N.Y. Real Property Tax Law § 421-f: Exemption of capital improvements to residential buildings and certain new construction

§ 421-f. * Exemption of capital improvements to residential buildings

and certain new construction.

* NB Effective until January 1, 2026

* Exemption of capital improvements to residential buildings.

* NB Effective January 1, 2026

1. Residential buildings reconstructed, altered or improved subsequent

to the effective date of a local law or resolution pursuant to this

section shall be exempt from taxation and special ad valorem levies to

the extent provided hereinafter. After a public hearing, the governing

board of a county, city, town or village may adopt a local law and a

school district, other than a school district subject to article

fifty-two of the education law, may adopt a resolution to grant the

exemption authorized pursuant to this section. A copy of such local law

or resolution shall be filed with the commissioner and the assessor of

such county, city, town or village who prepares the assessment roll on

which the taxes of such county, city, town, village or school district

are levied.

* 1-a. Buildings classified as class one property in section eighteen

hundred two of this chapter reconstructed, altered, improved, or newly

constructed in a special assessing unit that is not a city shall be

exempt from taxation and special ad valorem levies to the extent

provided hereinafter in the same manner and to the same extent to

county, town, special district and school district taxes levied on the

assessment roll prepared by such special assessing unit. Additional

buildings and yard improvements shall be excluded from receiving this

exemption. An application shall not be required to receive the

exemption.

* NB Repealed January 1, 2026

* 2. (a) Such buildings shall be exempt for a period of one year to

the extent of one hundred per centum of the increase in assessed value

thereof attributable to such reconstruction, alteration or improvement,

and new construction pursuant to subdivision one-a of this section, and

for an additional period of seven years subject to the following:

(i) The extent of such exemption shall be decreased by twelve and

one-half per centum of the "exemption base" each year during such

additional period. The "exemption base" shall be the increase in

assessed value as determined in the initial year of the term of the

exemption, except as provided in subparagraph (ii) of this paragraph.

(ii) In any year in which a change in level of assessment of fifteen

percent or more is certified for a final assessment roll pursuant to the

rules of the commissioner, the exemption base shall be multiplied by a

fraction, the numerator of which shall be the total assessed value of

the parcel on such final assessment roll (after accounting for any

physical or quantity changes to the parcel since the immediately

preceding assessment roll), and the denominator of which shall be the

total assessed value of the parcel on the immediately preceding final

assessment roll. The result shall be the new exemption base. The

exemption shall thereupon be recomputed to take into account the new

exemption base, notwithstanding the fact that the assessor receives

certification of the change in level of assessment after the completion,

verification and filing of the final assessment roll. In the event the

assessor does not have custody of the roll when such certification is

received, the assessor shall certify the recomputed exemption to the

local officers having custody and control of the roll, and such local

officers are hereby directed and authorized to enter the recomputed

exemption certified by the assessor on the roll. The assessor shall give

written notice of such recomputed exemption to the property owner, who

may, if he or she believes that the exemption was recomputed

incorrectly, apply for a correction in the manner provided by title

three of article five of this chapter for the correction of clerical

errors.

(iii) Except in a special assessing unit that is not a city, such

exemption shall be limited to eighty thousand dollars in increased

market value, or such other sum less than eighty thousand dollars, but

not less than five thousand dollars as may be provided by the local law

or resolution, of the property attributable to such reconstruction,

alteration or improvement and any increase in market value greater than

such amount shall not be eligible for the exemption pursuant to this

section. In a special assessing unit that is not a city, the exemption

shall be limited to seven hundred fifty thousand dollars in increased

market value. For the purposes of this section, the market value of the

reconstruction, alteration or improvement, or new construction as

authorized by subdivision one-a of this section, shall be equal to the

increased assessed value attributable to such reconstruction,

alteration, improvement or new construction divided by the class one

ratio in a special assessing unit or the most recently established state

equalization rate or special equalization rate in the remainder of the

state, except where the state equalization rate or special equalization

rate equals or exceeds ninety-five percent, in which case the increase

in assessed value attributable to such reconstruction, alteration,

improvement or new construction shall be deemed to equal the market

value of such reconstruction, alteration or improvement.

