On November 21st, BARNES New York had the pleasure to be a Bronze Sponsor for the FACC Beaujolais Nouveau Party hosted by the French American Chamber of Commerce.
Guests enjoyed an extensive cheese and charcuterie buffet, a chocolate stand by zChocolate, a savory station, and a variety of desserts, accompanied by a selection of drinks. The event featured live music, an open wine bar, festive networking, and a raffle for round-trip business class tickets from Air France.
It was a delightful opportunity for the BARNES New York team to connect with FACC members, foster new business relationships, and celebrate the iconic Beaujolais Nouveau wine, available only at this special time of year.
Two weeks ago, our managing partner Yann Rousseau had the pleasure to be a guest of the renown real estate podcast “Talking New York Real Estate with Vince Rocco”. This episode focused on foreign international buyers.
Yann Rousseau had the chance to talk about his background and experiences, and how it led him to his managing partner role at BARNES New York. He also discussed the trends he’s seeing in international buyers in the big apple – what they are looking for and what areas.
While international sales bring significant investment to the city, they also spark discussions around affordability and market access for local buyers. As NYC real estate continues to evolve, foreign investments will likely remain a key, if sometimes contentious, component of the city’s real estate landscape. Featuring guests Matthew Melinger of Brown Harris Stevens, Michael Holt of Compass, and Bruce Cohen of Cohen & Frankel Law.
From Friday, November 15th, 2024 to Sunday, November 17th, 2024, BARNES had the pleasure to host the three-day BARNES Pre-Loved Luxury Show event at the Carrousel du Louvre in Paris.
Present in 22 countries with over 150 destinations worldwide, our teams came together to offer visitors an exceptional experience. Each destination highlighted its unique expertise in prestigious real estate, showcasing rare properties and tailored services. Our advisors shared their passion for excellence, guiding clients through bespoke real estate projects in the world’s most sought-after locations.
BARNES, a specialist in prestige real estate, invited the guests to discover a new sustainable approach to real estate in the world’s major capitals: Paris, New York, London, Madrid, Dubai… These iconic cities combine dynamism, culture and innovation, while offering a wide range of prestigious properties. One main goal of the show was to highlight how the circularity and re-use of prestige properties are contributing to a more responsible future, while retaining the elegance and refinement of high-end real estate.
BARNES Pre-Loved Luxury Show was focusing on five pillars: preserving, transmitting, and sharing traditions, moments of joy, and precious objects across generations. Each of these represents the art of living in its own way, and they were championed at the inaugural salon dedicated to pre-loved luxury. Exquisite luxury pieces and properties, meticulously crafted, maintained, and restored by talented professionals, were presented for guests discerning appreciation.
In this edition, we feature Joy & Alexandre Barrière, the new owners of the Barrière Hospitality group. Renowned for their luxury hotels across the globe, and more specifically the Fouquet’s in the Champs-Élysées in Paris, The Majestic in Cannes, and Le Carl Gustaf in St-Barth, the brother and sister duo represents the fourth generation leading the family hotel group.
In this most recent edition, we also explore the savoir-faire of Fauré Le Page, discover new up and coming interior designers, learn more about the philanthropic work of the Chef Yannick Alléno, and shed light on the world of silver tableware with Puiforcat.
Not forgetting a world tour of our finest properties for sale and for rent.
The 421-a tax exemption is a significant real estate incentive program in New York City aimed at encouraging the development of new residential buildings and promoting affordable housing. This program offers property tax breaks to developers who include affordable housing units in their new projects. By reducing the tax burden, the city incentivizes the creation of more housing options, particularly for low- and moderate-income residents.
This post addresses the specifics and benefits of the former 421-a program, which has been recently discontinued. However, it remains relevant as a handful of buildings still benefit from the tax exemption. Extensions have been granted for ongoing unfinished projects, and the state now offers a replacement program labelled 485x (with different parameters).
What is the 421-a Tax Exemption?
The 421-a tax exemption, also known as the Affordable New York Housing Program, provides a partial property tax exemption for qualifying new residential construction projects. Developers receive this tax break in exchange for setting aside a portion of the units in their buildings as affordable housing. The program aims to stimulate the construction of new housing and address the city’s affordable housing shortage.
Key Requirements of the 421-a Tax Exemption
Affordable Housing Requirement:
Developers must allocate a percentage of the total units in the new building as affordable housing.
The specific percentage and affordability levels depend on the location and size of the project.
Location:
The program applies to new residential developments across New York City, with varying requirements based on different zones and neighborhoods.
Duration:
The tax exemption can last for up to 35 years, depending on the specific terms of the agreement and the project’s compliance with affordability requirements.
Construction Deadline:
Developers must complete construction within a specified time frame to qualify for the tax exemption.
