Co-op and Condo Tax Assessments Rebound to Pre-Pandemic Levels

The city’s Department of Finance (DOF) has released the final property tax assessments for the coming 2022-23 fiscal year, and for residents of co-ops and condominiums the news is neither welcome nor surprising: after a brief lull during the depths of the COVID-19 pandemic, assessments have rebounded to their pre-pandemic levels.

It remains to be seen if final tax bills will rise, decline or remain steady. The City Council will approve its new budget later this month and will set the tax rate, the number that’s used in the formula, along with assessments, to calculate final tax bills.

“During the 2021-22 fiscal year, the DOF reduced co-op and condo assessments by about 10%,” says Ben Williams, head of the property tax department at the law firm Rosenberg & Estis. “Now they’re trying to bring assessments back to pre-pandemic levels. I think they’ve increased assessments too much.”

In its Jan. 18 announcement of the tentative assessments for the coming fiscal year, the DOF noted that Class 2 properties — co-ops, condos and rental buildings — are expected to see an 8.7% increase in market value. During the previous fiscal year, market value fell by 8.2%. (Assessed value is a fraction of the market value. Co-ops and condos are assessed based on comparable rental properties — not on their market value.) So, given the city’s arcane system of computing property taxes, the widely reported rebound of rents is fueling the rise in assessments for co-ops and condos.

Williams expects the City Council will lower the tax rate to compensate for the 10% rise in assessments, which could mean that final tax bills will be roughly equal to last year’s. If that happens, boards that were expecting pandemic-related tax relief will be in for an unpleasant surprise.

“Boards prepared their 2022 budgets last year,” Williams says. “I have about 50 co-op and condo clients, and they won’t be surprised because this is what I was expecting. But some people are going to be surprised.”

Brett Gottlieb will not be among them. A special counsel at the law firm Herrick Feinstein, Gottlieb offered a prescient prediction to Habitat exactly one year ago: “Condos and coops are taxed as comparably situated rental buildings and therefore are directly impacted by vacancy rates and rent reductions. As vaccinations increase and employer mandates to return to work rise, vacancy rates should subside. If they drop sharply, it’s a good assumption that assessed values will resume their upward trajectory.”

Gottlieb doesn’t claim to be clairvoyant. “It was logic more than anything else,” he says about the accuracy of his prediction. “It took all the way into the 2021-22 tax year for the pandemic declines in tax assessments and rental values. Now, in 2022, vacancy has declined, rents have precipitously risen, and the city has returned assessments very close to pre-pandemic levels.”

For most co-op and condo boards, property taxes are their biggest expense. This year it appears unlikely there will be any relief for the weary.

The 2022-23 final property roll is now available online at www.nyc.gov/assessments. The final roll includes all property assessments in New York City and incorporates changes in assessments made since January’s publication of the tentative roll. The new assessments will be reflected in the property tax bills due July 1.