For those developers planning new ground-up residential projects, the current abatement expires December 31, 2020. To take advantage of the abatement, you must ACT now planning and executing your project(s).
Beginning in 2021 the 10-year tax abatement on new residential construction will be reduced by 10% each year for 10 years.
Timing is critical for those developers who want to take advantage of the full tax savings to get all the required documentation in place – required plans, permits, abatement filing etc.
The City believes getting the necessary approvals will be more challenging as developers flood L&I with new housing projects because of the year end abatement deadline.
As a reminder, the amended 10-year tax abatement only applies to new ground-up residential projects. The current tax abatement will remain in place for commercial development and renovations to existing residential properties.
Kevin Gillen, a senior researcher at Drexel’s Lindy Institute for Urban Renovation, predicts that this amendment to the abatement will negatively impact the market value of new housing by 8% to 9% once it goes into effect. However, he and other thought leaders are confident that the overall housing market remains healthy.