NYC
10/11/2012 05:32 pm ET Updated Oct 11, 2012

One57 Could Get 'Low Income' Tax Breaks For Billionaire Tenants Using 421-A Loophole (PHOTOS)

The billionaire tenants of a luxury apartment tower in New York City are slated to receive major tax breaks on their pricey pads.

According to CNBC, the management of the One57 tower-- which recently sold an enormous penthouse for a record-setting $90 million-- has applied to receive tax abatements using a loophole in a city program to build more low-income housing.

Developers of One57 can benefit from the program, titled 421-a, by funding affordable housing units in distant locations, away from One57's breathtaking, unobstructed views of Central Park and the East River. CNBC reports:

Take the “penthouse” on the 75th and 76th floor. The apartment, at 13,554 square feet, reportedly sold for more than $90 million to an unknown billionaire. (The building is still under construction and will open next year). Normally, the annual real-estate taxes on the apartment would be around $230,000 a year. With the special abatements, however, the taxes are projected to be only be $20,000 a year – saving the owner $210,000 a year in real-estate taxes.

While One57 has officially applied for the program, city records show developers have not received final approval. But developers are likely to receive the green-light, considering the loophole is nothing out of the ordinary for luxury developers and their tenants.

In 2011 alone, the city was projected to lose $900 million in property taxes because of 421-A.

Among tenants who have benefited from the loophole are Alex Rodriguez, who shelled out an easy $6 million for his Riverside Boulevard home, and only paid a measly $1,200 in real estate taxes in 2011. Not to single out the Yankees third baseman, but it's worth noting Roriguez rakes in a nice $29 million a year.

While One57 awaits the final world, New York City mayor is blowing off the idea of taxing the city's rich. Mayor Bloomberg called a proposed tax hike on the city's rich, as put forward by Public Advocate Bill de Blasio, "about as dumb a policy as I can think of."

Photos of where billionaires might receive "low income" breaks below:

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one57 hero

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