(b) Except in a special assessing unit that is not a city, no such

exemption shall be granted for reconstruction, alterations or

improvements unless:

(i) such reconstruction, alteration or improvement was commenced

subsequent to the effective date of the local law or resolution adopted

pursuant to subdivision one of this section; and

(ii) the value of such reconstruction, alteration or improvement

exceeds three thousand dollars; and

(iii) the greater portion, as so determined by square footage, of the

building reconstructed, altered or improved is at least five years old.

(c) For purposes of this section the terms reconstruction, alteration

and improvement shall not include ordinary maintenance and repairs.

* NB Effective until January 1, 2026

* 2. (a) Such buildings shall be exempt for a period of one year to

the extent of one hundred per centum of the increase in assessed value

thereof attributable to such reconstruction, alteration or improvement

and for an additional period of seven years subject to the following:

(i) The extent of such exemption shall be decreased by twelve and

one-half per centum of the "exemption base" each year during such

additional period. The "exemption base" shall be the increase in

assessed value as determined in the initial year of the term of the

exemption, except as provided in subparagraph (ii) of this paragraph.

(ii) In any year in which a change in level of assessment of fifteen

percent or more is certified for a final assessment roll pursuant to the

rules of the commissioner, the exemption base shall be multiplied by a

fraction, the numerator of which shall be the total assessed value of

the parcel on such final assessment roll (after accounting for any

physical or quantity changes to the parcel since the immediately

preceding assessment roll), and the denominator of which shall be the

total assessed value of the parcel on the immediately preceding final

assessment roll. The result shall be the new exemption base. The

exemption shall thereupon be recomputed to take into account the new

exemption base, notwithstanding the fact that the assessor receives

certification of the change in level of assessment after the completion,

verification and filing of the final assessment roll. In the event the

assessor does not have custody of the roll when such certification is

received, the assessor shall certify the recomputed exemption to the

local officers having custody and control of the roll, and such local

officers are hereby directed and authorized to enter the recomputed

exemption certified by the assessor on the roll. The assessor shall give

written notice of such recomputed exemption to the property owner, who

may, if he or she believes that the exemption was recomputed

incorrectly, apply for a correction in the manner provided by title

three of article five of this chapter for the correction of clerical

errors.

(iii) Such exemption shall be limited to eighty thousand dollars in

increased market value, or such other sum less than eighty thousand

dollars, but not less than five thousand dollars as may be provided by

the local law or resolution, of the property attributable to such

reconstruction, alteration or improvement and any increase in market

value greater than such amount shall not be eligible for the exemption

pursuant to this section. For the purposes of this section, the market

value of the reconstruction, alteration or improvement shall be equal to

the increased assessed value attributable to such reconstruction,

alteration or improvement divided by the class I ratio in a special

assessing unit or the most recently established state equalization rate

or special equalization rate in the remainder of the state, except where

the state equalization rate or special equalization rate equals or

exceeds ninety-five percent, in which case the increase in assessed

value attributable to such reconstruction, alteration or improvement

shall be deemed to equal the market value of such reconstruction,

alteration or improvement.

(b) No such exemption shall be granted for reconstruction, alterations

or improvements unless:

(i) such reconstruction, alteration or improvement was commenced

subsequent to the effective date of the local law or resolution adopted

pursuant to subdivision one of this section; and

(ii) the value of such reconstruction, alteration or improvement

exceeds three thousand dollars; and

(iii) the greater portion, as so determined by square footage, of the

building reconstructed, altered or improved is at least five years old.

(c) For purposes of this section the terms reconstruction, alteration

and improvement shall not include ordinary maintenance and repairs.

