New York’s 467-m office conversion tax break, explained

Since 2024, New York State has let an office building in New York City that becomes rental housing pay as little as a tenth of its property tax for decades, provided a quarter of its apartments stay affordable for good. The most generous version closed on June 30, 2026. Here is who qualifies, what the schedule is worth, and what it costs the city.

Checked against the enacted text of RPTL § 467-m · Updated October 17, 2026

At a glance

The law: Section 467-m of the New York Real Property Tax Law, added by Chapter 56 of the Laws of 2024. Administered by HPD under 28 RCNY Chapter 64, in effect since January 15, 2025.
What it gives: Full exemption during construction (up to three years), then 90% south of 96th Street in Manhattan or 65% elsewhere, phasing out over the last five years of a 25-, 30- or 35-year term.
Which buildings: Non-residential buildings other than hotels, converted to six or more rental apartments, with construction starting January 1, 2023 to June 30, 2031.
In return: 25% of apartments permanently affordable at a weighted average no higher than 80% of area median income, 5% at 40%, all rent-stabilized; prevailing wages for building service workers.
Status: Open. The 35-year term closed to new permits on June 30, 2026; conversions starting now get 30 years if their permit issues by June 30, 2028.

What 467-m is

Section 467-m of the Real Property Tax Law, “Affordable housing from commercial conversions tax incentive benefits,” was added by the 2024 state budget. It applies only in New York City and only to conversions: a building that was offices, a warehouse or another non-residential use becomes apartments. New construction does not qualify, and neither do hotels.

It is an exemption, not a credit. While it lasts, the building is exempt from the stated share of its property tax, other than assessments for local improvements, on the whole building rather than only on the added value. It is also exclusive: a building receiving 467-m cannot receive any other property tax exemption or abatement at the same time.

The state wrote the terms; the city does not set them. The city’s housing agency, HPD, administers the program under rules that took effect on January 15, 2025, and the Department of Finance applies the exemption to the tax bill.

Which buildings qualify

Non-residential before: a certificate of occupancy for commercial, manufacturing or other non-residential use on at least 90% of the floor area, or other proof HPD accepts. Hotels and other class B multiple dwellings are excluded.
Mostly the existing building after: at least half of the finished building’s floor area must be the structure that was converted, so additions are allowed but replacements are not.
Six or more rental apartments, all of them rented. Commercial, community facility and accessory space above 12% of the floor area reduces the benefit by the excess.
The dates: the Department of Buildings must issue the first qualifying permit (an alteration permit that requires a new certificate of occupancy) after December 31, 2022 and on or before June 30, 2031, and the first certificate of occupancy covering all the residential space must issue by December 31, 2039.

A building that is partly residential can still use it: a non-residential portion qualifies on its own if it is a separate condominium tax lot.

The 467-m benefit schedule

Every qualifying conversion is fully exempt during construction, for up to three years before completion. After completion, the length of the benefit depends on when the conversion started, and the share exempted depends on where it is. The Manhattan prime development area is any tax lot entirely south of 96th Street.

467-m benefit after completion, by permit date and location

First permit issued	Term	Manhattan south of 96th St	Rest of the city
January 1, 2023 to June 30, 2026 (closed to new permits)	35 years	90% for 30 years	65% for 30 years
July 1, 2026 to June 30, 2028	30 years	90% for 25 years	65% for 25 years
July 1, 2028 to June 30, 2031	25 years	90% for 20 years	65% for 20 years

In the last five years of every term the exemption steps down: in Manhattan south of 96th Street to 80%, 70%, 60%, 50%, 40%; elsewhere to 50%, 40%, 30%, 20%, 10%. Then the building pays full tax. The affordability requirement does not end with it.

Manhattan south of 96th, 30 years

85%

Unweighted average annual exemption over the term, after construction

Rest of the city, 30 years

59.2%

Unweighted average annual exemption over the term, after construction

What closing the 35-year tier changed

5 years

Fewer years of benefit; the average annual exemption barely moves (85.7% to 85% in Manhattan)

The tiers differ in length, not depth. A conversion starting today in Midtown gets the same 90% as one that started in 2024; it gets it for 25 years after completion instead of 30. Because those lost years are the furthest out, they are worth less in today’s money than the headline difference suggests.

These averages count each year the same. What a project actually saves in dollars depends on its assessed value and the tax rate in each year, both of which change.

