HomeLatest ThreadsGreatest ThreadsForums & GroupsMy SubscriptionsMy Posts
DU Home » Latest Threads » Forums & Groups » Main » General Discussion (Forum) » How a $2 Million Condo in...

Thu Oct 14, 2021, 03:13 PM

How a $2 Million Condo in Brooklyn Ends Up With a $157 Tax Bill

For years, when confronted with complaints of uneven property taxes, the New York City Department of Finance has blamed a state law that requires it to ignore the sale prices of condos and co-ops when determining their taxable value. Instead, the law requires city assessors to engage in a kind of thought experiment: Pretend co-ops and condos produce income for their owners—even though they don’t—and set their taxable values based on a hypothetical amount of income they’d generate if they did.

That law, designed to protect condos and co-ops from higher taxes, lays the groundwork for warped results. But now, for the first time, a Bloomberg News investigation reveals that city officials have made a bad situation worse. They’ve invented data points that bear no resemblance to market reality and used them in opaque calculations that tend to favor wealthy property owners. These flawed valuations shift hundreds of millions of dollars in tax burden from higher- to lower-priced properties and to rental apartment buildings every year.

City ordinances have created special exemptions that reduce taxable values for qualifying properties and abatements that shrink eligible tax bills—special breaks that have significant effects. But flawed valuations present a problem at a deeper level, one that’s far less apparent to most taxpayers.

A Bloomberg analysis of millions of city records related to condo sales and taxes shows that, in effect, two steps in New York’s assessment process combine to help perpetuate unfairness. First, city officials reduce the taxable values of condos across the board by adjusting an important data point—the so-called capitalization rate—in their calculations. Capitalization rates help investors gauge the value of income-producing properties; the higher the rate, the lower the property value. The rate that assessors apply is more than double the actual rates reflected in New York real estate markets.

As a result, New York condo owners see low taxable values on their annual bills. But here’s what they don’t necessarily see: In modest neighborhoods, those values are set somewhat closer to actual sale prices; in upscale areas, they’re much farther below the market. In other words, big-dollar properties get a bigger break.

That citywide phenomenon stems from the second step in the assessors’ process: They create their hypothetical income estimates by using data that reflect comparatively high amounts for the low-priced condos and relatively low amounts for the high-priced, an analysis of actual sales prices and city data shows.

https://www.bloomberg.com/graphics/2021-new-york-property-tax-benefits-rich/

3 replies, 955 views

Reply to this thread

Back to top Alert abuse

Always highlight: 10 newest replies | Replies posted after I mark a forum
Replies to this discussion thread
Arrow 3 replies Author Time Post
Reply How a $2 Million Condo in Brooklyn Ends Up With a $157 Tax Bill (Original post)
Klaralven Oct 14 OP
jimfields33 Oct 14 #1
Klaralven Oct 14 #2
marble falls Oct 14 #3

Response to Klaralven (Original post)

Thu Oct 14, 2021, 03:32 PM

1. How about holding the ones who passed the laws accountable

We never do that. Why?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to jimfields33 (Reply #1)

Thu Oct 14, 2021, 03:37 PM

2. Because NYC politicians are funded by the NYC real estate industry?

Reply to this post

Back to top Alert abuse Link here Permalink


Response to Klaralven (Original post)

Thu Oct 14, 2021, 03:59 PM

3. Tax dodgers write the tax laws.

Reply to this post

Back to top Alert abuse Link here Permalink

Reply to this thread