Taxes are an inescapable fact of life. If you’re a property owner in New York, property taxes form a big part of your tax liability. Property tax is paid on property owned by individuals or other legal entity and varies from one state to the other. This tax liability depends on the market value of your property.
The basis of property tax is the property value, which the authorities get from the property tax assessment. It’s important to understand the details of the property tax assessment process because it directly affects your tax bill. New York has the highest tax rates as residents spend almost 13.8% of their annual income on state and local taxes.
It’s important to remember that failure to pay property taxes, penalties, and accrued interest could lead to loss of your property. For these reasons, it’s important to learn more about all factors affecting your tax deductions and the tax grievance process.
This post examines property tax assessments, their effect on your property tax liability, and how to handle the process.
How is Your Property Tax Calculated?
Property tax is primarily based on the property’s value. The property value varies from year to year and is determined on a specific date of the year. The intervals of value assessment vary in different jurisdictions. While in some areas the assessment is done annually, in others the process is done during property transfers.
In New York, property tax is determined using the assessed value. To calculate the annual property tax in New York, you multiply the taxable value of your property by the tax rate (mill rate) for the property’s tax class. The rate changes every year. For example, in NYC, the average effective property tax rate is 0.88% but rises to 1.69% statewide.
The authorities can carry out a property assessment in three ways:
- The replacement method/ cost method
- The sales comparison method/ the market approach method
- The income method for business properties
Exemptions are subtracted from the assessed value to give the taxable value. The tax authorities apply the tax rate to the taxable value to show what you owe in taxes. New York State residents’ exemptions include the State School Tax Relief Program, or STAR, and the homestead property exemption to lower the amount of their home’s value they are taxed on.
When determining property tax, New York state authorities consider public goods and services. Public goods include facilities like public schools, and parks, sewer lines, and roads. Public services include police services, fire services, garbage pickup and recycling.
Each of these public expenditures form a component of the applicable tax rate. Due to such calculations, there are cases where the assessed value of a property can differ from the actual value of the property in the market.
If you feel the property assessment is not right or seems too high, you have a right to appeal the assessment. To do this successfully, you need the professional services of a tax expert.
What Makes Your Property Tax High or Low?
The biggest factor in determining property tax is the assessed value of your property. The other crucial factor in your property tax bills is the use of the property. For instance, are you using the property for residential, commercial, rental, agricultural, or is it vacant land? Some properties such as churches and charity offices might be exempt from taxes.
The tax multiplier is applied uniformly for property in the same category but differs from one category to the other. While the tax multiplier is uniform in the same category, there are other factors that affect the final tax figure. These include location, size, age, and architecture. Your property tax bill changes from year to year depending on fluctuations in perceived market value.
Using a Tax Expert in Property Assessment
A favorable assessment is crucial if you want to lower your property tax bill. The smartest move is to use a tax expert to file any grievance against property tax issues. A property tax expert understands property taxation laws, regulations, and deductions, assessment laws at both state and federal levels.
Tax professionals help in the following ways to ensure a favorable property tax assessment:
- Tax rates/market values: Your tax advisor ensures that you understand the tax rate and the market value that the assessor is using to calculate your tax assessment. If one of these factors is wrong, you are free to appeal.
- Analyze the assessment for errors: A tax expert ensures the information on your property card is correct. They check government records relating to your property- location, size, dimensions, use, etc. These professionals ensure your information is up to date and point out any discrepancies that impact your assessment negatively.
- Review comparable properties: If you file a tax grievance, your tax advisor helps review data pertaining to the comparable properties used in the assessment.
- Consultancy: A property tax expert offers advice in reducing your tax burden. For instance, they advise you to avoid building before an assessment. Home improvement projects like a pool or a garden shed improve the value of your home, and hence a higher tax assessment may be levied. Avoid building permanent structures before an assessment. They also advise regarding your home’s curb appeal, which is highly subjective.
- Advice on your role: The tax expert might advise you to act as a “tour guide” for the assessor to ensure they see the whole picture to avoid bias.
If you have an issue with the assessed value of your property in New York, you can file a tax grievance. The best approach is to use a tax grievance company, which will have the expertise and resources to help you achieve positive results.
Heller & Consultants is a tax grievance firm with decades of experience across Nassau or Suffolk counties, New York. We have worked with thousands of aggrieved property owners over the years to get favorable property tax assessments.
Contact our team today for dedicated advice on your property assessment in Nassau and Suffolk counties, New York.