The affordability requirement

In exchange, at least 25% of the apartments must be affordable, on these terms:

Incomes: at least 5% of all apartments for households at or below 40% of area median income; the affordable units together may use up to three income bands, none above 100% of AMI, with a weighted average no higher than 80%.
Permanent: the restriction period starts at completion and runs in perpetuity, even if the benefit is later revoked. The units are rent-stabilized, with one- or two-year leases at the tenant’s option, and can never become condominiums, co-ops or short-term rentals.
Not segregated: affordable units must share entrances and common areas with the market-rate units and cannot be confined to one floor or area. They must either match the market units’ bedroom mix or be at least half two-bedrooms, with no more than a quarter studios.

The market-rate apartments are not rent-stabilized unless they would be without the program. Leasing the affordable units goes through HPD’s housing lottery, which HPD says takes seven to eight months.

Prevailing wage

467-m requires prevailing wages for building service workers, such as porters, handypersons and doormen, for the whole benefit period, even if the benefit is later revoked. Buildings with fewer than 30 apartments, and conversions substantially funded by a government affordable housing program, are exempt. The Comptroller enforces it.

Construction workers are a different matter. The law does not mention them, and HPD’s requirements FAQ takes the position that 467-m projects meet the exclusion in the state’s construction prevailing wage law for privately owned housing with at least 25% affordable units under a regulatory agreement.

How to apply

The application comes at the end, not the start, but an earlier deadline comes first. Completion is the date the Department of Buildings issues the first temporary or permanent certificate of occupancy covering all the residential areas. An owner files the unit workbook with HPD no earlier than 12 months before completion and, under HPD’s rules (§64-02(c)(2)), generally no later than two months after it, markets the affordable units through HPD, and applies within a year after completion. The year allowed for the application does not extend the workbook deadline.

The application fee is $3,000 per dwelling unit, counting market-rate units as well as affordable ones: $300,000 for a 100-unit conversion. A quarter is due with the initial workbook and the rest with the application. HPD may waive it for a conversion in which every unit is affordable and built with substantial government assistance, according to its requirements FAQ.

Taxes billed during construction must be paid; once HPD certifies the building, the construction exemption is applied retroactively, and the post-completion exemption appears on the next tax roll. The forms, workbook and filing address are on HPD’s 467-m page.

What 467-m costs the city

In a July 17, 2025 report, the City Comptroller counted 44 completed, ongoing and potential conversions in Manhattan, about 15.2 million square feet and 17,400 apartments. Of those, about 14,500 apartments south of 59th Street could start by June 30, 2026 and qualify, 3,600 of them income-restricted. It valued their exemptions at $5.6 billion in present value and the net revenue the city gives up, against a world with no program, at $5.1 billion.

It found that most of that cost is the rent discount on the affordable units, and about three-quarters of it falls in Lower Manhattan, where office values had fallen far enough that it assumed many conversions would proceed without the exemption. It judged the program “likely too generous” there and found it more pivotal in Midtown East. The report is an estimate made before the 35-year window closed, and it is not a full cost-benefit study.

What 467-m does and does not pay for. It does not pay construction costs. It exempts property tax during construction, for up to three years, though that relief arrives retroactively after HPD certifies the finished building. After that it lowers the building’s operating costs for decades, which raises what the building is worth and what a lender will finance against it. The trade is permanent below-market rents on a quarter of the homes for a tax bill that is a fraction of normal.

Timeline

April 2024: The state budget, Chapter 56 of the Laws of 2024, adds Section 467-m to the Real Property Tax Law, retroactive to conversions begun after December 31, 2022.
January 15, 2025: HPD's rules, Chapter 64 of Title 28 of the Rules of the City of New York, take effect and applications open.
July 17, 2025: The City Comptroller estimates the program will cost $5.1 billion in present value, mostly in Lower Manhattan, and calls it likely too generous there.
June 30, 2026: The 35-year benefit closes. Conversions whose first qualifying permit is issued after this date get 30 years.
June 30, 2028: The 30-year benefit closes; later starts get 25 years.
June 30, 2031: Last day a conversion can start and qualify. It must be finished by December 31, 2039.

