A new Tax Commission report on last year’s tax certiorari hearings provides a glimpse into what owners can expect when they challenge their assessed property values: It’s very unlikely for properties to actually land the tax reduction.
Owners have until June 3 to submit Finance Department Real Property Income and Assessment forms with their building’s previous year’s income, which are supposed to help garner a fairer tax assessment by city Finance assessors for next year.
The stakes for messing up the income and expense forms are high. Those who do not file the RPIE at all are subject to penalties based on a percentage of the assessed value. In 2023, about 4,000 properties were barred from a tax assessment hearing for skipping or incorrectly filling out the Finance Department’s income and expense form.
The Tax Commission has their own income and expense forms that are to be submitted the following March when filing the application to challenge the tentative assessed values that are released in mid-January.
The hearing process begins with the highest assessed properties of $67 million and up and certain condominiums, which get hearings before the Tax Commission by May 25. The tax roll is then closed, after which the City Council passes the budget and the Department of Finance sends out bills based on the new tax rate.
In practice, most bills will be sent out in June using last year’s tax rate. Then, after both city and state politicians pass their budgets, the bills are adjusted for payments due the following January. That is a very a long time for property owners to “lend” the city funds based on overvaluations.
Throughout the summer and fall, the commission will hold hearings for properties with lower assessments. Those owners that do not get or accept an offer by the Tax Commission will have to wait another year or more to get another chance at a hearing, and will need to file petitions with the New York State Supreme Court by October 16th of each year to maintain the assessment challenge. After two years, the even slower Law Department oversees multi-year challenges.
Crunching the numbers
The data on tax assessment challenges show that the chances of winning a reduction are slim.
- Last year, 57,057 applications representing 253,637 tax lots applied for review of tax assessments totaling $264 billion. For technical reasons representatives waived the hearings for 18,928 applications for 37,805 lots. Misfiled forms and missing additional information resulted in 5,326 applications representing 13,003 tax lots not allowed hearings.
- Of those that filed, just 7,945 properties with 44,792 tax lots — worth $5.2 billion in reductions — were granted offers. Most of those that received offers (40,018 to be exact) accepted, reducing their assessments by $4.27 billion.
- Of the 2,979 properties offered reductions on their prior year assessed value, 1,700 accepted, shaving $879 million off their assessments.
- Of Class 1 lots, not one multi-lot taxpayer received a reduction offer. Of the 51 single lots offered a reduction, 39 accepted, lowering assessments by a modest $1.5 million.
- Of 17,063 Class 2 rental buildings that challenged their assessments, just one of nine were offered reductions.
- One in six of the 25,514 Class 4 commercial applications for 44,743 tax lots were given offers, with 3,755 accepting offers on 6,307 tax lots — shedding $2.72 billion in assessed value.
- Not one of the 110 parcels of Class 1 vacant land representing $10.4 million in assessed value got an offer.
- Class 4 owners filed 1,008 applications on 992 vacant parcels. Just 65 were offered a reduction and 59 accepted. The reductions totaled $137.79 million.
- For those who represented themselves, Class 1 homeowners had a one in 14 chance of getting an offer, Class 2 had a one in five chance, while Class 4 had a 50-50 shot at an offer to reduce their assessed value.
- Those that challenged assessments themselves — without attorneys — got more offers, but it is unclear if those reductions were as good as those given to those with representation.
- The percentage of reduction also varied. Just 279 properties were offered reductions greater than 30 percent, with 246 accepting. On the other hand, 4,181 were offered less than a 10 percent reduction; 3,498 accepted.
Offers of a 10 percent to 20 percent reduction were made on 2,732 properties, with 2,360 of those accepting. Of the 746 properties offered 20% to 30%, just 636 accepted.
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