If you've been asking yourself, “what's going on with NY property taxes?” lately, you aren't alone. According to a recent Bloomberg report, city officials are levying property taxes on New York real estate owners in a manner that might disproportionately benefit the wealthy.
Hypothetical Property Tax Assessments
To start, the Bloomberg article notes the manner in which the property taxes are assessed is based on hypothetical rationale. For example, rather than assess property value for tax purposes on the actual value of a condo or co-op, the city determines the tax amount based on the hypothetical income the owners of these spaces might be making. Essentially, the city assumes that those who own condos or co-ops are profiting from the real estate.
While the law may be designed to benefit condo or co-op owners, that isn't always the result.
Market Realities Don't Reflect Assessor Calculations
To further complicate matters, the Bloomberg investigation reveals that the city estimates profit values for taxation purposes in a questionable manner. Rather than base their valuations on market realities, the city officials in charge of assessing property value instead base their findings on “invented data points.”
Essentially, the investigation reveals that:
- The city applies a capitalization rate that is double the actual market rate in New York City, and
- Hypothetical income estimates serve to apply high-income estimates to low-income areas and low-income estimates to high-income areas.
These valuation methods disproportionately burden the lower-income property owners while giving the higher-income property owners a significant tax break.
Speak with an Experienced New York Commercial Real Estate Attorney
Unfortunately, it's not easy to look behind the proverbial curtain regarding how New York city officials assess property values in determining what tax rates to apply. Doing so takes a team of investigative journalists, and even then, the Bloomberg article notes that the methodologies are still shrouded in mystery.
If you're having difficulty maintaining the financial obligations associated with your New York real estate assets, you should speak to an experienced attorney who can help you decipher the deeply technical real estate law. To learn how Melvin Monachan, Attorney at Law, can help you, contact us online today, or call (347) 389-1682.