Created in 1971 to spur development in neglected neighborhoods of New York, the 421-a program allowed condo buildings to be exempted from millions of dollars in property taxes for 10 to 25 years, depending on location and other criteria. The program expired in 2016, but the tax breaks persist depending on when a building was built. Owners of 421-a apartments pay a fraction of the property’s full taxes during a period of exemption, with the tax burden rising steadily until it reaches the full assessed value.
While some of these benefits will last into the 2040s, the end of those benefits could not have come at a worse time for many sellers, who are faced with mounting taxes and stiff competition in a weak market. Some are selling for marginal returns or even less than what they paid several years ago.
For savvy buyers, that could mean discounts in fancy condos that were built from the early- to mid-2000s, with leverage to negotiate and a much clearer picture of their future tax bills.
The moral is the same for longtime owners and potential buyers in tax-abated buildings: never mind the price tag, do the math.
A full list of 421a properties can be found at this link:
https://www1.nyc.gov/site/finance/benefits/benefits-421a.page?_ct=6nwt55fypmb4
(source: newyorktimes.com, nyc.gov)
Supply chain issues could slow Miami’s condo boom
Miami’s condo market, known for its booms and busts, is in the middle of a big boom that would typically be threatened by, inevitably, an oversupply of condos. But the dreaded trio of supply chain breakdowns, rising costs, and labor shortages pose the most significant hazard.
To offset rising construction costs and prepare for supply chain-induced shortages, some contractors and developers purchase materials and store them in warehouses earlier or modify sales contracts to account for changes to materials and appliances. And those measures may be more widely adopted now that a land war in Europe, and some of the toughest financial sanctions against Russians in generations, threaten to disrupt supply chains even further.
“Construction prices are out of control, and supply chain issues are really problematic,” said Suzanne Amaducci-Adams, a Miami attorney who heads the real estate practice at Bilzin Sumberg. Jon Paul Pérez, president of Related, said construction costs are increasing 10 to 15 percent every month, he said in December.
The cost increases are already being built into single-family home sales contracts between homebuilders and buyers. That means buyers agree to pay a price that may not be fixed.
While the price is supposed to be a basic element of the contract, “We have addenda that basically say if our price for lumber, etc. goes above x, either the developer or the seller has the right to terminate or pass that cost onto the buyer,” creating more of a “ballpark purchase price”.
Once they launch sales, developers and brokers are just hoping to capture as many buyers as possible, even if that means selling out before the sales office is completed and open. Who actually delivers is another question.
(source: therealdeal.com)
