December 29, 2021
Report recommends the biggest changes to New York City’s property tax system in 40 years
NEW YORK – The New York City Advisory Commission on Property Tax Reform released its final report today with recommendations to create a simpler, clearer and fairer property tax system. The final report, titled “The Road to Reform: A Blueprint for Modernizing and Simplifying New York City’s Property Tax System,” recommends sweeping changes to the current system, with particular emphasis on small residential properties that the public and experts alike. in this matter cite as having the greatest inequalities.
The final report expands on the initial recommendations released on January 31, 2020 and details targeted homeowner relief programs that will help low and moderate income homeowners better pay their tax bills. The report marks the first top-down review of the property tax system by a government-appointed commission since 1993. It can be viewed here.
“I am pleased to present to you the final report of the Advisory Commission responsible for reforming the City’s property taxation. I would like to thank the members of the commission who have spent the past three years diligently working on the myriad of issues involved. Hopefully this report will serve as a model for state and city legislative bodies to implement this much needed reform, ”said Commission President Marc Shaw.
The Commission’s work was temporarily disrupted by the pandemic, but it resumed in 2021 with five additional public hearings to seek comments on the 10 recommendations in the preliminary report. Public comments were instructive for the Commission in crafting its final recommendations, which involved stripping the system of the characteristics that lead to inequalities and rebuilding it to align it with a set of core principles that prioritize targeted relief for the main resident owners.
The Commission’s strategic approach focused first on establishing the right mix of structural changes to achieve horizontal equity, the principle that similar properties should be imposed in the same way, and then on l ‘Addition of homeowner assistance programs consistent with the long-standing principle of ability to pay. The result is a system design that will help ensure that low and moderate income homeowners have affordable tax bills and that senior residents are not displaced from neighborhoods they have called home.
The final report includes structural changes that would make the system more fair and understandable by:
- Create a new tax category for small residential owners: 1 to 3 family homes, condos, cooperatives and 4 to 10 rental properties, ensuring that the rules are applied uniformly regardless of the type of property;
- Evaluate properties in this new residential category based on market value based on sales, thereby ending the legal requirement to evaluate co-ops and condos based on comparable rental properties;
- End fractional appraisals that differ by property category and confuse landowners;
- Remove appraised value (VA) growth caps, widely recognized as one of the main drivers of inequity, and stagger market value changes over five years instead;
- Replace the complicated class-sharing system with a simple, more transparent system where tax rates for individual classes are set for five-year periods, unless they are deliberately changed by city council and the mayor.
The recommendations also include targeted relief for Primary Resident Homeowners to help them better pay their tax bills, including:
Homestead exemption: A fixed or gradual partial exemption is recommended.
- Flat-rate exemption: Principal residents with incomes below $ 375,000 would benefit from a 20% property tax exemption based on market value based on sales. Those with incomes between $ 375,000 and $ 500,000 would benefit from exemptions between 4% and 16%.
- Exemption from the progressive marginal rate: Principal residents with incomes below $ 375,000 would benefit from an exemption of up to 30% based on the market value of their home based on sales. The exemption would decrease for homes of greater value and, for those with incomes between $ 375,000 and $ 500,000, the exemption would be further reduced.
Circuit breaker: In addition to the homestead exemption, a tax allowance for those subject to tax burdens, with incomes below $ 90,550, is recommended.
- Principal residents whose income is less than $ 90,550 and who pay more than 10% of their income in property taxes would receive a tax deduction for the amount in excess of 10% of their income, up to a limit of 10%. $ 000; for those with incomes between $ 58,000 and $ 90,550, the benefit would be gradually reduced as income increases.
“While New York City’s property tax system has resisted reform for forty years, this comprehensive set of proposals offers a realistic way forward that addresses deep inequalities and responds to the realities of large differences in capacity. to pay. I urge city state lawmakers to stand up for these reforms in Albany and show all taxpayers that the government is working in their best interests, ”said Member of the James Parrott Commission.
“The work of this temporary committee charts a roadmap to real estate tax fairness in New York’s property tax system, which has treated too many New Yorkers unfairly for decades. What scares me the most is that if the government does not take the necessary steps towards fairness and transparency now, the inequity between owners will become more and more disparate with each coming year, ”he said. declared Member of the Allen Cappelli Commission.
“Over the past three years, the Commission has worked diligently to find solutions and / or recommendations to make our current property tax system more efficient, understandable and transparent. I believe that the recommendations in our final report make real and substantial progress towards achieving these goals. Accordingly, I would like to thank my colleagues on the Commission, as well as the invaluable support staff at New York City Council, the Mayor’s Office, the Department of Finance, and the Office of Management and Budget for their hard work and their dedication to our mission, “mentioned Kenneth J. Knuckles Commission Member.
“New Yorkers deserve a fairer property tax system than the one we have, which is getting more and more unfair every year. The Commission presents a roadmap for a fairer and simpler system. Our elected officials must follow this path soon ”, declared Member of the Commission Carol O’Cleireacain.
“The Commission was invited to develop recommendations to make the property tax system fairer, simpler and more transparent. The recommendations in this report will do just that and, if adopted, will benefit residents who have been taxed unfairly for too long, ”said Member of the Elizabeth Velez Commission.
About the Commission
Mayor Bill de Blasio and President Corey Johnson announced the creation of the Commission in May 2018. It was responsible for developing recommendations to reform the existing property tax system to make it simpler, clearer and fairer , while ensuring that there is no reduction in income to finance. essential city services.
Beginning in 2018, the Commission conducted a first round of hearings in which members of the public provided comments on the property tax system and the Commission received expert advice. Following a series of meetings of the Commission in executive session, a preliminary report was published in January 2020. The work of the Commission was delayed by the COVID-19 pandemic, but resumed in the spring of 2021. Five Additional virtual hearings were held this year to solicit comments on the preliminary recommendations. In total, the Commission sponsored 15 public events and read hundreds of public comments.
Members of the Commission include Marc V. Shaw, Chairman, Allen P. Cappelli, Carol O’Cleireacain, Kenneth J. Knuckles, James A. Parrott and Elizabeth Velez. The Commission also included ex-officio non-voting members, including Finance Commissioner Sherif Soliman, Budget Director Jacques Jiha, Director of City Council Finance Division Latonia McKinney and Deputy Director and Chief Economist of the finance division of the Raymond Majewski city council.