How to create best chance for non-crazy tax assessment?
We are in the last stage of converting an SRO to two family. It didn’t require a ton of work. I see assessments all over the place, for example, a newly constructed townhouse near me (was an empty lot) sold for $4million and has taxes of $250 a month! While that just seems civically irresponsible how do we get something that doesn’t mean we have to sell the house? Is there a lawyer or law firm who can get involved at the beginning?
melissa.smith
in General Discussion 2 years and 5 months ago
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oliver_nyc | 2 years and 5 months ago
(i should note ours was a three family to one family conversion with associated change to CofO but no tax class change.)
oliver_nyc | 2 years and 5 months ago
that was my experience, my “effective market value” (amount tax is ultimately based on) went up by almost 40% (approx. the cost affidavit figure from the reno work) but it didn’t rise to the full “market value” the DOF had estimated at that time. this was about 10 years ago so the effective and actual market values were much closer though. since then my effective market value has been going up the capped 6% every year while the “actual” market value estimated by the DOF has gone up over 6x. based on this i’d say the cap is lifted but only to the extent to cover the renovation costs and not to the “full” market value. but as i noted, the two (effective and actual) market values where much closer together so maybe its all just coincidence/ rounding error. you might want to reach out to the office of the taxpayer advocate in the DOF or search for a property tax certiorari firm/ practice who may have a definitive answer but @augustiner’s reply above seems to check out in my case.
oxalis100
in General Discussion 2 years and 5 months ago
Just following up on the above. If I theoretically want to change a one family to a 2 family, that requires an ALT-1 but my house stays in the same tax class, so the cost of the work will be added to my assessed value, but the cap will not be removed. Is that correct? And who might be helpful in clarifying this for me?
Augustiner | 2 years and 5 months ago
These are the scenarios:
A regular tax year where nothing is going on:
Even if your market value declined, your assessed value will increase by 6%, until your assessed value is equal to market value in 15 years.
Alt-1 or Alt-1 C of O change (no tax class change):
The value of the renovation (or what DOF estimates is the real cost not the low number you entered in the cost affidavit) will be added directly to the assessed value. You could call it a partial or temporary cap removal
Alt-1 renovation with tax class change:
The cap will be removed and the full market value will be the basis for the DOF witchcraft calculation.
Please correct me if I made a mistake
oliver_nyc | 2 years and 5 months ago
FWIW our house had a CofO change shortly before we bought it and the removal of the cap on assessments resulted in a jump in the assessed value pretty much equal to the amount on the cost affidavit filed with the DOB for the renovation work. since then its been increasing by the permitted 6% p.a. one thing to note related to the above comments on general tax reform, is that you should probably keep an eye on the “market value” the DOF assigns to your property. while this value doesn’t currently directly impact your taxes (which will likely be based on a lower amount that has been subject to capped increases) i do feel that ultimately any reform will involve the DOF looking at this “market value” more closely. because of whatever algorithm/ formula the DOF uses to arrive at the market value, there are many instances where their estimated value for homes is completely out of sync with the actual market (i’m quite certain my DOF market value is about 2x what i could actually get for my home in today’s market.) if the proposed reform to “equalize” property taxes does move to ward use of actual market values, the DOF will hopefully undertake a fair and analytically robust process to re-asses townhouses. the likelihood of that happening is higher in my mind if homewners become aware of what fantastical amount the DOF thinks their home is worth ahead of any reforms.
Augustiner | 2 years and 5 months ago
The truth is that you’ll be in for a surprise and there is nothing you can do. And it will not be in line with what your neighbors pay.
Some time after your new C of O is approved, the DOF will change the tax class on your building, presumably from class 2 to 1. That’s a biggie. That will trigger a new assessment and ‚cap removal‘ of the assessment value that prevents the assessed value from rising more than 6% per year. That means you’ll be taxed like a new building. I’m paying $ 20,000 per year on a converted SRO to 3 family in Bed Stuy. It’s not different from my neighboring buildings who pay $ 6,000. so just as a ballpark number, you‘ll probably pay more than that.
I’ve been trying everything to get ‚justice‘ and ask pointed questions. But there is no way to object.
You are also not an interesting case for politicians because no one has sympathy for a homeowner who is not in distress.
In essence this is the truth:
the property tax system is not fair or transparent. The city has the goal to raise property taxes as much as possible. They consider brownstone Bro oklyn under-taxed. SRO to class 1 conversions should not be treated like new construction, especially because historically those were not built as ‚hotels‘ but 1 family houses. But that was before the modern tax system was implemented. That’s what the DOF guy replied when I brought that up at the ‚tax outreach event‘ this month.
But please if you have any success even years from now keep me updated. I would like to be in touch with people who are in the same boat
xchx | 2 years and 5 months ago
When I had it done, it seemed to be based on a certain $ psf and was consistent with an average of the neighbors’ assessments. It came in right around where I expected. (You can see the actual assessment even if they are paying taxes on a lower, capped amount.) The problem is you will be paying on the full amount right away, whereas older houses might be capped very low because of the rule that taxes can only go up I think 5% a year. That new house might benefit from some kind of tax break — you can go to DoF website and pull their annual Notice of Property Value which should show the assessment before any breaks.
cate | 2 years and 5 months ago
Is that newly constructed townhouse part of a development that has a 421-a or other tax break?
justinromeu26 | 2 years and 5 months ago
There was a ny times article written some years back about post reno tax assessments. Someone on here wrote something about challenging assessments a couple years back.
I know nothing about this in the city but i know that out on long island my mom challenged the town a couple times and was successful. In their case i think they were billed for things they did not have, like a fireplace.
RobertGMarvin
in General Discussion 2 years and 5 months ago
I don’t know either, but try to find out if you can get similar treatment as that $4 million new building taxed at $3,000 pa.
mozeeatupu | 2 years and 5 months ago
Dunno, until there’s an assessment to contest there’s not much a lawyer can do yet and you have a coupler of years until the new assessment hits.