New York City Property Taxes: How to Figure It Out


Oct 31 | 3 minutes read
New York City Property Taxes: How to Figure It Out

It's common knowledge that New York City homebuyers must pay a slew of taxes at closing on their property. The annual cost of property taxes is another factor to consider. It can be difficult to determine how much money is owed. If you are trying to figure out how much property tax you will owe in the Big Apple, then you should look at our handy guide.

 

How are property tax rates determined in New York?

Your building's property tax rate in New York City is determined by a number of variables, including its "class," market value, assessed value, tax rate, and any exemptions or abatements for which you may be eligible.

 

Distinguishing between Class 1 and Class 2 structures

Class 1 properties include virtually all dwellings in the United States. Class 2, however, can be assigned to multi-family dwellings with five or more individual units.

Class 1 properties in New York City are assessed at 6% of market value, as stated by the Department of Finance. There is a cap of 20% over five years on AV increases of more than 6% each year.

Homes in Class 2 are taxed at 45% of their fair market value. The Assessed Value for such properties cannot go up by more than 8% every year, or 30% over a five-year period.

Alterations to the property's structure are exempt from the increased cap in both circumstances. These are evaluated differently because of their potential impact on prices.

 

The Process of Determining Your Home's Value

All homes in New York are given a market value by the Department of Finance, which is based on the property's tax category and the state's regulations. A reminder of your assessed value will be sent to you annually. You may find that the current market value of your home is lower than what you originally paid for it. In those unusual cases, you may submit a request for review to the local government.

 

How the Tax Rate Is Calculated

Your tax classification also determines the rate you'll pay on your property. These are the 2021 property tax rates:

  • Class 1 - 21.045%
  • Class 2 - 12.267%
  • Class 3 - 12.826%
  • Class 4 - 10.694%

 

Estimating your New York City property tax bill for the year

To illustrate, let's assume a Class 1 home with a $500,000 market value and an assessment ratio of 6%. Based on the data provided, the applicable tax rate is 21.045%.

(500,000 x .06) x .21045

30,000 x .21045 = $6,313.50

In this scenario, your yearly property tax bill will be $6,313.50, or about $526 per month.

 

Identify whether or not you can get a discount or exemption

If you are eligible for a tax exemption or abatement, you can reduce the amount of money you owe. Veterans can get a break, and families in need can use the School Tax Aid Relief (STAR) programme.


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