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CompsWatch: In New Tax City, a 25-year abatement is a beautiful thing

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Last week, CurbedNY crowned the Frederick Douglas Boulevard corridor in lower and central Harlem Neighborhood of the Year in its annual reader contest.

As BrickUnderground recently reported, this area does score well among Harlem neighborhoods in terms of food options. But another area of great appeal, at least for bargain hunters, is price.

Harlem's relatively modest asking prices in new developments--in the mid-$600s to mid-$700s per square foot for the three examples below--tell only part of the story about the cost to own in upper Manhattan. Another key to affordability in the neighborhood is the very long term nature of the 421-a tax abatements available this far north.

Many of the 421-a tax abatements offered south of Harlem are limited to 10 years, with taxes increasing evenly every two years until the unit is fully taxed at year ten. But the 25-year tax abatement is a very different creature, with nominal taxation occurring for the first 20 years of the abatement, and then taxes increasing evenly each year until the unit is fully taxed at year 25.

With NYC property taxes expected to continue their steroidal growth for awhile, a quarter-of-a-century-long tax abatement is a significant deal sweetener. 

Here are some examples that show just how low total monthly common charges and taxes can be:

  • 2280 Frederick Douglas Boulevard, between 122nd and 123rd Streets, Unit 7H. With an asking price of $724,000, this 1,106-square-foot two-bedroom, two-bathroom unit has monthly common charges of $763 and taxes of $7. (Yes, you read that single digit correctly.) Total carrying costs in a new luxury building with high-end finishes, doorman and roof terrace work out to only 70 cents per square feet, versus the $1.50-$2.00 per square foot in most Manhattan buildings.  With 20% down, and a mortgage at 5% interest, total monthly costs for this unit including carrying charges would come to $3,879. 
  • The Lore, 261 West 112th Street (near FDB), Unit PHA, also offers high-end finishes, roof deck, a gym, and each unit comes with a storage bin and washer/dryer. Unit PHA is one of three apartments currently listed for sale, at $799,000 for a 1,061 square foot two-bedroom, two-bathroom with a 495-square foot terrace. It carries common charges of $683 per month and taxes of $3 monthly.  That works out to 65 cents of monthly charges per square foot. One way this building has lowered its costs is by foregoing live doormen in favor of a remote doorman system. Total monthly costs with 20% down and a mortgage rate of 5%: $4,117 per month including carrying charges.
  • The Livmor, 2131 Frederick Douglas Boulevard (between 115th and 116th Street), Unit 8H Listed at $575,000, this 826-square-foot one-bedroom has monthly common charges of $536 and taxes of $27, making the monthly carrying costs--at 81 cents per square foot--the most expensive of our three examples. This building has a doorman and a gym, as well as a residents' lounge, children's playroom and parking for a fee. Total monthly costs with 20% down at a 5% interest rate: $4,032.

 

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