This summer, New York Gov. Andrew Cuomo signed legislation that authorizes local governments or school districts to provide a real property tax exemption for new green building or renovation projects constructed after Jan. 1, 2013, by local law, ordinance, or resolution. The legislation was approved unanimously by the New York State Assembly (140-0) and Senate (59-0).
Under this legislation, new residential buildings or home renovations that are certified in compliance with the ANSI-approved ICC 700 National Green Building Standard (NGBS) and exceed $10,000 are eligible for the tax exemption. The property tax exemption is available for renovations only if the improvement increases the assessed value of the property. Ordinary maintenance and repair projects will not qualify, but a significant renovation or remodeling project will qualify.
For a residential or mixed-use building certified as NGBS-compliant, the exemptions are equal to 100 percent of the increase in assessed value as a result of the improvement in the first year. As shown in the table above, the exemption is gradually phased out over 10 years, with 20 percent exempted for Emerald buildings in year 10 and no exemption for Bronze, Silver, or Gold–certified buildings in year 10.
The state law provides authorization for a local jurisdiction to take action—the governing board of the municipal corporation must hold a public hearing and adopt a local law, ordinance, or resolution for the property tax exemption to take effect in that jurisdiction. The green certificate, issued by the NAHB Research Center, must be filed with the Assessor’s Office and approved as meeting the requirements of both the state law and the municipal corporation’s local law.
In some areas, green high-performance homes have received appraisals that insufficiently value the green features of those homes, but there is evidence that green certified buildings sell for higher values than non-certified buildings. As a result, some building owners may see a disincentive to incorporate green features if the savings are then negated by an increase in property taxes. This new law allows New York property owners who wish to construct or renovate buildings and have them green building certified avoid the potential risks related to their return on investment. The tax exemption is one way to help ensure that the return property owners might enjoy from a high-performance certified building is not eroded by higher property taxes as a result of the certification.
Find out more on green certification at www.nahbrc.com/green. For a list of known available incentives for NGBS certified projects, visit www.nahbgreen.org/certification/incentivessummary.aspx.
Learn more about markets featured in this article: New York, NY.