Property Assessment and Tax Definitions

Market Value:  The estimated value of a property if bought or sold on the open market.

Property Class:  There are only four types of classes a property in NYC can full under: One(1), Two(2), Three(3) or Four(4). Assessment Ratio: A set maximum percentage for each property class.

Assessed Value: The tentative amount the property will be taxed. (Market Value times Assessment Ratio.)

Property Tax Reductions: NYC offers programs to help reduce property taxes. Some examples are:

• STAR Exemption
• Senior Citizens Exemption
• Veteran’s Exemption
• Disable Homeowner Exemption
• Coop/Condo Abatement
• Various Reductions for Businesses

Taxable Value: The amount your taxes are based on. It is determined by multiplying the Market Value (minus any reductions) by the appropriate class Assessed Percentage Rate.

Tax Rate: The rate for each tax class used to multiply by the Taxable Value.

Tax: The final dollar amount due for your taxes - (Taxable Value times Tax Rate).



Example for a Class One Property, worth $450,000, with the basic STAR exemption:

Annual Tax in Dollars for above Example: $4,408.70



How Finance Determines Your Assessment

The annual assessment is based on a formula established by New York City and State real property laws.  The Dept. of Finance cannot make any changes.  State law requires the same maximum assessed value percentage of market value for each tax class.  This property tax rate is set each year.

The State legislature limits how much an assessment can increase in any given year.  This is true regardless of how much the property’s market value increases. Read the following details about determining your property assessment and final tax:

1) Finance assigns your property to one of four tax classes.

Class 1: Most residential properties of three units or less.  Some examples include1-, 2-, and 3-family homes, small stores or offices with only one or two apartments attached.  This also includes most condominium buildings having three stories or less, and residentially zoned vacant land in all boroughs except Manhattan.

Class 2: All other property that is primarily residential, such as cooperatives and condominiums. There are three subclasses in Class 2: 2a (rentals with 4 - 6 units); 2b (rentals with 7 - 10 units); and 2c (condos with 6 -10 units). This also includes apartment buildings with more than 10 units.

Class 3: Includes property, with equipment, owned by a gas, telephone, or electric company.

Class 4: Includes all commercial and industrial property, such as office, factory buildings and vacant land other than in Tax Class 1.

2) State law requires Finance to assess properties in each class at an equal percentage of value (called the “assessment ratio”).

The estimated market value is multiplied by the assessment ratio for the property's tax class to obtain the property’s “Assessed Value”.
 
Class 1: The maximum assessment ratio is 6 percent. For example, a property that Finance estimates to be worth $1,000,000 would have an assessed value of no more than $60,000.

Class 2, 3, & 4: The Assessment ratio is 45 percent. For example, a property that Finance estimates to be worth $1,000,000 would have an assessed value of no more than $450,000.

3) State law requires Finance to follow certain rules related to assessment changes.  This does not apply  if there is a physical change to your property, such as new construction or demolition.

Class 1: We cannot increase assessments on a property more than 6 percent each year or more than 20 percent in five years.
 
Class 2: We cannot increase assessments on properties with ten units or fewer more than 8 percent each year or more than 30 percent in five years. Assessment changes on properties with eleven or more units must be phased-in over five years.

Class 3: There are no assessment limits on Class 3 properties.

Class 4: Assessment changes must be phased-in over five years.

4) Property Tax Reductions
Finance offers many ways to reduce both residential and commercial property taxes.  These programs must be applied for by you, your building management or company.

5) Property Tax Rate
The property tax rate is determined by the City Council and signed into law by the Mayor.

Related Links
Assessment Roll
Calculating Your Annual Property Taxes
Statements of Assessment Procedure

Forms and Publications

"Annual Notice of Property Value" Brochure
 Download Brochure

Request for Condominium Re-allocation Affidavit
 Download Affidavit

Request for Review of Property Value
(for Class 1 properties)
 Download Form

Request for Review of Property Value
(for Class 2 and 4 properties)
 Download Form

Request to Update Property Data
(for Class 1 Homes)
 Download Form  

Request to Update Vacant Land Data
 Download Form