421-a Tax Exemption Question. Please, advice!

I am considering purchasing a one-bedroom apartment in a new development. The building is not finished yet, and I am one of the first potential buyers. The Sponsor applied for tax abatement (421-a) but has not received approval yet. My question is what are the chances of the Sponsor not being able to secure the 421-a tax exemption benefits? This is the first time I am trying to purchase an apartment. Any advice/suggestions would be greatly appreciated. Thank you!

es711

in Taxes 12 years and 11 months ago

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landlord | 12 years and 11 months ago

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If the development site qualifies for 421-a tax exemption there is little chance that it won’t get it. bkmatthew post above points out different issues, some very important as well, but not directly related to the 421-a eligibility.

es711 | 12 years and 11 months ago

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bkmattew, Thank you very much for you reply!

bkmatthew | 12 years and 11 months ago

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If you can, make sure there are lots of conditions in the contract that favor you, and as few as possible that favor the vendor. For example, you want to make sure that you don’t have to close until at least 50% of the apartments are in contract, you want a building completion date (Certificate of Occupancy, not Temporary Certificate of Occupancy) and you want to make sure that the developer is required to sell all the units, and you’ll need some protection from the possibility that the developer is really trying to sell a few units to finance a rental building. Get yourself a good real estate attorney and listen to their advice – before you sign anything or write any checks.