Trying To Keep 421a Tax Abatement on NYC Property
I purchased a 3 family investment property in Brooklyn NY back in 2008. I was under the impression that there was a 10 year 421a tax abatement on the property. Turns out it's actually 25 year abatement. Super Lucky - Yes! Major grin - Yup!
However, I was advise that the abatement would come to an end this coming January. After months of repeated calls, messages, and emails, I was finally able to get someone helpful to assist me with information and forms including a FCE (Final Certificate of Eligibility).
Part of the requirements (see STEP 3 in the below image) is that each residential unit must be registered as rent stabilized with the NYS Division of Housing and Community Renewal (DHCR). I don't understand why units are required to be rent stabilized for the continuation of an existing 25 year abatement. The current rents are lower than the market rates for the area (Bed Stuy).
If I register the units as rent stabilized, will I have to adjust the current rents for the tenants?
How will this affect the yearly increases I can charge? What about future tenants?
According to nyc.gov site the property taxes without abatement would be about $7750/year. Is it better to give up the abatement and pay current tax rates to be able to charge market or close-to-market rents?
Any input from someone familiar with NYC 421a abatement that can offer some insight would be greatly appreciated. Thanks.