Putnam May Offer Tax Break for ‘In-Law Apartments’

By Holly Crocco

The Putnam County Legislature is expected to approve a property tax exemption for those who create accessory dwelling units on their properties for long-term rentals.

New York State has given counties the option to provide a temporary exemption on the increase in value created when a homeowner creates a legal accessory dwelling unit, and Legislator Nancy Montgomery, D-Philipstown, has put forth a resolution asking the county to utilize that tool to increase the long-term housing supply while ensuring that the public subsidy does not go toward services like Airbnb, Vrbo, or other short-term rentals.

During the county’s Sept. 8 Rules Committee meeting, Montgomery said that when she was taking care of her parents, she wished she could add an apartment to her house for them to live with her. Now, her grown children may have the same wish.

“I could be that grandma while the kids take over the house,” she said. “I talk to a lot of constituents, and nobody’s kids can live here, nobody’s parent scan live here.”

Giving homeowners an incentive to build “in-law apartments” could help seniors age in place, bring young adults back to the county, create housing for caregivers and working families, and create much-needed housing without large-scale development, noted Montgomery.

The exemption would be on a 10-year schedule that decreases each year, so that by year 10 the homeowner is paying the full amount of taxes. It would be eligible on construction that costs $3,000 or more, and limited to $200,000 in increased market value attributable to the home. Any increase greater than that would remain taxable.

It also only applies to units offering long-term rentals. “If someone is using their property as a short-term rental, they don’t get this,” said Montgomery.

The legislator explained that, while the exemption only applies to the county’s portion of a homeowner’s tax bill, “I hope towns and villages and special districts, and school districts, especially, take a look at this so we can attract younger people.”

Legislator Amy Sayegh, R-Mahopac Falls, voiced support for the local law. “You’re hopefully creating housing for seniors, for 20-somethings,” she said. “The housing market here is terrible for young families… This would make more rental options.”

Legislator Jake D’Angelo, R-Carmel, asked if this will allow big developers to buy up properties and construct accessory units to take advantage of the tax break, then rent or sell.

“This would almost incentivize them to do it,” he said, noting that it could hurt the housing market because it raises the home price.

Senior Deputy County Attorney Heather Abissi said that’s a possibility, but it will still provide more housing without big development.

“For every tax exemption there is, there is a developer who is creative and finds a way to maximize it,” she said. “This does incentivize the ability for actual owners – property owners – to allow for housing in a more affordable way locally without capitalizing on additional land development. While it might encourage developers to look at property they already acquired, you won’t have big developers going up and occupying some of our open spaces.”

The local law was unanimously approved by the committee and will go to the full Legislature for a vote. It will require a public hearing before adoption can take place.