Benefits of the 421-a Tax Exemption
Tax Savings: Developers can significantly reduce their property tax liability, improving the financial viability of their projects.
Increased Housing Supply: The program encourages the construction of new residential buildings, adding to the city’s housing stock.
Affordable Housing: By mandating a portion of affordable units, the program helps provide housing options for low- and moderate-income residents.
Case Study: A Mixed-Use Development in Brooklyn
Let’s look at a case study to understand how the 421-a tax exemption works in practice.
Scenario: ABC Development Company plans to build a new mixed-use residential building in Brooklyn, consisting of 100 units. They aim to benefit from the 421-a tax exemption to improve the project’s financial feasibility.
Planning the Project: ABC Development decides to set aside 30% of the units (30 units) as affordable housing. These units will be rented to tenants with incomes at or below 130% of the area median income (AMI).
Applying for the Exemption: ABC Development submits their project plan to the New York City Department of Housing Preservation and Development (HPD) for approval. They outline the total number of units, the number of affordable units, and the targeted income levels for affordability.
Receiving Approval: After reviewing the application, the HPD approves the project, confirming that it meets the requirements for the 421-a tax exemption. ABC Development can now proceed with construction.
Construction and Leasing: ABC Development completes the construction within the required timeframe and begins leasing the units. The affordable units are rented to eligible tenants at reduced rents, while the remaining units are rented at market rates.
Tax Benefits: With the 421-a tax exemption in place, ABC Development enjoys a significant reduction in property taxes for up to 35 years. This tax break enhances the project’s profitability and helps offset the lower rental income from the affordable units.
Outcome: ABC Development successfully leverages the 421-a tax exemption to create a mixed-use residential building in Brooklyn. The project not only adds 100 new housing units to the city’s supply but also provides 30 affordable units for low- and moderate-income residents. The tax savings help make the project financially viable, benefiting both the developer and the community.
421-a tax exemptions do not only concern rental buildings. A handful of condominiums (new developments) have benefited from this program, therefore extending the tax exemptions to the individual owners of the units. These tax exemptions remain with the unit, and any subsequent buyer will also benefit from them until expiration.
BARNES New York has assisted clients in buying units in 421-a approved buildings, and can curate a list of options for interested buyers, whether for primary residence, pied-a-terre, or investment purposes.
Conclusion
The 421-a tax exemption is a vital tool in New York City’s efforts to address its affordable housing crisis. By incentivizing developers to include affordable units in their new residential projects, the program helps increase the supply of housing options for residents across income levels. Understanding and utilizing the 421-a tax exemption can be a win-win for developers and the community, fostering the development of vibrant, inclusive neighborhoods.
BARNES New York is your ideal real estate partner to assist with many scenarios for your real estate project, including the 421-a tax exemption. Please contact us to learn more.
BARNES New York had the pleasure to be a platinum sponsor of the yearly NYC Real Estate Expo.
This year’s edition of the NYC Real Estate Expo took place on Wednesday, October 16th, 2024 at the New York Hilton Midtown, and BARNES New York, alongside BIM Property Management, had the honor of being a platinum sponsor with two booths where our team had the chance of meeting colleagues and professionals from the real estate industry.
BARNES President, Thibault de Saint Vincent, was invited to be a guest speaker in the main room alongside Vince Rocco, for a conversation regarding International Luxury Real Estate. He was followed by Yann Rousseau, BARNES New York Managing Partner, who participated in a panel with industry peers – Stefani Berkin from R New York, Nile Lundgren from SERHANT, Nikki Field from Sotheby’s International Realty, Alexander Zakharin from Nest seekers International, and Eric Benaim from Modern Spaces – around the topic: “NYC real estate market forecast: what to expect”.
Joachim Gruet, real estate salesperson at BARNES New York, had the honor to be the host speaker at the Bryant Room, where he introduced guest speakers and conversation topics.
The NYC Real Estate Expo is a yearly event gathering professionals in the real estate industry and the general public from across the country. This year’s edition featured 225 vendors, 150 speakers and resulted in more than 12,000 attendees.
A 1031 exchange, named after Section 1031 of the U.S. Internal Revenue Code, is a strategy that allows real estate investors to defer paying capital gains taxes on an investment property when it is sold, as long as another “similar” property (for investment purposes) is purchased with the profit gained by the sale. This tax deferral can be a powerful tool for investors looking to grow their real estate portfolio without the immediate tax burden.
What is a 1031 Exchange?
In simple terms, a 1031 exchange allows an investor to sell a property, reinvest (part or all of) the proceeds in a new property, and defer the applicable capital gain taxes. The primary benefit is the ability to use the full amount of the sale proceeds to purchase a new property, thus potentially increasing the investor’s buying power.
