Section 421-F. Exemption of capital improvements to residential buildings

1.  Residential buildings reconstructed, altered or improved  subsequent
  to  the  effective  date  of  a local law or resolution pursuant to this
  section shall be exempt from taxation and special ad valorem  levies  to
  the  extent  provided hereinafter. After a public hearing, the governing
  board of a county, city, town or village may adopt a  local  law  and  a
  school  district,  other  than  a  school  district  subject  to article
  fifty-two of the education law, may adopt  a  resolution  to  grant  the
  exemption authorized pursuant to this section.  A copy of such local law
  or  resolution  shall  be filed with the state board and the assessor of
  such county, city, town or village who prepares the assessment  roll  on
  which  the  taxes of such county, city, town, village or school district
  are levied.
    2. (a) Such buildings shall be exempt for a period of one year to  the
  extent  of  one  hundred  per  centum  of the increase in assessed value
  thereof attributable to such reconstruction, alteration  or  improvement
  and for an additional period of seven years subject to the following:
    (i)  The  extent  of  such  exemption shall be decreased by twelve and
  one-half per centum of  the  "exemption  base"  each  year  during  such
  additional  period.    The  "exemption  base"  shall  be the increase in
  assessed value as determined in the initial year  of  the  term  of  the
  exemption, except as provided in subparagraph (ii) of this paragraph.
    (ii)  In  any year in which a change in level of assessment of fifteen
  percent or more is certified for a final assessment roll pursuant to the
  rules of the state board, the exemption base shall be  multiplied  by  a
  fraction,  the  numerator  of which shall be the total assessed value of
  the parcel on such final  assessment  roll  (after  accounting  for  any
  physical  or  quantity  changes  to  the  parcel  since  the immediately
  preceding assessment roll), and the denominator of which  shall  be  the
  total  assessed  value  of the parcel on the immediately preceding final
  assessment roll. The  result  shall  be  the  new  exemption  base.  The
  exemption  shall  thereupon  be  recomputed to take into account the new
  exemption base, notwithstanding the  fact  that  the  assessor  receives
  certification of the change in level of assessment after the completion,
  verification  and  filing of the final assessment roll. In the event the
  assessor does not have custody of the roll when  such  certification  is
  received,  the  assessor  shall  certify the recomputed exemption to the
  local officers having custody and control of the roll,  and  such  local
  officers  are  hereby  directed  and  authorized to enter the recomputed
  exemption certified by the assessor on the roll. The assessor shall give
  written notice of such recomputed exemption to the property  owner,  who
  may,   if   he  or  she  believes  that  the  exemption  was  recomputed
  incorrectly, apply for a correction in  the  manner  provided  by  title
  three  of  article  five  of this chapter for the correction of clerical
  errors.
    (iii) Such exemption shall be limited to eighty  thousand  dollars  in
  increased  market  value,  or  such  other sum less than eighty thousand
  dollars, but not less than five thousand dollars as may be  provided  by
  the  local  law  or  resolution,  of  the  property attributable to such
  reconstruction, alteration or improvement and  any  increase  in  market
  value  greater  than such amount shall not be eligible for the exemption
  pursuant to this section.  For the purposes of this section, the  market
  value of the reconstruction, alteration or improvement shall be equal to
  the  increased  assessed  value  attributable  to  such  reconstruction,
  alteration or improvement divided by the class  I  ratio  in  a  special
  assessing  unit or the most recently established state equalization rate
  or special equalization rate in the remainder of the state, except where
  the state equalization rate  or  special  equalization  rate  equals  or

  exceeds  ninety-five  percent,  in  which  case the increase in assessed
  value attributable to such  reconstruction,  alteration  or  improvement
  shall  be  deemed  to  equal  the  market  value of such reconstruction,
  alteration or improvement.
    (b) No such exemption shall be granted for reconstruction, alterations
  or improvements unless:
    (i)  such  reconstruction,  alteration  or  improvement  was commenced
  subsequent to the effective date of the local law or resolution  adopted
  pursuant to subdivision one of this section; and
    (ii)  the  value  of  such  reconstruction,  alteration or improvement
  exceeds three thousand dollars; and
    (iii) the greater portion, as so determined by square footage, of  the
  building reconstructed, altered or improved is at least five years old.
    (c)  For purposes of this section the terms reconstruction, alteration
  and improvement shall not include ordinary maintenance and repairs.
    3. Such exemption shall be granted only upon application by the  owner
  of  such  building  on  a  form  prescribed  by  the  state  board.  The
  application shall be filed with the assessor of the city, town,  village
  or  county having the power to assess property for taxation on or before
  the appropriate taxable status date  of  such  city,  town,  village  or
  county.
    4.  If  satisfied  that  the  applicant  is  entitled  to an exemption
  pursuant to this section, the assessor shall approve the application and
  such building shall thereafter be exempt from taxation  and  special  ad
  valorem  levies  as  herein provided commencing with the assessment roll
  prepared on the  basis  of  the  taxable  status  date  referred  to  in
  subdivision  three  of this section. The assessed value of any exemption
  granted pursuant to this section shall be entered by the assessor on the
  assessment roll with the  taxable  property,  with  the  amount  of  the
  exemption shown in a separate column.
    5. For the purposes of this section, a residential building shall mean
  any   building  or  structure  designed  and  occupied  exclusively  for
  residential purposes by not more than two families.
    6. In the event that a building granted an exemption pursuant to  this
  section  ceases  to  be used primarily for residential purposes or title
  thereto is transferred to other than the heirs or  distributees  of  the
  owner, the exemption granted pursuant to this section shall cease.
    7.  (a)  A  county,  city,  town  or village may, by its local law, or
  school district, by its resolution:
    (i) reduce the per centum of exemption otherwise allowed  pursuant  to
  this section;
    (ii)   limit   eligibility   for  the  exemption  to  those  forms  of
  reconstruction, alterations or improvements as are  prescribed  in  such
  local law or resolution;
    (iii)  provide  that  the  exemption shall be applicable only to those
  improvements which would otherwise result in an increase in the assessed
  valuation of the  real  property  but  which  consist  of  an  addition,
  remodeling  or  modernization  to  an  existing residential structure to
  prevent physical deterioration  of  the  structure  or  to  comply  with
  applicable building, sanitary, health and/or fire codes.
    (b)  No  such  local  law  or  resolution  shall  reduce  or repeal an
  exemption granted pursuant to this section until the expiration  of  the
  period for which such exemption was granted.
    8.  The  provisions  of  this section shall not apply to a city with a
  population of more than one million.