After he got elected, Edward Mangano’s tax overhaul led to the creation of 2 different property assessment systems that are not only unequal but also separate
The Nassau County Executive’s actions seem to have had a massive impact on the county’s economy.
1 system covers about sixty-one percent of the country’s commercial and residential property owners who went ahead to appeal their assessments in this period. Over the past 7 years, their tax bill went up by 466 dollars or just 5% with basically 4 out of 5 appeals successful.
The second system covers thirty-nine percent of the people that didn’t yet appeal. For these owners, the tax bill went up sevenfold or by almost 36 percent to 2748 dollars.
All of these discoveries have been properly documented in a Newsday series of data studies that currently provides one of the most accurate and comprehensive analyses of the assessment system in the county. These studies are performed with the purpose of exposing hidden difficulties among less affluent residents and senior citizens that usually do not appeal. The studies also shed light on the massive changes in the way tax are distributed within the county between the lower valued and higher valued properties.
Over the past 7 years, the analyses revealed a shift of one point seven billion dollars in taxes from those who appealed their assessments successfully to those that didn’t. It was discovered that 10% of the owners whose appeal was successful had properties of at least one million dollars prior to the reassessment. After it, the reassessment garnered almost 50% of the benefit. What this means is that over seven hundred and ninety million dollars in tax were transferred to lower-valued parcels. As a result, homeowners whose property is worth at least a million dollars are currently paying less in taxes than they did 7 years ago.
The overhaul was very much welcome in an environment where certain people have been paying more taxes than others. This was also due to the fact that in ’97 a suit was filed in this regard, alleging that minority homeowners were paying a lot more taxes than other groups. Functioning under a two thousand court-supervised settlement that requires a great level of assessment accuracy, officials decided to lower the share of less expensive properties and increase taxes on properties worth at least 1 million dollars or more.
After this change, the residential assessments in the county were finally in compliance with all of the widely used professional standards for accuracy and fairness. However, after partnering up with 2 national assessment experts and conducting a residential property data study, Newsday discovered that it is currently non-compliant with all of them.
When county officials were inquired about this, they did not question any of the results. Mangano did go on the defensive, protecting his reforms saying that they can help minimize the costs for the county’s assessment system. He also estimated that thanks to these reforms, the county managed to save between twenty to thirty million dollars a year. He went on to say that every future generation and single taxpayer benefitted from them since they helped the county by not creating debt.
When the county officials had to respond to evidence that stated fewer grievances were filed by less affluent homeowners, they said that they had more than forty workshops per annum with the purpose of explaining the steps homeowners can take to challenge assessments. They even posted a video detailing the process of filing on the internet. This is something which is solely allowed by Nassau County.
The head of the Nassau County grievance arbiter, Robin Laveman, said that the reforms brought by Mangano saved the county a lot of money by replacing a faulty and old system.
Mangano’s purpose was to fix a system that was straining the county budget since many homeowners have already successfully appealed their assessments which resulted in massive refunds.
Thanks to Mangano’s reforms, the county managed to save between one hundred and fifteen million to 299 million dollars, based on different factors, such as the impact of a recently launched program that influences commercial property refunds, and inflation.
First, the solution involved awarding highly discounted reductions on a much greater number of appealed properties than ever. This was done in order to settle cases prior to tax refunds having to be paid in order to save money. Secondly, there was the issue of assessment freezes which resulted in those reductions being locked in from year to year. Over a period of 6 years during which the value of properties went up, seventy-eight percent of the 858 thousand grievances filed resulted in massive reductions, sometimes in double digits.
If we look back in the history of the country, we can notice that it’s generally high-value property owners who file the greatest number of appeals. The effects seem to be apparent in all 3 county property classes which were included in the analyses conducted by Newsday. However, there was a 4th class which was excluded, composed of phone poles and other types of utility properties.
When it comes to the residential class which includes low rise condominium buildings and private homes, the gap between unappealed and appealed properties was even greater. The median tax bill increased by thirty-six percent for unappealed properties, while the appealed properties saw an increase of five percent to 431 dollars.
The median bills are those of regular homeowners, including residential and commercial homeowners, whose burden is in the middle between the smallest and largest bills. In this article, we’re referring to the median bills as the standard ones.
The category including the high-rise condominium buildings and cooperatives, the bills for a standard appealed property rose 4% to 202 dollars compared to sixty percent of 2299 dollars for the unappealed property.
For commercial properties, the gap between the 2 groups was five hundred and eighty-eight dollars. However, this number fails to include the refunds received by properties after battling with courts for years.
Over 6 years, those 1-year disparities will add up. The general tax bill for unappealed property increases was greater than those of appealed properties by eight thousand nine hundred and fifty-nine dollars over that timeframe.
It’s true that the US tax code is indeed intimidating and because of that, many Americans don’t really want to dig through IRS forms and receipts each spring. The good news is that if you’re the proud owner of a home, then you can take advantage of many deductions that can save you a lot of money in taxes this year. Because of that, it’s certainly not a good idea to let the fear of paperwork intimidate you.
