Tax abatement Q

the abatement will probably be phased in, meaning begin 8 year they charge 30% more, 9 year 60% more, then 10 year=100%.

i am also buying in a bldg with an abatement, and when it comes selling time i guess you have to realize that all the comps will have the same taxes.

i was shocked when i found out what the taxes will be for my apt after the abatement (around $500/month), but thats what it is for new construction.

We saw several apartments in two or three recently constructed UES buildings which have tax abatements and we were shocked by how much the taxes will increase once the 10 years period was through. I would definitely get the numbers of what the taxes will be after the abatement is over from either your broker or the seller's broker or even the management company. It was a huge difference in the buildings that we saw.

So do you think this gives you any leverage for your offer? The broker was trying to spin the abatement as a positive (low taxes) but I'm seeing it as a HUGE negative! I'm a little freaked out by the ridiculously high number. I'm not worried about carrying it myself, but I'm really afraid it would be a deal breaker for many buyers when I want to sell which will be after it is at full price.

The only apartment that I researched that I felt was similar to the UES tax abatement apartments was Le Chambord on East 72nd Street. It had a 1400 square foot 2 bedroom condo listed at under $1M that sat on the market for over a year (twice. It's possible that although it's a beautiful building in a nice residental area that potential buyers were scared off because the maintenace and taxes were so much higher than comparable apartments, but I can't say for sure. The price was very low relative to other simlar units, but my husband didn't even want to see the apartment because the miantenance and taxes were so high. It might be a deterrent for some future buyers, but not all. The tax abatements is just one factor and apartments here do have huge maintenance in general.

the problem with many new construction buildings is that so many developers made them so amenity-laden, so the common charges are very high. that seems acceptable on a psf basis as long as the taxes are low, but the combined taxes and common charges could be a killer at the end of the day. i'd suspect many people will be happy to trade unused amenities for lower costs. some abatements are much better than others, as well, so if you're development has a relatively short abatement compared to others in a neighborhood that could affect resale potential down the road.

do your research and be careful.

" I'm really afraid it would be a deal breaker for many buyers when I want to sell which will be after it is at full price."

You'll just have to drop the price of the apartment accordingly.

Figure out what you think the value of the apartment would be without a tax abatement.

Then take the present value of the adjusted (tax-deductible) tax abatements for the full period and subtract that from the above figure.

Then decide whether you think that figure is a good price for the apartment you're considering buying.

read the whole article or at least the last paragraph of the 2nd page and first of 3rd page.

http://www.nytimes.com/2009/02/08/realestate/08COV.html?_r=1&scp=8&sq=tax+abatement+condo&st=nyt

i would suspect that these new construction condos will be worth less than coops once the abatements are over. many people also bought without considering them or saying that i will sell before hand. consider this, the first wave of abatements to run out will be within 5-7 years. there will be a flood of condos on the market once all the owners see what they really have to pay per month.

Kind of reminds me of people loading up on mortgages with "teaser" interest rates. Great until they reset.

Thanks everyone for your thoughts & thanks ab_11218 for the link. I'm glad I asked- something to think long and hard about before buying in a newer building.