Question: How easy is it to challenge and get reduced property taxes in NYC?

— Overtaxed in Tottenville

Dear Overtaxed:

I wouldn’t say it’s easy at all. It’s difficult and time consuming. And your odds are not great. There are thousands of tax appeals filed every year (55,000 in 2017), but the going rate for successful tax reductions is just 17% or so.

If you want to give it a shot, you should understand how taxes are assessed and then the process for appealing your tax assessment.

There are four broad property classifications:

  • Class 1 are one-to-three-family homes.
  • Class 2 are buildings with four or more units, co-op and condominiums.
  • Class 3 are special properties held utilities and other entities.
  • Class 4 properties are commercial buildings.

Every January, the Department of Finance mails property owners a Notice of Property Value, which includes information about your property’s market and assessed values. The assessed value of a Class 1 property is is fixed percentage of its market value. After determining the assessed value, the city government then applies the appropriate tax rate: $20.385% in 2017 for Class 1 properties.

So, let’s say this is your house in Tottenville and you think it’s worth $799,000. Go here and see how to calculate your taxes.  In doing the math, the city isn’t far off. It gives this property an “effective market value” of $767,400. If that number is higher than you think your property is worth, then you might have a case to make.

Property owners challenging their assessments must file their appeals in March (by the 15th for Class 1 properties; the first for all others). Appeals are made to the NYC Tax Commission. The forms you need are all available on the commission’s website. You will then have to go for a face-to-face meeting with a commission hearing officer, usually in May through July.

As I said, the odds are not in your favor. But, appeals can be won. The owners of the Time Warner building on Columbus Circle won a $17.8 million tax cut in 2016, the same year that a certain owner at 721 Fifth Ave. wrangled a $3,000 tax reduction on his penthouse condo.

David Crook is a veteran journalist and author of The Complete Wall Street Journal Real-Estate Investing and Homeowner’s Guidebooks. Do you have a question about anything real estate-related in NYC? Write him at askus@streeteasy.com. For verification purposes, please include your name and a phone number; neither will be published. Note: Nothing in this column should be considered professional legal advice. If you have a legal issue, consult an attorney.
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