Tax Appeals for Condos Specifically
In response to the financial crisis that began in late 2008, New York City Mayor Michael Bloomberg announced that he intends to increase New York City property-tax rates. As accompanying articles have shown, you can appeal your real estate tax assessment, which is the basis for determining your property tax. Here are 10 things you should know about the city's assessment process and appeal procedures.
1. Strength in Numbers
Condos are unique because each unit has its own deed and block-and-lot designation for tax purposes. However, this does not mean that owners must go it alone in contesting their assessments. Most boards have authority under their bylaws to file appeals on behalf of all residential units. If not, the board will need to get written consent from each unit-owner in order to file a protest on their behalf. It makes sense for all residential owners to file a joint appeal.
2. Annual Assessments
Each January 15, the city's Department of Finance releases its tentative assessment roll for the upcoming tax year, which begins July 1 and ends June 30 of the following calendar year. The final assessment roll is published May 24.
3. Comparables
Like co-cops. condo buildings are assessed at 45 percent of the city's estimated market value for the property, but determining this value is a straightforward process. Also like co-ops, condos aren't assessed based on sales price but on the rental value of comparable residential properties. Simply put, the city looks at rental buildings of similar age, location and quality to estimate the rental income for your property.
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Attorneys who specialize in real estate tax appeals can provide you with this research. They can generate studies showing the rental data for comparable buildings to support your case for reduction. Condo owners often focus on the sale price of their units, when what is relevant is the neighborhood 's rental market.
In 2008, the city changed its assessment practice by adopting a valuation method known as the "gross income multiplier." The GIM method assumes that most buildings have similar expenses per square foot. To account for differences in the rental values among buildings, the city created a table of GIM factors to be applied depending upon the estimated rental income. To determine the market value using the GIM, one multiplies the building's gross income by the applicable GIM factor.
By using the GIM, assessors are no longer taking into consideration your actual expenses — in effect, penalizing those who spend more on the upkeep of their property than those who do not.
4. On Appeal: Net Income Method
The good news is the New York City Tax Commission does not use the GIM when reviewing your case. The tax commission relies on the more traditional net income approach, which takes into consideration your actual building expenses. To help build your case, it is important to highlight special ongoing expenses that the assessor may be ignoring (e.g., high repair costs, special staffing needs, etc.).
5. Filing Your Appeal: March 1 Deadline
The board may appeal the assessment by filing an Application for Correction of Tentative Assessment with the tax commission on or before March 1. Be sure to prepare early and adhere to all of the filing deadlines.
6. Things to Know When You Appeal
As part of your appeal, you must submit the building's most recently completed income-and-expense data. You must also supply information relating to rental income for any unsold units. Make sure you complete this section, since the tax commission will not grant a reduction if this information is not supplied.
7. The Courts: Appealing Your Tax Commission Protest
If you do not obtain relief from the tax commission, you can file a petition with the New York State Supreme Court to keep your appeal open for further review. Be sure you comply with the petition deadline since it is subject to change.
8. Applying for the Refund
If you obtain an assessment reduction prior to the publication of the final assessment roll, the tax savings will be reflected in your tax bills. If the reduction is obtained later, your attorney will need to file for a refund.
9. Tax Appeal Season Has Begun
January 15, 2009, is when the new assessments will be published for tax year 2009/20010. It's also the beginning of the next tax-appeal season. Now is the time to review your assessment situation and begin planning your appeal strategy.
Editor's Note: Dealing With Refunds
One last point of importance is how to deal with a tax refund. It is not unusual for assessment cases to go on for several years before resolution. This can create confusion as to who is entitled to the refund if the unit has been sold during the intervening time. The board will want to insulate itself from any controversy between current and former owners. You should consult with your attorney about how to deal with this.
Joseph B. Giminaro is an associate at the New York City law firm of Stroock & Stroock & Lavan.