Dept. of Finance Market Values
We just got a notice from the Dept. of Finance stating the “market value” for our brownstone. We just bought the place in November 2009. It’s a 3-family in park slope. We paid $1.695 and DOF has valued it at $1.97. So that’s roughly $300,000 over what we paid (and we paid the asking price)….
We just got a notice from the Dept. of Finance stating the “market value” for our brownstone. We just bought the place in November 2009. It’s a 3-family in park slope. We paid $1.695 and DOF has valued it at $1.97. So that’s roughly $300,000 over what we paid (and we paid the asking price).
The DOF letter includes instructions for what to do if we’d like to dispute this valuation.
My question is: should we? The case we would make would be that it’s worth what we paid, I suppose.
Interestingly the DOF statement also notes a drop in market value from the previous year, 2007 I think, when it had been valued at $2.1 something.
I’m sort of thinking it might be best to let sleeping dogs lie… also it sounds easier.
I’m pretty sure we are paying very low property taxes in NYC in general, so this seems like it may not matter. Maybe there are even reasons having a higher value makes sense.
Advice? Thoughts?
thanks
You should certainly contest the valuation, as it is directly tied to your tax as described above. The process to do this is called tax certiorari – the NYT real estate section has a nice piece from 99 or something on it here: http://www.nytimes.com/1999/05/02/realestate/q-a-437093.html?pagewanted=1
And as someone points out, it is a very standardized process so the legal fees are relatively economical. It’s not a sure thing, but our co-op has found that we’ve avoided much more in tax increases than we’ve paid our lawyers over the years.
Your taxes will only rise a max of 8% per year ( I believe for a three family). Or something close to that. Yes, brownstone taxes are very low.
Don’t pay any attention to what the haters, hannible & qeekspice, say. They’re bitter.
Bstonerlogin – The basis of a coop i think is the same as condo. That is to say they estimate how much comparable units will rent for in you building and then allocate your proportion of that value.
For instance if they determine 4 coops in the building will rent for a total of $10,000 per month than the equation would be something like this:
10,000per month X 12 months = 120,000
120,000 X 9.5(Rent Roll Multiplier) = 1,140,000 Market value
Supossidly they use comparable rents to evaluate the value so it is supposed to be based on current market. However per the DOF website there is a lag between the rents comaprisson and actually charging you. Also, theoretically, because there is limits of how much they can raise it every year, there may be “Pent-up” rental increase from prior years not yet included in your market value assesment.
Best thing to do would be approach the equation from the perspective of does it make sense that all the units in your building would rent for X and determine if the market value is in the same ballpark or not. If the answer is no, you may want to appeal
We also got this notice the other day–for our 4-unit co-op–and I’ve been trying to get a straight answer from our account about what it means. Late last year we got a notice from the co-op’s mortgage bank (through whom we pay our real estate taxes) that our taxes were going up–we had to pay a big lump sum to top up our tax escrow, as well as an increase in monthly payments starting Jan. 1.
What I’ve been trying to figure out is whether that recent tax increase was related to *this* market value assessment from the city? Or can/should we expect our taxes to go up *again*?? Anyone?? (Our accountant has not been very helpful with a clear answer…his response has been “You can always expect the City to raise real estate taxes”…)
Taxable Value: The amount your taxes are based on. It is determined by multiplying the Market Value (minus any reductions) by the appropriate class Assessed Percentage Rate.
Tax Rate: The rate for each tax class used to multiply by the Taxable Value.
Tax: The final dollar amount due for your taxes – (Taxable Value times Tax Rate).
So per the DOF, the market value is directly related to the taxable value.
The market valuation makes a huge difference. You are taxed on a percentage of that valuation. There are some arcane laws on the books that limit how much your actual property tax can increase each year. But you know the city is going to do what it can to reach the maximum each year.
You absolutely should challenge it. Hire a lawyer (they charge very little for this because it’s easy for them.) to fill out the forms that are due by 3/15.
If nothing else, the increase in market valuation also increases the basis your insurance company uses to figure your replacement value and yearly cost.
thank you
NYC DOF has a long page with FAQs and lots of links re: property value, and questioning property value: http://bit.ly/dzMz5r
I don’t believe you are taxed on the market valuation.
I wouldn’t pay any attention to it. I don’t.