A Tax Overhaul Plan Co-ops and Condos Will Love

Residents of the city’s co-ops and condominiums might soon have reason to rejoice. Ditto owners of one-, two-, and three-family homes – if the panel studying an overhaul of the city’s much-maligned property tax system adopts a new recommendation from the independent fiscal monitor Citizens Budget Commission, Bloomberg reports. 

The nonpartisan group has proposed a “comprehensive redesign” of the system that would shift co-ops and condos from Class 2 into Class 1 with one-, two-, three-family homes, which face a lower effective tax rate. Effective tax rates would be increased for residential rental buildings (Class 2), utility properties (Class 3), and commercial properties (Class 4). 

Assessed values would rise in all four classes, with a shift to valuation relying on full market value, possibly adjusted to favor residential properties and households where property taxes are out of proportion to income. Under the current system, co-ops and condos are assessed not on market value but on the value of nearby rental properties. That, plus a cap on yearly rises in assessments, has led to a current state of affairs where wealthy homeowners frequently pay far less in property taxes, proportionally, than lower-income households. 

The Advisory Commission on Property Tax Reform, formed in the spring by Mayor Bill de Blasio and the city council, is developing legislative proposals and other steps for next year that would introduce the first changes in the system in more than 20 years. The commission has heard comments from the public in all five boroughs, and it will hear expert testimony at a hearing on Dec. 13. It is now considering the CBC proposals.