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> But in New York City, you owe the city between 10.6% and 20.0% of your property’s assessed value, every year. > Let’s put this in perspective. In the very r
by vostok 10y ago
> But in New York City, you owe the city between 10.6% and 20.0% of your property’s assessed value, every year.
> Let’s put this in perspective. In the very residential and fairly affordable (for Manhattan) East Village, a pre war, 5-story, apartment building with 15 1-bedroom units and a storefront may have a market value of about $5M. “Assessed values” tend to be lower than actual market values (both in NYC and most other cities), so you might end up with an assessed value of half the actual value, or $2.5M.
The author of this article is highly misinformed. The assessed value of a property is often well under 50% of the market value.
I know someone who recently bought a place for just over $7.5m, but the assessed value is under $500k. This property does not have any abatements.
The exact tax rules are somewhat complicated and involve the interaction between rules on assessment ratios, caps on assessed value increases, fair market value models, transitional assessed values, tax rates, abatements, and probably a few other things that I missed.
- clamprecht 10y agoWhy don't they just assess it accurately and lower the tax rate to a normal amount, making it more transparent and predictable? It seems owners are at the mercy of the assessed value, which the city could crank up arbitrarily?
- soreal 10y agoWell, the assessment in NYC, unlike other places is actually pretty predictable and transparent, but not simple. If you are Class 1, it is 6% of FMV If you are Class 2+ it is 45% of FMV https://www1.nyc.gov/site/finance/taxes/definitions-of-property-assessment-terms.page https://www1.nyc.gov/site/finance/taxes/definitions-of-prope...
- bradleyjg 10y agoExcept the FMV of condo and condominium units aren't actually fair market values. Instead they are based on a model designed to figure out what income the building would produce if it were a rental building. And that's before taking abatements into account. The system overall is not very transparent.
- me2i81 10y agoRight, so you get an effective rate of 1.2% of FMV for class 1, 5.8% of FMV for class 2. So the rate is just a bit higher than California for class 1, which might explain why brownstones are so expensive in NYC relative to larger buildings.
- Finnucane 10y agoThe annual rise in assessments is limited by statute.
- tsaoutourpants 10y agoAuthor here. I've updated the post to reflect that the assessed value for apartment buildings (more than 3 units) is exactly 45% of market value. It is not "well under" 50% for any standard apartment building... it is exactly 45% by law. More info: http://www1.nyc.gov/site/finance/taxes/property-determining-your-assessed-value.page http://www1.nyc.gov/site/finance/taxes/property-determining-...
- vostok 10y ago> Author here. I've updated the post to reflect that the assessed value for apartment buildings (more than 3 units) is exactly 45% of market value. It is not "well under" 50% for any standard apartment building... it is exactly 45% by law. This is still not completely accurate. Read the section about transitional assessed values and maximum assessed value increases.
- adamscj 10y agoIt looks like most private residencies have an assessed value of 6%, not 45% Tax Class: Property in NYC is divided into 4 classes: Class 1: Most residential property of up to three units (family homes and small stores or offices with one or two apartments attached), and most condominiums that are not more than three stories. Class 2: All other property that is not in Class 1 and is primarily residential (rentals, cooperatives and condominiums). Class 2 includes: Sub-Class 2a (4 - 6 unit rental building); Sub-Class 2b (7 - 10 unit rental building); Sub-Class 2c (2 - 10 unit cooperative or condominium); and Class 2 (11 units or more). Class 3: Most utility property. Class 4: All commercial and industrial properties, such as office, retail, factory buildings and all other properties not included in tax classes 1, 2 or 3. https://www1.nyc.gov/site/finance/taxes/definitions-of-property-assessment-terms.page https://www1.nyc.gov/site/finance/taxes/definitions-of-prope...
- bradleyjg 10y agoWhat makes you think that most private residences in NYC are in buildings with up to three units?
- rco8786 10y ago"Let's take a pretty typical example" posts a "this guy I know" anecdote You can do better than that.
- tsaoutourpants 10y agoYou can also look up the assessed value of any building in NYC. If you doubt the numbers, go and look: http://webapps.nyc.gov:8084/CICS/fin1/find001i http://webapps.nyc.gov:8084/CICS/fin1/find001i
- mrgreenfur 10y agoWow, this is awesome! I rent an apt in a brownstone. The brownstone up the street sold recently for $3.4MM. The documents you linked show the annual taxes at $8,700 = 12.5% * $67,000 (Billable assessed value). The document says the estimated value is just under $1,000,000. $8,000/year doesn't seem outrageous for a $1mm property with rental income, especially given that it's estimated value is about 2/3rds under what it should be.
- vostok 10y agoI have edited my comment per your advice. The intent was to clarify that the property in question does not have any abatements in place.