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

Assign official Market Value (valuation methodology varies by property type)

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.

Subtract Exemptions (reduction in assessed value – for example, Veterans Exemption) to determine Taxable Billable Assessed Value (BAV)

Apply statutory tax rate to Taxable Billable Assessed Value (BAV)

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

Update October 14, 2021
In-depth article published by Bloomberg:
How a $2 Million Condo in Brooklyn Ends Up With a $157 Tax Bill
https://www.bloomberg.com/graphics/2021-new-york-property-tax-benefits-rich/

NYC Advisory Commission on Property Tax Reform: Preliminary Report Jan 2020

NYC property taxes: all you need to know

State and Local Tax (SALT) tax deduction cap explained