The NYC 467-m Tax Incentive: A Guide to Office-to-Residential Conversion

What Is 467-m?

Formally titled "Affordable Housing from Commercial Conversions," RPTL 467-m was enacted in April 2024 as part of the New York State budget — the same legislative package that created the 485-x new-construction incentive. It is the successor to 421-g, the narrow Lower Manhattan office-conversion program that ran from the mid-1990s through 2006, but it is dramatically broader in scope, benefit, and duration.

467-m is not limited to office towers. It applies to any building where at least 90% of the floor area was used for commercial, manufacturing, or other non-residential purposes before conversion — which can include older commercial lofts, showroom buildings, and light-industrial structures, not just Class A and B office stock. It explicitly excludes hotels and Class B multiple dwellings. The converted building must contain six or more dwelling units and be operated as rental housing — 467-m does not apply to condo conversions.

Where It Applies: Citywide, With a Manhattan Premium

Unlike 421-g, which only covered a small slice of Lower Manhattan, 467-m is available citywide across all five boroughs. But the benefit is richer inside the Manhattan Prime Development Area (MPD) — generally, Manhattan south of 96th Street — reflecting the concentration of aging, underleased office stock in that submarket.

How Long the Benefit Lasts

467-m uses an "early bird" structure — the sooner construction commences, the longer the exemption runs:

• Construction commences by June 30, 2026 → 35-year exemption
• Construction commences July 1, 2026 – June 30, 2028 → 30-year exemption
• Construction commences July 1, 2028 – June 30, 2031 → 25-year exemption

To qualify at all, conversion work must commence after December 31, 2022 and no later than June 30, 2031, with the project completed by December 31, 2039. For owners weighing whether to sell an obsolete office or commercial building now versus later, that commencement window is one of the most consequential dates on the calendar — a site that pencils for a buyer today may pencil for 10 fewer years of tax benefit in 2029.

Affordability Requirements

467-m is not a no-strings tax break. At least 25% of the residential units must be permanently affordable, set at a weighted average of 80% of Area Median Income (AMI) or below, spread across no more than three income bands, none exceeding 100% AMI. Some HPD guidance also references a deeper carve-out requiring a portion of those affordable units to be set at 40% AMI — because agency guidance on this specific detail has evolved since the program launched, owners and developers should confirm the current requirement against HPD's published rules before underwriting a project.

Unlike some prior NYC tax incentive programs where affordability requirements sunset after 20–30 years, the affordable units under 467-m are permanently income-restricted and rent-stabilized — a meaningful long-term tradeoff for the exemption's length and depth.

Prevailing Wage for Building Service Workers

Buildings converted under 467-m with 30 or more units must pay building service employees — porters, doormen, handypersons, cleaners, elevator operators — a prevailing wage. Buildings under 30 units are exempt from this requirement. Notably, 467-m does not appear to impose a separate construction-worker wage floor the way 485-x does for large new-construction projects — a meaningful difference between the two programs that affects project underwriting.

467-m vs. 421-g vs. 485-x

421-g (1995–2006) covered only a narrow Lower Manhattan zone, offered a roughly 14-year abatement around 80%, and converted about 13 million square feet of office space over its life. 467-m is citywide, offers longer terms (25–35 years), a richer 90% exemption in the MPD, and — unlike 421-g — comes with permanent affordability and prevailing-wage conditions. Conversion activity under 467-m is already reported to be outpacing 421-g's historical volume, with the NYC Comptroller's office estimating roughly 12.2 million square feet of qualifying space and a multi-billion-dollar present-value tax expenditure.

485-x, by contrast, is a new-construction incentive with its own affordability tiers, benefit lengths, and construction-wage rules. If your site involves demolishing an existing building and building new, 485-x is the relevant program. If it involves converting an existing predominantly non-residential building's structure into housing, 467-m applies.

Who Should Be Paying Attention

• Owners of older Class B or C office buildings, particularly south of 96th Street in Manhattan, with high vacancy or functional obsolescence
• Owners of commercial loft, showroom, or light-manufacturing buildings citywide where 90%+ of floor area is non-residential
• Multi-family and mixed-use owners near qualifying commercial buildings — conversions can reshape a block's supply and rent dynamics quickly
• Anyone evaluating a sale to a developer who has flagged conversion economics as part of their offer

What a 467-m Analysis Involves

Determining whether your building is a strong 467-m conversion candidate requires assessing the existing floor-area mix against the 90% non-residential threshold, confirming the building's location relative to the Manhattan Prime Development Area boundary, modeling the affordability set-aside against achievable rents, and benchmarking against current construction and conversion costs — floor plates, window lines, and structural grid all affect whether a commercial building converts efficiently into apartments. Not every office building converts cleanly; deep, windowless floor plates are a common obstacle.

If you own a building that could be a conversion candidate — or a nearby property that stands to be affected by one — it's worth getting a current analysis of both what your building could be worth as-is and what it could be worth under a 467-m conversion scenario.