How 467-m compares with other cities

467-m exempts most of the whole building’s tax, not only the value the work adds, and asks for permanent affordable homes in return. Pennsylvania has authorized a 20-year abatement for conversions in Philadelphia that exempts only the added assessment from the work and, in the state law, carries no affordability requirement; the city has not adopted it. California’s Office to Housing Conversion Act takes the other approach, trading faster approval rather than lower taxes for affordable homes.

467-m and the federal RESIDE Act

467-m and the federal RESIDE Act pay for different things. 467-m lowers a finished building’s tax bill for decades. RESIDE, Section 210 of the 21st Century ROAD to Housing Act, is a HUD grant to cities toward the up-front cost of converting buildings that are vacant and abandoned. As of October 17, 2026, Congress had appropriated no money for it: HUD is running on a stopgap through December 11, 2026 that bars programs not funded the year before and does not mention RESIDE. A New York City project could use both, since 467-m bars stacking other property tax breaks but not grants.

Questions

What is 467-m?

Section 467-m of the New York Real Property Tax Law, added by the 2024 state budget, is a property tax exemption for converting non-residential buildings in New York City, most often offices, into rental apartments. The building is fully exempt during construction, then pays 10% of its tax for most of the benefit term in Manhattan south of 96th Street and 35% elsewhere, for 25 to 35 years. In return, at least 25% of the apartments must be permanently affordable and rent-stabilized. HPD calls it the Affordable Housing from Commercial Conversions (AHCC) program.

Is the 35-year 467-m benefit still available?

Only for conversions whose first qualifying permit the Department of Buildings issued on or before June 30, 2026. Those projects still apply after completion, so 35-year benefits will keep being granted for years. A conversion whose permit is issued from July 1, 2026 through June 30, 2028 gets 30 years, and one issued from July 1, 2028 through June 30, 2031 gets 25. No conversion that starts after June 30, 2031 qualifies.

What buildings qualify for 467-m?

A non-residential building in New York City, other than a hotel, with a certificate of occupancy for commercial, manufacturing or other non-residential use covering at least 90% of its floor area. The conversion must create at least six apartments, all rented, and at least half of the finished building's floor area must be the existing structure. A non-residential portion of a building can qualify on its own if it is a separate condominium tax lot.

What are the 467-m affordability requirements?

At least 25% of the apartments must be affordable, including at least 5% for households earning no more than 40% of area median income. The affordable units may use up to three income bands, none above 100% of AMI, with a weighted average no higher than 80%. They are rent-stabilized and stay affordable permanently, even after the tax benefit ends. They must share entrances and common areas with the market-rate apartments and be spread through the building.

Can condos or co-ops use 467-m?

No. Every apartment in an application must be operated as rental housing, and the affordable units can never be converted to condominiums or cooperatives.

Does 467-m require prevailing wages?

For building service workers, yes: porters, doormen and other building staff must be paid the prevailing wage for the whole benefit period, unless the building has fewer than 30 apartments or is substantially funded by a government affordable housing program. For construction, no. HPD's position is that 467-m projects meet the affordability exclusion from the state's construction prevailing wage law.

How do you apply for 467-m?

To HPD, after the work is done: no earlier than the date the Department of Buildings issues the first certificate of occupancy covering all the residential space, and no later than a year after. The owner pays tax as billed during construction; once HPD certifies the building, the construction-period exemption is applied retroactively. The affordable units are leased through HPD's marketing process, which HPD says takes seven to eight months.

How much does 467-m cost New York City?

The City Comptroller estimated in July 2025 that the exemptions would be worth $5.6 billion and cost the city $5.1 billion in present value, compared with no program, for about 14,500 apartments in Manhattan south of 59th Street, 3,600 of them income-restricted. It found about three-quarters of the cost falls in Lower Manhattan, where it judged many conversions would have happened anyway.

How does 467-m relate to the federal RESIDE Act?

They pay for different things and can stack. 467-m lowers a finished building's taxes; a RESIDE grant, if Congress funds the program, would go to a city to cover part of a conversion's up-front cost, and only for buildings that are vacant and abandoned under the federal test.

Sources

Conversion incentives in other cities: Philadelphia’s 20-year tax abatement

Federal law: The ROAD to Housing Act explained · Environmental review changes · CDBG and HOME changes · Opportunity Zones · The Innovation Fund · Innovation Fund reforms, city by city · The Build Now Act · Manufactured housing and the chassis rule · Chassis-free manufactured homes by state · RESIDE Act funding status · How RESIDE grants should be sized · The ban on large investors buying homes