* NB Effective January 1, 2026

* 3. Except in a special assessing unit that is not a city, such

exemption shall be granted only upon application by the owner of such

building on a form prescribed by the commissioner. The application shall

be filed with the assessor of the city, town, village or county having

the power to assess property for taxation on or before the appropriate

taxable status date of such city, town, village or county. In a special

assessing unit that is not a city, the exemption shall be applied based

upon that completion of reconstruction, alteration, improvement or new

construction on or before the applicable taxable status date of the

special assessing unit; provided, however that the exemption for such

reconstruction, alteration, improvement or new construction that

occurred after the taxable status date of such special assessing unit

for the two thousand nineteen -- two thousand twenty assessment roll and

on or before the taxable status date of such special assessing unit for

the two thousand twenty -- two thousand twenty-one assessment roll shall

be applied beginning with the two thousand twenty-one -- two thousand

twenty-two assessment roll.

* NB Effective until January 1, 2026

* 3. Such exemption shall be granted only upon application by the

owner of such building on a form prescribed by the commissioner. The

application shall be filed with the assessor of the city, town, village

or county having the power to assess property for taxation on or before

the appropriate taxable status date of such city, town, village or

county.

* NB Effective January 1, 2026

4. If satisfied that the applicant is entitled to an exemption

pursuant to this section, the assessor shall approve the application and

such building shall thereafter be exempt from taxation and special ad

valorem levies as herein provided commencing with the assessment roll

prepared on the basis of the taxable status date referred to in

subdivision three of this section. The assessed value of any exemption

granted pursuant to this section shall be entered by the assessor on the

assessment roll with the taxable property, with the amount of the

exemption shown in a separate column.

* 5. For the purposes of this section, except in a special assessing

unit that is not a city, a residential building shall mean any building

or structure designed and occupied exclusively for residential purposes

by not more than two families.

* NB Effective until January 1, 2026

* 5. For the purposes of this section, a residential building shall

mean any building or structure designed and occupied exclusively for

residential purposes by not more than two families.

* NB Effective January 1, 2026

* 6. In the event that a building granted an exemption pursuant to

this section ceases to be used primarily for residential purposes, is no

longer classified as class one property in a special assessing unit that

is not a city, or title thereto is transferred to other than the heirs

or distributees of the owner in other than a special assessing unit that

is not a city, the exemption granted pursuant to this section shall

cease.

* NB Effective until January 1, 2026

* 6. In the event that a building granted an exemption pursuant to

this section ceases to be used primarily for residential purposes or

title thereto is transferred to other than the heirs or distributees of

the owner, the exemption granted pursuant to this section shall cease.

* NB Effective January 1, 2026

* 7. (a) Except for a special assessing unit that is not a city, a

county, city, town or village may, by its local law, or school district,

by its resolution:

(i) reduce the per centum of exemption otherwise allowed pursuant to

this section;

(ii) limit eligibility for the exemption to those forms of

reconstruction, alterations or improvements as are prescribed in such

local law or resolution;

(iii) provide that the exemption shall be applicable only to those

improvements which would otherwise result in an increase in the assessed

valuation of the real property but which consist of an addition,

remodeling or modernization to an existing residential structure to

prevent physical deterioration of the structure or to comply with

applicable building, sanitary, health and/or fire codes.

(b) No such local law or resolution shall reduce or repeal an

exemption granted pursuant to this section until the expiration of the

period for which such exemption was granted.

* NB Effective until January 1, 2026

* 7. (a) A county, city, town or village may, by its local law, or

school district, by its resolution:

(i) reduce the per centum of exemption otherwise allowed pursuant to

this section;

(ii) limit eligibility for the exemption to those forms of

reconstruction, alterations or improvements as are prescribed in such

local law or resolution;

(iii) provide that the exemption shall be applicable only to those

improvements which would otherwise result in an increase in the assessed

valuation of the real property but which consist of an addition,

remodeling or modernization to an existing residential structure to

prevent physical deterioration of the structure or to comply with

applicable building, sanitary, health and/or fire codes.

(b) No such local law or resolution shall reduce or repeal an

exemption granted pursuant to this section until the expiration of the

period for which such exemption was granted.

* NB Effective January 1, 2026

8. The provisions of this section shall not apply to a city with a

population of more than one million.