If you’re looking for the best tax breaks, you could easily get the biggest bang for your dollar from your home deductions. If you overlook them, then they may just cost you.
For instance, let’s take the most popular deduction, the interest that you have to pay on your home mortgage. Collectively, US taxpayers get a break of approximately one hundred billion dollars a year from this item alone.
As a homeowner, you certainly have access to such breaks plus many others which can save you a lot of money every year. Here are the 7 biggest ones we think you should know about.
This is the most popular break for taxpayers. So if you have a thirty-year mortgage on a two hundred and fifty thousand dollar home, this is going to result in approximately ten thousand dollars interest payments over the first year. You should also not forget about the condo or vacation home you bought, since you can easily use the interest you paid on those, as well.
Real Estate Taxes
The deduction for local properties is yet another great tax break for Suffolk and Nassau County homeowners and the good news because you live on Long Island, it can be pretty high. In a lot of ways, this tax break is more common than many others, including the mortgage interest deduction. While many people own a property and do not have a mortgage, everyone pays real estate tax.
If you’ve borrowed and do not have twenty percent equity in your home, then you have to get PMI (Private Mortgage Insurance). This is required for the protection of the lender, in case the loan defaults. PMIs usually costs between point five and one percent of the entire loan amount per annum, so if you have a large loan balance, then deducting these payments can add up fast.
When you have 1 point on your home mortgage, that point is valued at one percent of the total loan amount and it has to be paid upfront to the lender in order to minimize your total interest rate. Because of that, many lenders pay points for the purpose of getting a better lending rate and the good news is that they’re also going to get a tax break.
However, it’s only possible to deduct the amount of the points paid in the year you’ve paid them, so if you bought a home in the past year and paid points, then make sure you don’t miss this break.
If your home is damaged by fire or a storm, then you can offset some of the losses thanks to the tax break provided by the IRS. Even if you do have a home insurance policy, you cannot double-dip and get compensated twice for the losses. However, if you have a great insurance policy, you may still receive some tax benefits. You can easily find out how much (if any) of your losses are tax-deductible by doing some simple math on Form 4684.
In case you’re self-employed and own a home that meets IRS standards, you can take advantage of some pretty great tax benefits. For example, let’s say that your home office represents five percent of your home’s entire square footage. In this case, you’re eligible to deduct five percent off your property’s taxes, insurance, utilities, but also general repairs. Just keep in mind that there are strict rules in place on what constitutes a home office that sees exclusive or regular use. Because of that, you need to speak to your tax consultant or check Publication 587 to verify whether you qualify for this deduction or not.
As a single taxpayer, you can sell your main residence for a two hundred and fifty thousand dollar tax-free gain, while if you’re married, then you can do so for double that amount. However, if you managed to maintain accurate records of any capital expenses on your property, then it’s easy to increase the tax-free gains beyond those limits. While $500 thousand dollars sounds like a lot of money, over a thirty-year mortgage there can be a major appreciation in your real estate market. As a result, even if this year you won’t actually use the documents from your capital improvements, make sure to keep them until you plan on selling your property.
Residential Energy Credit
When it comes to big-ticket systems, such as geothermal heating units and solar panels, you get a thirty percent tax break from the REEPC (Residential Energy Efficient Property Credit). This also includes smaller amounts on items such as water heaters. It’s true that compared to the rest of the breaks, these ones are smaller, but the good news is that they’re a credit and not a reduction.
Why are reassessments being performed by my municipality?
When it comes to taxes, it’s fair to say that they are practically a 0 sum game. This means that what a property owner doesn’t pay, is going to be picked up by another individual. Therefore, if a neighbor’s property is greatly under-assessed, then this results in them paying fewer taxes while other homeowners subsidize the neighborhood’s or the taxpayer’s share of the bill.
In general, a property becomes under-assessed over a certain period of time when assessments are not properly updated. This means that the more a property’s value increases compared to that of its neighbors without having its assessment properly adjusted, the more it’s going to be under-assessed.
Will more taxes be collected by my town after performing a reassessment?
There are actually many cases where property owners do complain about the fact that their town or city decided to update its assessments for the purpose of collecting more taxes. In fact, this misconception can be easily dispelled by having a better idea of the municipal budget process.
Assessments are influenced by the assessor
The role of the assessor is to ensure that each property owner gets a proper assessment of his property based on the current market value. Several months after the assessments are done, counties, towns, cities and school districts will calculate the amount of money required for collecting taxes.
If you want, then you could think of the tax money collected by the county, school district or city as a pie. It’s not the assessor that’s going to influence the size of the pie; this is actually the job of county legislatures, school boards, town boards, and city councils. The assessor’s duty is to make sure that everyone gets a piece of the pie taking into account the current market values.
In the event a reassessment leads to an increase in assessments because of the increasing property values, it’s expected that tax rates will be proportionally lower. The reason why that happens is that the tax levy will be distributed over a broader tax base. If the taxes remain unchanged or they increase, this means that school budgets or municipal budgets are increasing.
