Death and taxes — the only two things you can be certain of in life. For New Yorkers who own real estate, taxes may even beat out death. The deluge of NYC property taxes is crippling for many owners wishing to buy, sell, or maintain a property and can be onerous to try and figure out. Here’s a guide to help clarify things.
How much are property taxes in NYC?
Once you’re actually in your home in NYC and dealing with an annual tax bill for your property, you’ll be somewhat relieved to know that the property taxes are lower than the New York State average and those of surrounding areas such as New Jersey. The average property tax rate in NYC is 0.2 percent compared to 1.5 percent for New York State. Just outside of NYC in Westchester, the effective property tax rate is 2.39 percent.
The reason for this comparatively modest rate is that NYC hits residents hard on income taxes charged by the city and state governments. There are also many other forms of tax revenue in the city, including tourism and taxes on commercial property.
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What are the different tax classes in NYC?
Properties in NYC are divided into four different tax classes. Owners of residential properties will only be concerned with Classes 1 and 2.
Class 1 includes one-to-three-unit residential properties, and Class 2 includes residential properties with more than three units, including co-ops and condos.
In 2021, Class 1 residences will be taxed at a rate of 21.045% of the assessed value, while Class 2 properties will be charged a rate of 12.267%, according to the New York City Department of Finance website.
Are property taxes based on market value?
Partly. The market value of your residence is a big factor in determining your tax bill. The government determines the market value by using statistical analysis that incorporates factors including recent selling prices of properties similar in style, size, and age to the subject property.
The second step is determining a property’s assessed value. This is where things can become a little contentious. A property’s assessed value is a percentage of its market value. Chances are you won’t be in for any big shocks. State law limits the increase of the assessed value of a Class 1 property in New York City.
For a Class 1 property, the assessed value cannot rise more than 6% in one year or 20% over five years, no matter how quickly the market value of your home increases. If, however, you make a physical change to the property, such as an addition or renovation, all bets are off, and taxes could increase more dramatically.
Because of the caps, it is possible that the assessed value of your property continues to increase even if your market value decreases. This is because it can take years for assessed value to catch up to the market value.
For Class 2 properties, the market value is based on the potential rental income and expenses of a building, Those properties have a level of assessment of 45% of their market value.
There’s also a difference in the way condo owners pay the bill, as opposed to those who own shares in a co-op. In the latter, the building’s overall tax assessment is divided up by its shareholders (co-op owners) and charged as part of their maintenance fee. With condos, the individual owners are billed directly by the city.
How do I figure out what my taxes will be?
To estimate your annual property tax:
Property tax rates change each year, as does the value of exemptions and abatements. The actual taxes you pay each year might be different.
Example: calculating your taxes
1 Enter the Taxable Value from the Notice: $16,000
2. Multiply Taxable Value by the Tax Rate (example Class 2) X 0.12267 (12.267%)
Your Taxes: $1,962.72
How can I lower my property taxes in NYC?
The first step in attempting to lower your property taxes is to challenge the Assessed Value. An appeal has to be made to the NYC Tax Commission for this to occur.
However, before the owner takes that step, NYC.gov advises that the owner review their Notice of Property Value (NOPV). If it has a line called “Effective Market Value,” the owner must prove that their current market value is less than the Effective Market Value to win their Tax Commission appeal.
To find the assessed value of a building in NYC, go to Marketproof.com and type in the building’s address.
The Tax Commission can:
- Reduce your property’s assessment
- Change its tax class
- Adjust exemptions
Are property taxes paid monthly or annually in NYC?
NYC’s Property Tax (Fiscal) Year is July 1 to June 30. New York City’s Department of Finance mails property tax bills four times a year. You either pay your property taxes two or four times a year, depending on the property’s assessed value.
Bills are generally mailed and posted on the City website about a month before your taxes are due.
What are property tax exemptions?
Property tax exemptions reduce the assessment of your property’s value, thus reducing taxes. New York allows local governments to give out several different exemptions. New York has exemptions for senior citizens, veterans, and the disabled. The STAR (School Tax Relief) exemption is an exemption for residential property that is used as the owner’s primary residence. These exemptions are not uniform throughout the state. Each locality makes its own decisions.
The 421a tax exemption plan is for certain multi-family buildings in NYC where the property changed value because of construction. Benefits can exist because of location, property use, and requirements for affordable housing.
How long can I go without paying my taxes in NYC?
Article 11 of the Real Property Tax Law states that foreclosure may begin after two years of delinquency. However, counties have the option of extending that period to three or four years. Additionally, cities may have their own charter-mandated process for delinquent tax enforcement.
How do I find my tax history?
All current taxes for NYC properties are available on marketproof.com. To find current and projected taxes, search for the property you are interested in, and then click on ‘Taxes’. You can also follow the links to nyc.gov to see tax bills and payments.
Can I pay my taxes online?
Yes, you can pay your property taxes online by going to NYCePay at https://www.govone.com/nycefile/Account/Logon. You can also pay as a guest by eCheck and Credit/Debit Card at https://a836-citypay.nyc.gov/citypay/PropertyTax#!/by-bbl-form.
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Top photo courtesy of Millo Astoria.