How does this work?
January 13, 2009 7:52 AM   Subscribe

Explain to me how property taxes in NYC work.

I was just looking at this which seems to indicate that the avg property tax in nyc is about 13%.

Is that right or even possible? Are you telling me if someone owns a property worth 1 million dollars they pay 130k in taxes every single year?

For example, loan payments on a 30 year loan for a million dollars add up to only about 75k a year (using bankrate's calculator). So you could conceivably make say 250k a year and afford a million dollar mortgage (250-87.5k in taxes-75k mortgage=87k). Does that mean all of your remaining money goes to nyc real estate taxes? Or that you wouldn't even be able to afford your property tax bill? That just doesn't make sense to me.

I have to be missing something
posted by jourman2 to Law & Government (6 answers total)
Best answer: That tax rate is based on the city's assessed value of the property, which is not kept up to date with the market value, and is only relevant in determining where a certain property stands in value compared to others.

For example, a place may have a market value of 300k, but an assessed value of 10k (Not a stretch), therefore, they'd be paying an average of 13% of that, $1,300 a year. Differences between the assessed value and the market value vary, so the only way to look up the actual tax amount is by referencing the tax bills, found online here.
posted by coryinabox at 8:07 AM on January 13, 2009

Certain condos aside, New York City residential property taxes are actually quite low as a percentage of market value -- the City also relies upon upon its own income tax (one of the few municipalities which have them) and the return to it from Albany of a large portion of its residents' state income tax payments.
posted by MattD at 8:36 AM on January 13, 2009

Best answer: Property Shark can also give you an assessment history with tax estimates for any property in the five boroughs, although it stops being free after the first few reports per day.
posted by zvs at 8:52 AM on January 13, 2009

Best answer: NYC page: Determining the Annual Assessment

It looks like the current assessed value for single family homes (Class 1) is 6% of "real market value", while coops/condos and commercial buildings (Classes 2-4) are 45%. So the real rate for a house would be 16.787% (from your link) x 6% = 1%. And the real rate for a coop/condo would be 13.053% x 45% = 5.87%.

But even that's not the whole story, because the assessment aren't done every year, so the value they are using may be discounted by 25-50% off what the selling price would be.
posted by smackfu at 12:21 PM on January 13, 2009

(It should also be noted that 6% is a very low assessment ratio. Connecticut uses 70%, and so has correspondingly lower state tax rates of 2-3%.)
posted by smackfu at 12:28 PM on January 13, 2009

Response by poster: Oh very cool - so if I owned a $1,000,000 single family house I would only pay about $7,800 (1 mil x .06 x .13 )?

I didn't realize there could be such a huge gap between assessed value and real value. Instead of 'assessing' it a lower rate - is there any reason they would just use market value and lower the rate? Then they wouldn't have to use a workaround.

But great answers all so far.
posted by jourman2 at 12:31 PM on January 13, 2009

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