Key Requirements for a 1031 Exchange
Like-Kind Property: The properties involved in the exchange must be of “like-kind,” meaning they must be of the same nature or character, even if they differ in grade or quality. For real estate, most properties are considered like-kind to each other. Primary residences are excluded, as well as “fix-and-flip” properties.
Timing Rules:
Identification Period: The investor has 45 days from the date of selling the original property to identify potential replacement properties.
Exchange Period: The investor must complete the purchase of the replacement property within 180 days from the sale of the original property.
Qualified Intermediary: The exchange must be facilitated by a qualified intermediary who holds the funds between the sale of the original property and the purchase of the replacement property.
Title Requirements: The title of the new property must be in the same name as the title of the property sold.
Benefits of a 1031 Exchange
Tax Deferral: The most significant benefit is the deferral of capital gains taxes, allowing more capital to be reinvested.
Portfolio Diversification: Investors can use 1031 exchanges to diversify their holdings by investing in different types of real estate or different geographic locations.
Increased Buying Power: By deferring taxes, investors can use the full amount of their sale proceeds for the purchase of new property.
Case Study: From Single-Family Rental to Commercial Property
Let’s look at a case study to understand how a 1031 exchange works in practice.
Scenario: Jane owns a single-family rental property that she purchased for $200,000 ten years ago. The property has appreciated in value and is now worth $400,000. Jane wants to sell this property and purchase a commercial property to generate higher rental income.
Selling the Original Property: Jane sells her single-family rental for $400,000. Normally, she would have to pay capital gains tax on the $200,000 profit (the difference between the sale price and the original purchase price; property fiscal depreciation may need to be taken into account as well).
Identifying Replacement Property: Within 45 days of the sale, Jane identifies a commercial property valued at $500,000 as her replacement property.
Using a Qualified Intermediary: Jane uses a qualified intermediary to hold the $400,000 proceeds from the sale of her single-family rental.
Completing the Purchase: Within 180 days, Jane uses the $400,000 held by the intermediary and an additional $100,000 of her own money to purchase the commercial property.
Outcome: Jane successfully completes a 1031 exchange. She defers paying capital gains tax on the $200,000 profit from the sale of her single-family rental and reinvests the full amount into a higher-value commercial property. This allows her to leverage the tax deferral to potentially generate greater rental income and continue growing her real estate portfolio.
Conclusion
The 1031 exchange is a valuable tool for real estate investors looking to defer taxes and maximize their investment potential. By understanding the rules and leveraging the benefits, investors like Jane can strategically grow their portfolios, diversify their investments, and increase their buying power. Always consult with a tax advisor or a qualified intermediary to ensure compliance with the specific requirements and to optimize the benefits of a 1031 exchange.
BARNES New York has already assisted multiple clients with their 1031 endeavors, and can therefore help you with the full process and assist in pairing you with the right partners. Do not hesitate to contact us to receive further information.
On September 17th, our team had the pleasure to travel to Luxembourg to meet BARNES Luxembourg and host an ‘Invest in New York’ Conference at their office located on the Avenue de la Porte-Neuve. The event was a success, with collaborators and professionals from the country and nearby towns.
The two BARNES offices joined forces to showcase the vibrant investment opportunities in New York. Attendees were treated to insightful presentations and discussions, highlighting the dynamic growth and immense potential of New York’s market.
The presentation was followed by a cocktail and hors d’oeuvre inside the Luxembourg office.
On August 22nd, BARNES New York had the pleasure of being a bronze partner at the FACC Summer Social Event organized by the French-American Chamber of Commerce, alongside CIC and JetBlue.
The event brought together more than 100 attendees who enjoyed good vibes, networking opportunities, and professional encounters. The unique setting allowed guests to meet new or existing peers in an informal environment while enjoying drinks and snacks. The FACC Summer Social was a valuable opportunity to engage with professionals from various industries and to connect over shared experiences of conducting business in the United States.
The FACC Summer Social Event was the perfect time to reflect on the first half of 2024 and prepare for the new chapter ahead, with fall just around the corner. The event was filled with high spirits, new connections, and potential future collaborations.
On August 27th, at the iconic Chelsea Piers in Manhattan, a stunning sunset cocktail reception took place aboard the luxurious All In and San Lorenzo yachts, hosted by BARNES Yachting and BARNES New York. Guests were treated to an unforgettable evening as the sun dipped below the horizon, casting a golden glow over the Hudson River. Attendees indulged in delicious drinks and exquisite food while discovering the exclusive services offered by BARNES Yachting and ACES Yachting. The breathtaking views of the city skyline from the decks of these elegant yachts made for a truly magical atmosphere, leaving a lasting impression on all who attended.
Bien reçu, merci !
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