Property owners in New York City will see a significant increase in property taxes this year as announced by the NYC Department of Finance in January (Click here for DOF Press Release).
According to the Wall Street Journal, the tax increase, which will take effect in July, will result in a 7.5% rise for co-op owners, 9.6% for condo owners and 2.8% for single family home owners.
Building owners should also take note that taxes on rental buildings will increase as well (9% for rent-regulated apartments and 8.1% for unregulated apartments).
Although the Department of Finance cites improved earnings and a more accurate valuation procedure as reasons for the tax increase, skeptics will question whether property values increased sufficiently to justify the tax hike.
However, the new rates are not final and property owners can file an appeal with the NYC Tax Commission through the Department of Finance website. Owners of one-to-three family homes have until March 1, 2011 to challenge assessments while other owners have until March 15, 2011. We recommend retaining the services of a tax certiorari attorney to assist you in any challenges you may pursue.
Potential purchasers can expect a corresponding jump in maintenance costs for co-ops as result of these tax increases. Typically, among the main drivers behind maintenance increases have been higher property taxes. Co-op boards have little choice but to raise these charges as a means of offsetting higher property taxes. For buildings whose owners do not file an appeal with the City, purchasers can expect these extra tax costs to be passed on to the shareholders.