New York City currently collects about $24 billion in property taxes annually. The city expects this amount to grow over the next several years. This represents about 45% of all taxes collected and roughly 40% of the city’s total revenue. While this includes all property types, residential property generates a fair amount.
This funds a variety of items that run the city and make it a magnificent metropolis. The significant expenditures include uniform agencies (e.g., police, sanitation, etc.), education, other agencies, and health and welfare. However, while no one wants to shirk his or her civic responsibilities, neither should you pay more than your fair share. Typically, property taxes are a homeowner’s second biggest monthly expense, trailing your mortgage (principal and interest) payment.
With this in mind, there are steps you can take if you feel your property tax bill is too high.
Check the accuracy
This is an obvious but easily overlooked part of the process. While you would expect the city to have the correct information, that is not always the case. This is particularly true if you have recently completed construction.
Therefore, it is incumbent upon you to verify the data. This includes the square footage and the number of bathrooms. For instance, the city may state your house has two full bathrooms. In reality, it contains one-and-a-half bathrooms.
The NYC Department of Finance sends out the notice of property value. This includes a property description containing the property and land’s square footage, number of residential units/floors, number of non-residential units. There is other information, such as the name and owner of the property, street address, and effective market value.
It should be easy for you to correct these errors, although you may have to spend some time on the matter. You must file an administrative Review Application with the NYC Department of Finance. The city has the power to go back six years to retroactively fix errors.
Watch your deadlines
It is imperative that you pay attention to the deadline for appealing your property tax since you cannot do so at any time throughout the year. The annual assessment comes out annually, and it is released on January 15th. You must file a protest with the NYC Tax Commission, an independent agency, by March 15th for Class 1 properties (residential property up to three units, including family homes and most condos that are not more than three stories), and March 1st for the other 3 classes (Class 2 are primarily residential that do not fit into Class 1, including rentals, and co-ops/condos that have at least two units).
Disagreement on property value
The matter becomes more complicated and difficult when you disagree on the assessed value. When the NYC Department of Finance sends out the notice of property value, you may believe the effective market value is too high based on current conditions. You may also disagree with the tax class your property was put in. Errors are handled through the Department of Finance, who has the sole domain in this matter. But, you can protest the valuation assigned to the NYC Tax Commission. The commission has various forms for you to fill out. Form TC108 is for valuation claims regarding Class 1 properties. Meanwhile, TC101 is for Class 2 or 4 properties, other than condo units. You will need form TC109 for condo units in Class 2 or 4 classifications.
You enter your claim of the market value, and the property tax is obtained by multiplying it by the correct percentage. There is an option to request an in-person hearing. Other required information includes property description, such as the number of kitchens, bathrooms, and bedrooms.
The crucial information is part where the form asks you to provide support for your claim. It asks about sales information on other properties, including the date, price, and address. It is best to find comps that are recent and, the more like-kind to your property, the better. Ideally, it has the same square footage to your unit, and it is on the same floor. Failing that, one in your building is the next best comparable sale to use.
Should you hire a professional?
You can hire a company or law firm that can handle your appeal. Using a professional services provider has certain advantages. Presumably, the company is an expert in this area and knows the process and proper forms to file. It should also see if you have a legitimate claim. Using an outside company can save you time dealing with the city bureaucracy. Additionally, the firm does the legwork to demonstrate that your property has a lower market value than the city claims. On the downside, you will have an added expense, with no guarantee on the outcome.
Given this, you might wish to analyze the cost and benefits carefully.
Other ways to lower your bill
The city and state have additional programs which might help you reduce your property tax bill. There is the New York State Tax Relief Exemption, or STAR, which provides tax relief for the state’s residents. Basic STAR exempts the first $30,000 of your home’s value from taxation, providing your income is less than $500,000. The state designed Enhanced STAR for residents age 65 or older.
Other exemptions can reduce your property tax bill. The city has its benefit for those 65 or older, the Senior Citizen Homeowners Exemptions (SCHE). SCHE Your eligibility is dependent on having your income below a threshold. You also must meet other requirements related to ownership and residency. This can lower your assessed value by up to 50%, depending on your income.
There are also property tax exemptions for disabled individuals. Similar to the SCHE program, this can decrease your home’s assessed value by up to 50%. Other groups that can achieve property tax relief include veterans, clergy, and disabled crime victims. For you to gain eligibility for these programs, the city requires that the property is your primary residence. This means you live there most of the year or use the address for your voting registration.
For the city’s programs, you need to have your application postmarked by March 15th to receive benefits by July 1st. Otherwise, your assistance starts the following year.
You do not have to accept the city’s assessed value blindly. There is a procedure in place for you to appeal. It is important to note that the onus is on you to do your homework and provide proof.