Filing an appeal for your real estate taxes - what is the process?
Let’s take a deeper look at what it means to file an appeal for your real estate taxes and why you need to do so annually.
How are property taxes calculated?
As a commercial property owner, one of the largest operating expenses you have is your property taxes. Your tax bill is based on many factors. The taxing authority, typically the town, county, or municipality your property is located in, assesses every property in that town. This assessment is sometimes done annually, but in some municipalities, assessments are done at longer intervals. Some assessments are done during the transfer of ownership of the property.
The municipality places an estimated value on your property, using its own formulas for market value. This valuation may not be very accurate. There are so many factors that affect the true value of a property. You may think of location value as primarily being determined by the section of town that the property is in, but it’s more than that. The side of the street a property is located on can have an effect, the quality of access into the property from the road, location of nearby utilities, environmental impacts, vacant nearby properties, lighting, condition of the parking lot, traffic flow, all of these factors can change a valuation.
Those are just some location-specific factors, but there are many more related to the condition and use of the building itself. The town does not take all of these details into consideration for each property. They assign an estimated assessed value to the property based on their own formulas and the information they have about the property, which may not be very detailed.
The estimated value of a commercial property is then multiplied by the mill rate (tax rate) for that property’s tax class. The mill rate changes annually, so every year your tax bill will fluctuate based on both the assessed value and the current mill rate. The mill rate is set based on many variables such as requirements for public schools, public utilities, roads, the local police and fire departments, and other services like garbage and recycling pick-up. As a commercial property owner, you can’t control the mill rate. All properties in that municipality have to pay taxes based on the set mill rate for that year.
However, you do have the ability to ask the taxing municipality to take another look at your assessed value by filing an appeal, also known as a property tax grievance. When you file a grievance, you have the chance to provide more information on your property that can help clarify the real value of your property.
Sometimes properties are assessed at or near real value, and in that case, it’s not worth filing an appeal. Often properties are over-assessed, though, which means property owners or tenants are paying taxes on a value that is not realistic. Therefore they are paying more than their fair share of taxes, which could end up being thousands of dollars or more in overpayment a year.
The assessed value of your property is the value used for tax purposes, but it is not necessarily the same as its market value. The methods to determine valuation vary depending on the municipality in New York State, so if you own commercial property in more than one location in NY, you could end up with very different taxes assessed on properties that otherwise seem to have similar value.
How do you know what the real value of your property is, and whether you have been overassessed and are paying too much for taxes? You work with a property tax consultant like Realty Tax Challenge, who specializes in commercial property tax appeals in NY, and are experts at knowing what the true valuation of a property is. You can contact us for a free consultation and we will let you know whether we think your assessed value is accurate or not, it’s that simple!
Tax rates can also be affected by local laws, deductions, and a variety of state and local regulations. Realty Tax Challenge (RTC) are not only experts in real property valuation, but we understand all the other laws, deadlines, and changes that affect your tax bill. We can check your bill for accuracy, and whether levies like the DAF levy in Nassau County have been applied properly.
What is the Process for Filing An Appeal?
The assessments are published annually. This is known as the tentative assessment roll. Many towns and cities publish a tentative assessment roll on May 1. Nassau County published it for 2022 on January 3rd. Most commercial properties fall within Class 4. Once the assessment rolls are published, you can work with RTC to determine if your property is over-assessed. If so, RTC will help you then prepare to grieve your commercial property taxes.
The formal grievance is done through a State form filed with the municipality’s Board of Assessment Review (BAR). The deadline for filing this varies per municipality. You can see all the Grievance Deadlines in NY State on our Grievance Deadlines page, or check your local municipality’s website. This form is crucial because it is your chance as a property owner to list all of the details that you need to prove that your property is over assessed and to help determine the true value.
Property taxes in NY are among the highest in the country. NY State ranks #47 out of 50 for the worst Property Taxes in the country for 2019-2022, according to the Tax Foundation. As we’ve all witnessed over the last few years, property values can fluctuate widely, even within the space of a year. If your assessed value is based on an assessment completed over a year or more in the past, it may not reflect the current real property value. This means you could be paying more taxes than you really should owe. It is important to grieve your taxes annually and to contract with a company like RTC that can help you prepare your grievance in advance of the deadline.
On Grievance Day, the BAR meets to hear the grievances and then review all the grievance filings. They will issue a Notice of Determination to each property owner that files a grievance that will specify whether the reduction has been granted. It is important to note that it is against NY State law to increase an assessment based on a grievance filing. So you do not need to worry that this process will increase your assessment or taxes. Your taxes can only go down as a result of an appeal.
If the Board of Assessment Review asks for further information or denies an appeal, RTC can help you navigate any outcomes and let you know your options to achieve a successful appeal.