Blocks & Lots

New York City Property Tax System Background

New York City Property Tax System History

  • 1975 Court of Appeals Case: Hellerstein v. Town of Islip – SeminalcaseforrealpropertytaxreforminNYS
  • In 1981, NY’s Real Property Tax Law was amended to create what is effectively today’s property tax structure.
  • Effective in 1983, NYC no longer had a single tax class; four tax classes were created, each with its own valuation rules and rate.
  • The last in-depth review of the property tax system by a government-appointed commission was in 1993.

Building Blocks for Property Tax Calculations

  1. Assign official Market Value (valuation methodology varies by property type)
  2. Determine Assessed Value (AV), a percentage of Market Value.
    • Assessment Ratio, the relationship between AV market value, is 6% for Class 1, 45% for Classes 2-4
    • Assessment Ratio is set at the discretion of the NYC Finance Commissioner, per State law.
  3. Subtract Exemptions (reduction in assessed value – for example, Veterans Exemption) to determine Taxable Billable Assessed Value (BAV)
  4. Apply statutory tax rate to Taxable Billable Assessed Value (BAV)
  5. Subtract Abatements (credit applied to tax bill – for example, Coop/Condo Abatement)

Property Tax Billed = [ (Assessed Value – Exemptions) * Tax Rate] – Abatements

New-York-City-Property-Tax-System-Background

Link to New York City Property Tax System Background: https://blocksandlots.com/wp-content/uploads/2020/01/New-York-City-Property-Tax-System-Background.pdf

Further Reading

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