Real Estate Taxes Continue to Soar Despite City and State Restrictions
The City Department of Finance (DOF) released the tentative assessment role on January 15th for the upcoming Fiscal Year (FY) 2021, which will begin on July 1, 2020. Tax assessments across all tax classes increased by 6.70%, with Class 2 buildings (rentals, co-ops and condos) once again rising sharply with an 7.32% assessment increase.
Citywide, there is an assessment increase of 8.06% for larger Class 2 rental buildings, which raises the average annual tax bill to $5,441 per apartment per year (a $363 increase from last year). Rental properties citywide with 4-10 units will increase 6.79%, which raises the annual tax bill to $3,797 per apartment (a $214 increase from last year).
Brooklyn once again had the highest assessment increase for larger rentals at 13.74%, raising the annual tax bill to $3,591 per unit. Rentals with 4-10 units will see a lower increase of 8.13%, which raises the annual tax bill to $2,639 per unit. The Bronx saw the second highest assessment increase in the City for larger rental buildings at 8.90%, raising the average annual tax bill to $2,233 per unit. Buildings with 4-10 units in the Bronx had a smaller increase of 5.36%, which raises the annual tax bill to $2,572 per unit.
In Queens, assessments for larger Class 2 rentals increased by 8.85%, raising the annual tax bill to $3,915 per unit. Buildings with 4-10 units in Queens also increased by 5.10%, with annual tax bills of $3,274 per unit.
In Manhattan, assessments for larger Class 2 rentals increased by 6.49%, raising the annual tax bill to $8,946 per unit. Rentals with 4-10 units saw a slightly higher increase of 6.53%, increasing the annual tax bill to $8,608 per unit.
Staten Island’s assessments for larger rental buildings increases by 7.74%, raising annual tax bills to $2,730 per unit. The assessments for buildings with 4-10 units in Staten Island increased by 5.91%, which raises annual tax bills to approximately $3,085 per unit.
Based on this year’s tentative property tax assessments, it is alarming that larger Class 2 buildings in all of the outer boroughs saw higher rates than Manhattan. This is clearly an indication that the City has maxed out its ability to increase taxes on luxury buildings in Manhattan and will now increasingly raise revenue by aggressively taxing working-class housing in the outer boroughs.
Furthermore, even though the City and State have now severely capped any increases in revenue for rental properties (historically low rent guideline increases through the City Rent Guidelines Board and the HSTPA of 2019), rentals are still seeing a disproportionate increase in real estate taxes.
Please keep in mind that the FY 2021 tentative tax roll is subject to adjustment based on tax protests by rental property owners. We encourage you to review your tentative assessments and file a protest with the City Tax Commission if the assessments are not consistent with neighboring properties or borough averages. Additionally, you should also consider a tax protest if your net operating income (NOI) did not increase but your assessment did increase. For other factors that can be considered when challenging your assessment, see page 5.
For more information on how to begin the process of challenging your property tax assessment, see page 9 of the January edition of the RSA Reporter. If you have not yet reviewed your individual property tax assessment, please visit https://on.nyc.gov/2RkY2eo. The deadline for Class 2, 3 and 4 properties to challenge their values is March 2nd and the deadline for Class 1 properties is March 16th.
Additional help to challenge your property tax assessment can be obtained through RSA’s latest partnership with the law firm Certilman Balin Adler & Hyman, LLP. Please see page 5 for more information.