Comment by vostok | Hacker News Reader

Comment by vostok | Hacker News Reader

> But in New York City, you owe the city between 10.6% and 20.0% of your property’s assessed value, every year.

> Let’s put this in perspective. In the very residential and fairly affordable (for Manhattan) East Village, a pre war, 5-story, apartment building with 15 1-bedroom units and a storefront may have a market value of about $5M. “Assessed values” tend to be lower than actual market values (both in NYC and most other cities), so you might end up with an assessed value of half the actual value, or $2.5M.

The author of this article is highly misinformed. The assessed value of a property is often well under 50% of the market value.

I know someone who recently bought a place for just over $7.5m, but the assessed value is under $500k. This property does not have any abatements.

The exact tax rules are somewhat complicated and involve the interaction between rules on assessment ratios, caps on assessed value increases, fair market value models, transitional assessed values, tax rates, abatements, and probably a few other things that I missed.

Author here. I've updated the post to reflect that the assessed value for apartment buildings (more than 3 units) is exactly 45% of market value. It is not "well under" 50% for any standard apartment building... it is exactly 45% by law.

More info: http://www1.nyc.gov/site/finance/taxes/property-determining-...

> Author here. I've updated the post to reflect that the assessed value for apartment buildings (more than 3 units) is exactly 45% of market value. It is not "well under" 50% for any standard apartment building... it is exactly 45% by law.

This is still not completely accurate. Read the section about transitional assessed values and maximum assessed value increases.

It looks like most private residencies have an assessed value of 6%, not 45%

Tax Class: Property in NYC is divided into 4 classes:

Class 1: Most residential property of up to three units (family homes and small stores or offices with one or two apartments attached), and most condominiums that are not more than three stories. Class 2: All other property that is not in Class 1 and is primarily residential (rentals, cooperatives and condominiums). Class 2 includes: Sub-Class 2a (4 - 6 unit rental building); Sub-Class 2b (7 - 10 unit rental building); Sub-Class 2c (2 - 10 unit cooperative or condominium); and Class 2 (11 units or more). Class 3: Most utility property. Class 4: All commercial and industrial properties, such as office, retail, factory buildings and all other properties not included in tax classes 1, 2 or 3.

https://www1.nyc.gov/site/finance/taxes/definitions-of-prope...

What makes you think that most private residences in NYC are in buildings with up to three units?

At least in my experience, the assessed values for 4+ unit buildings tend to be substantially lower than 45% of true market value.

Property tax rates in NYC are actually not too terrible. I've owned homes in NYC as well as northern NJ, and also recently spent a lot of time looking at condos in the NYC area. Tax rates in northern NJ are pretty much always higher than NYC -- NJ is known as one of the states with highest property tax rates. Yet, typical property tax bill for a condo in northern NJ amounts to around 0.8-1.2%/year of the true market value of a property.

In NYC it'll usually be under 1% of true market value for a 4+ unit building, even with no abatement. And for a 1-3 unit building it's a tiny fraction of this. Also consider that property tax payments are tax-deductible federally... and that property value here is rising rapidly, so the value of your investment is increasing by a dollar amount that may exceed the cost of taxes + maintenance/common charges + mortgage.

Sites like StreetEasy are very helpful for seeing the tax rates for homes on the market -- I've personally never seen any with rates nearly as high as suggested in your article. You can also look at quarterly reports from major brokerages to get a good sense of cost per square foot of condos and coops in various neighborhoods, and see how quickly they are rising in recent years.

Why don't they just assess it accurately and lower the tax rate to a normal amount, making it more transparent and predictable? It seems owners are at the mercy of the assessed value, which the city could crank up arbitrarily?

Well, the assessment in NYC, unlike other places is actually pretty predictable and transparent, but not simple.

If you are Class 1, it is 6% of FMV If you are Class 2+ it is 45% of FMV

https://www1.nyc.gov/site/finance/taxes/definitions-of-prope...

Except the FMV of condo and condominium units aren't actually fair market values. Instead they are based on a model designed to figure out what income the building would produce if it were a rental building.

And that's before taking abatements into account. The system overall is not very transparent.

Right, so you get an effective rate of 1.2% of FMV for class 1, 5.8% of FMV for class 2. So the rate is just a bit higher than California for class 1, which might explain why brownstones are so expensive in NYC relative to larger buildings.

The annual rise in assessments is limited by statute.

"Let's take a pretty typical example"

posts a "this guy I know" anecdote

You can do better than that.

You can also look up the assessed value of any building in NYC. If you doubt the numbers, go and look: http://webapps.nyc.gov:8084/CICS/fin1/find001i

Wow, this is awesome! I rent an apt in a brownstone. The brownstone up the street sold recently for $3.4MM. The documents you linked show the annual taxes at $8,700 = 12.5% * $67,000 (Billable assessed value). The document says the estimated value is just under $1,000,000.

$8,000/year doesn't seem outrageous for a $1mm property with rental income, especially given that it's estimated value is about 2/3rds under what it should be.

I have edited my comment per your advice. The intent was to clarify that the property in question does not have any abatements in place.

Including the Cooperative and Condominium Tax Abatement? http://www1.nyc.gov/site/finance/benefits/landlords-coop-con...

Yes.

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