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October 4, 2007
Property Tax Assessment - Accurate?
Hi,
We are trying to assess the value of a brownstone we are looking at, to see if the price is reasonable. I went on Property Shark and saw the value that it was assessed at for 06/07 and o7/08, and the two figures are MUCH lower (by $500k) less than the price the place is listed.
I seriously doubt it is priced $500k more than its worth but I just wanted to double check. Is it reasonable to assume these tax assessments are often inacurrate and understating the value of the property?
Or are they usually quite accurate?
Thank you very much.
Comments
They are usually quite INACCURATE.
Posted by: guest at October 4, 2007 10:28 PM
not only are they inaccurate, if they're really inaccurate, it means they haven't gotten around to adjusting the assessments upwards, which means the taxes have no where to go but up.
Posted by: chuck at October 4, 2007 10:31 PM
I was under the impression that they are intentionally low as a means of shifting the tax burden away from "families" and on to commercial property owners. In the last ten years my taxes have gone up a little over $1000 for a two family from $1300 to $2400. My home is undervalued by about $500,000 at the current market levels.
Posted by: guest at October 5, 2007 12:21 AM
The tax burden is not truly shifted away from families. In fact it's extremely unevenly distributed. From my experience those properties paying the higher tax are those developed or redeveloped later in time, regardless of whether they're residential. Though less than 4 family properties seem to be taxed less. You are lucky to pay only $2400 on a two family. I pay more than that on a single co-op. In fact our co-op building pays almost 4 times the tax of an identically sized neighboring building.
The tax system seems quite anti-development.
Posted by: guest at October 5, 2007 10:33 AM
Yup, assessed value has little bearing on actual value. For me, best way to assess real value is lots and lots of open houses of all properties in the 'hood you're looking in and close looks at recent sales. Also I compared versus rents. What would it cost to rent a similar space?
Also, tax increases are capped so even though the assessed value is way low, you probably wouldn't experience a sudden large bump. Rather a series of smaller bumps as 12:21 says. And keep in mind rebates. $500 per year this year?
10:33 is right. Burden seems to fall disproportionally on owners of apartments versus houses.
Disclaimer: Not an accountant. Consult a tax professional. Past performance no guarantee of future results blah blah blah ;-)
Posted by: Johnny at October 5, 2007 11:46 AM
All municipalities establish their own way of acquiring revenues and for what purposes it will be spent. In NYC we have a personal income tax on residents (remember the commuter tax?). This somewhat offsets the real property tax which is lower than the surrounding counties. As a financial exercise take your property tax and add it together with all City personal income tax paid by your household.
The tax on owners of 1-2-3 family properties is kept low as a political reality. Were it to be raised to the level of, say, Nassau county, the entire City Council would be voted out at the next election by the 600,000 plus homeowners.
Of course, market price and assessment are not related. The City is restricted in changing the numbers after a sale.
There is also case law and legislation involved. To understand this situation you should look up the Hellerstein decision and its aftermath. Or better yet pay attention to politics in Nassau county--it's all about property taxes.
I'm further fascinated about the NYC debate on 421A tax abatements on new condo's. Behind it all is the City's freedom to establish a real property tax on new-construction multi-families that is incredibly higher than the existing adjacent multi-family. This inevitable killer-cost scared off builders of any such construction that was not meant for the super-rich until 421A was invented in 1973 as a reprieve.
If you are really have time: see what your neighbors are paying (nyc.gov/finance), then see what comparables are paying in any of Brooklyn's more expensively-priced areas. That should get your blood up.
Posted by: guest at October 5, 2007 12:52 PM
taxes on 1-3 family houses are low in the city. Its one of the few monetary breaks we get.
Posted by: slick at October 6, 2007 6:27 AM
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