New York City - Property Tax Abatement for Photovoltaic (PV) and Energy Storage Equipment

Summary

In August 2008, the State of New York enacted legislation allowing a property tax abatement for photovoltaic (PV) system expenditures made on buildings located in cities with a population of 1 million or more people. This limits the abatement to systems installed within New York City. Eligible buildings include all real property except utility real property. As originally enacted, the in-service deadline for eligible systems was December 31, 2012. However, in August 2012 the abatement was extended to systems placed in service through December 31, 2014, at a reduced rate. In September 2014, S.B. 746 extended the compliance period for systems until 2016. S.B. 7110 of 2016 again extended the compliance period until 2019, while A.B. 10410 of 2018 expanded the abatement to include energy storage equipment. Most recently, A.B. 6113 of 2023, extended the compliance period until the end of 2034.

The abatement allows building owners to deduct from their total real property taxes* a portion of the expenditures associated with installing a PV system on an eligible building. Systems placed in service between August 5, 2008 (the effective date) and December 31, 2010 were eligible for an abatement of 8.75% of eligible expenditures annually for four years. The percentage of abatement changes dependent on the time period the system was put in place; 5% for 2011-2012, 2.5% for 2013, 5% for 2014-2023. The addition of energy storage equipment brought a 10% abatement for systems in service between 2019-2023. The current abatement for both types of systems is 7.5% for 2024-2034.

The maximum abatement during a year is $62,500 or the amount of real property taxes owed during the year. Unused balances may not be carried forward to subsequent years. Eligible expenditures include reasonable expenditures for materials, labor associated with on-site preparation, assembly and original installation, architectural and engineering services, and designs and plans directly related to the construction or installation of a system. Expenditures incurred using a federal, state, or local grant are not eligible, nor are interest or finance charges. However, the amount of eligible expenditures is not reduced by federal, state or local tax credits, tax abatements, tax exemptions or tax rebates.

The abatement program is administered by the Department of Finance in cooperation with the Department of Buildings. Applications for the abatement must be filed by March 15 in order to be eligible for a tax credit during the year the application is submitted. Applications submitted after this deadline can be applied to taxes owed for the following fiscal year. It is important to note that claiming the abatement does not affect whether a building owner can claim New York's real property tax exemption on the value added by solar, wind, and farm-based biogas energy systems.


*This incentive is similar to an investment tax credit for renewable energy systems, which are frequently applied to personal or corporate income taxes. It is unique in that the tax benefits are recouped through reduced property taxes on the host building instead of through reduced income taxes.