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September 28, 2012

New York Offers Tax Exemptions for NGBS Certified Buildings

 

This summer, New York Governor Andrew Cuomo signed legislation which authorizes local governments or school districts to provide a real property tax exemption for new green building or renovation projects constructed after January 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 as 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 only available for renovations if the improvement increases the assessed value of the real property. Ordinary maintenance and repair projects will not qualify as eligible improvement projects; however, a significant renovation or remodeling project would 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 below, 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, and Gold-certified buildings in year 10.

NGBS CERTIFICATION TAX EXEMPTIONS

 Year Bronze/Silver  Gold  Emerald 

 1

 100%

 100%

 100%

 2

 100%

 100%

 100%

 3

 100%

 100%

 100%

 4

 80%

 100%

 100%

 5

 60%

 80%

 100%

 6

 40%

 60%

 100%

 7

 20%

 40%

 80%

 8

 0%

 20%

 60%

 9

 0%

 0%

 40%

 10

 0%

 0%

 20%

 

The state law merely 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 Home Innovation Research Labs, must be filed with the Assessor’s Office and approved by the Assessor as meeting the requirements of both the state law and the municipal corporation’s local law.

The intent of the legislation was for New York State to continue to provide incentives for green buildings and eliminate the possibility that higher assessments might serve as a disincentive for property owners to seek green certification. In some areas, green high-performance homes have received appraisals that insufficiently value the green features of that home; however, there is a growing body of evidence that green certified buildings sell for higher values that non-certified buildings. As a result, some building owners may see a disincentive to incorporate green and energy efficiency features designed to reduce operating costs if the savings are then negated by an increase in property taxes. This new law allows New York property owners that wish to construct or renovate buildings and have them certified to green building rating systems, such as the NGBS, avoid the potential risks related to their ROI. The tax exemption is one way to help ensure that the ROI property owners might enjoy from a high-performance certified building is not eroded by higher property taxes resulting from the certification.

More information on certification to the ICC 700 National Green Building Standard is available on Home Innovation Research Labs website. Information on all available state, regional, or local incentives available for NGBS certified projects is also online.

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