Learning How The City Charges Homeowners
Figuring out how the city determines property taxes for homeowners was the focus of the Middle Village Property Owners/Residents Association (MVPORA) meeting on Monday night, June 10, at St. Margaret Parish Hall.
Reasa Semper, director of the Department of Finance’s Outreach Unit, provided an overview to residents on how the city determines tax bills every year. The property tax workshop was arranged by MVPORA President Salvatore Candela and the office of City Council Member Elizabeth Crowley after residents, at a previous civic meeting, expressed confusion over the calculation of property tax bills, many of which have risen even as the market values of homes have dropped recently.
Semper acknowledged that many New Yorkers are unaware of, or confused about how the city calculates property taxes, and she sought to clear things up for those at Monday’s session.
With the majority of the audience indicating that they owned one- to three-family homes (considered to be Class 1 properties by the Finance Department), Semper focused much of her presentation on how property taxes are derived for such buildings. Class 2 properties are condominiums and co-op apartments, Class 3 properties are utility company equipment and Class 4 properties are all other real property, including office buildings, factories, stores, hotels and lofts.
“We really start with the market value” of the home, Semper said, noting that the Finance Department determines that figure by examining the prices of similar properties recently sold in the vicinity.
“The property assessors go out and evaluate properties. They use computer systems to come up with values based on comparable sales,” Semper stated.
The market value of a home is then multiplied by the assessment ratio to determine the assessed value of the property, Semper said. Under state law, the assessment ratio for a Class 1 property may increase by up to six percent annually, but no more than 20 percent over a five-year period.
For example, if a one-family home has a market value of $300,000 and an assessment ratio of six percent, the assessed value of the home would be $18,000.
After determining the assessed value of a home, the Finance Department then applies any available tax exemptions to property owners. Semper explained that there are a litany of exemptions available to homeowners who are seniors, veterans or disabled, among others. Once those exemptions have been subtracted from the assessed value, the figure becomes what is known as the taxable value.
One exemption available to the vast majority of homeowners is the Basic STAR program, which provides a $200 deduction for any homeowner for their primary residence if they make an annual income of less than $500,000.
Going back to the previous example, if the assessed value of a home is $18,000 and the property owner receives the $200 Basic STAR exemption, the taxable value would be $17,800.
The final property tax bill is determined by multiplying the taxable value by the tax rate as set by the City Council and the mayor, Semper stated. Any tax abatements for which the homeowner may be eligible- such as for installing solar energy panels on rooftops or creating green roofs-is then deducted from that figure to determine the property tax bill.
In the 2013 fiscal year budget, the property tax rate for Class 1 properties was 18.569 percent. Semper noted that the rate will likely be revised in the 2014 fiscal year-which begins on July 1-once the City Council and mayor have finalized a new budget.
Returning to the aforementioned example, when multiplying the taxable value of $17,800 by the 18.569 percent property tax rate, the final tax bill-with no abatements-comes out to approximately $3,305.28.
All of these figures-from the market value to the taxable value- are listed on the Notice of Property Value statement sent every January to every property owner in the city, Semper said. Homeowners have until Mar. 15 every year to file a challenge to any of the figures with the city’s Tax Commission, which operates independently from the Finance Department.
A homeowner who challenges their assessment must file a formal application and appear at a hearing before the Tax Commission to explain why he/she believes the figures are inaccurate, Semper stated. In many instances, she noted, challenges to the commission have been successful and homeowners were able to reduce their property taxes.
Semper encouraged all to visit the Finance Department’s website, www.nyc.gov/finance, and obtain applications for various tax exemptions and abatements they may be eligible to receive. Applications for such tax reductions must be received by Mar. 31 every year.
Though it is too late for the current fiscal year budget, Semper urged everyone to take advantage of available opportunities to challenge their tax assessments and apply for available tax breaks.
While many in attendance suggested that the overview was helpful, a few expressed skepticism over the math used to calculate a property owner’s tax responsibilities to the city.
“The market value has no correlation” to the final property tax bill “if you really do the math,” said one man.
Candela added that at the height of the economic downturn, “many of us saw our market values go down, and yet our taxes still went up.”
Neil Giannelli added that “the market values I was getting from [the Finance Department] just sort of blew me away,” adding that inflated market values helped contribute to higher tax obligations year after year.
Council Member Crowley, who spoke at the start of the meeting, was among those who charged that the property tax formula used by the city is “complicated” and “really not fair” to the majority of property owners. Changes have been proposed in the City Council, but she suggested that real reform could come after the November election.
“What we really need is a mayor that will make the system based on property value, not all the different values that go into” the assessed value of homes, Crowley said. “You look at homes in Queens and Staten Island, they’re newer and they tend to be assessed higher.”
Crowley on 911, budget
Problems related to the city’s 911 system will be the focus of a hearing of the City Council’s Fire and Criminal Justice Committee this Monday morning, June 17, at City Hall, announced Crowley, who serves as committee chair. The hearing is being held in conjunction with the Public Safety Committee.
The lawmaker stated the session will focus on the response time by police and fire units to emergencies and recent breakdowns and errors in the 911 system.
“We’re leading the fight that whatever funding we put into the system makes it safer and more reliable,” she said.
Turning to the ongoing budget negotiations, Crowley hoped that the City Council and Mayor Michael Bloomberg would form an on-time, balanced budget by the June 30 deadline which “doesn’t raise taxes, doesn’t close firehouses” and preserves the city’s school system. Any cutbacks in the budget, she suggested, would not be as severe, since “more and more New Yorkers are working” and more tax revenue is being generated.
“It looks like the toughest times are behind us, and better times are ahead,” Crowley added.
The Middle Village Property Owners/Residents Association is not scheduled to meet in July and August. Their next session will take place in September on a date to be announced.
