100% 4,650 100%
6% YR 3 109,18 0 10% 1,030 32,030 27,226 100% 4,804 100%
6% YR 4 115,73 1 10% 1,092 33,122 28,154 100% 4,968 100%
4% YR 5 120,36 0 10% 33,122 28,154 100% 4,968 100%
3% YR 6 123,97 1 10% 33,122 28,154 100% 4,968 100%
2% YR 7 126,45 0 10% 33,122 28,154 100% 4,968 100%
6% YR 8 134,03 7 10% 1,265 34,387 29,229 100% 5,158 100%
3% YR 9 138,05 8 10% 34,387 29,229 100% 5,158 100%
1% YR 10 139,43 9 10% 34,387 29,229 100% 5,158 100%
1% YR 11 140,83 3 10% 34,387 29,229 100% 5,158 100%
2% YR 12 143,65 0 10% 34,387 29,229 80% 5,158 80%
3% YR 13 147,96 0 10% 34,387 29,229 60% 5,158 60%
4% YR 14 153,87 8 10% 34,387 29,229 40% 5,158 40%
2% YR 15 156,95 6 10% 34,387 29,229 20% 5,158 20%
(3) Industrial construction work on a peaking unit will have the same inflation protection as other industrial construction projects.
(4) A property receiving abatement benefits for both industrial and commercial construction is eligible for the inflation protection provided under this section based upon the predominant use of the property as determined by the department.
(5) Time limit for completion of construction. Construction of buildings or structures must be completed no later than five years from the date of issuance of the first building permit, or if no permit was required, the commencement of construction. Failure to meet this requirement will result in the termination of any inflation protection provided under this subdivision for any tax year that begins following the date by which completion of construction is required.
(Added City Record 2/10/2017, eff. 3/12/2017)
Source: City of New York, Charter, Administrative Code and Rules (American Legal Publishing XML export, codelibrary.amlegal.com)URL: https://codelibrary.amlegal.com/codes/newyorkcity/latest/NYCrules/0-0-0-96879Fetched: 10/24/2026