Will my taxes increase if my town does a reassessment?
It’s important to keep in mind that a reassessment doesn’t necessarily imply an increase in taxes. However, if your assessment increases, it doesn’t actually mean that your taxes are going to go up.
After a property is assessed, the process should reflect that property’s market value. If market value decreases or increases and the assessments won’t reflect these changes, this is going to result in a wide range of property owners having to pay more taxes than they should. At the same time, other homeowners are going to pay fewer taxes.
In some cases, it’s not uncommon that taxes will be adjusted among various kinds of property. It can also happen that the market value of all properties in a neighborhood increased after the last reassessment, while at the same time the worth of brick houses increased a lot faster than that of homes made of wood. In this scenario, those owning brick homes will have to pay more taxes, while the property owners of wooden homes are going to pay fewer taxes. It’s because of situations like this one that municipalities need to frequently perform reassessments.
There are cases when, during a reassessment, the municipality may shift from a fractional assessment level to one hundred percent. So what this means is that if the initial assessment level was ten percent, your property’s assessed value may go from nine thousand to ninety thousand dollars and you may not have to worry about increasing taxes. We all know that the market value of properties does decrease and because of that, such properties will experience a decrease in their assessed value.
What happens during a reassessment?
The reassessment is performed in order to ensure that all properties are finally assessed at a uniform assessment level. For the purpose of analyzing the real estate market, the assessor will be required to scrutinize the most recent property sales, but also a few other factors. The assessments in the municipality are going to be property reviewed to see where the assessments need to stay the same, decrease or go up. This may not or it could include the visual reinspection of all or just some of the parcels. It can also happen that mailers may be sent to homeowners and requests them to update or simply correct the info on their home. Individuals’ whose reassessments are going to be adjusted will be notified about it via mail.
Will the share of State Aid to my school district decrease in the event of a reassessment?
The answer is no. This actually makes use of a wide range of factors in order to calculate the amount of aid the school district is going to receive yearly. To include one such factor, it’s the real property wealth in the school district. To have the peace of mind the State Aid formula will be equitable for every school district, it’s important that it won’t be founded on assessments. Given the fact that some municipalities have assessments as old as one hundred years and some of them have them up to date, Stat Aid is not going to be equitable while being rooted in those specific assessments. Instead, the rate of real property wealth (according to the state,) is incorporated in the formula for calculating the State Aid for each particular school district.
There’s a similar belief that lingers around the false idea that the State Aid of a school district is going to be lower as the equalization rate increases proportionally. However, that’s false. It’s important to keep in mind that for the State Aid formula, the State’s estimate of a district’s property wealth is going to be taken into consideration.
Are reassessments required in New York State?
The RPTL (Real Property Tax Law) of N.Y. addresses the problem of assessment equity. It’s not necessary that assessments are one 100% of market value, but it does set a standard that they should be appropriate at an even percentage of market value.
On top of that, it’s important to keep in mind that there’s no special mechanism that enforces the adherence to this standard. Employees of the State Office of RPTS do advise themselves with metropolitan officials and then set out steps for the purpose of providing fair assessments. Also, the agency does indeed manage State Aid programs so reassessments can benefit from incentives. However, beyond that, ORPTS’ role is that of offering advice.
Contrary to popular belief, the process of real estate tax reduction is not lengthy. In fact, with the right Tax Grievance firm, your grievance will be settled successfully and quickly. The Heller & Consultants Tax Grievance is the Long Island Tax Grievance agency that you need to file your case and reduce your taxes without any hassle.
To get started, visit our website grieveourtaxes.com and complete the simple Nassau Tax Grievance or Suffolk Tax Grievance application form to sign up with us. Please note that we do not charge you anything until the case is won and your taxes are reduced. In the case we cannot get you the reduction, you will not pay us anything. We will pay the filing fee, appraisal cost, and other costs.
Upon receiving authorization, we thoroughly analyze your property to determine whether or not you can receive tax reductions. If we determine your property can not receive any reductions, we will inform you of that at that time and will not continue to file a tax reduction claim. If we find that your property has been overassessed, we will immediately do an appraisal and file a complaint with the office of the assessor. The assessor’s office gives property owners a few weeks window to file their tax reduction grievances, the last day of the period is known as the grievance day. To ensure that your grievance meets the deadline, we at Heller & Consultants Tax Grievance make all the prior arrangements for you.
We present your grievance to the Board of Assessment Review which is composed of homeowners in your local town. After reviewing your grievance, the board decides whether your tax reduction is warranted and publishes their decision within a period of 6 weeks. At this point, they determine whether your property will get a reduction.
Our staff analysts will then discuss whether the reduction is satisfactory or not. If not, we file a SCAR (Small Claims Assessment Review). This is a lawsuit filed in the Supreme Court. The assessor will then contact us and make an offer based on what the property value is. If we find that the offer is reasonable, we accept it and write a Stipulation of Settlement. We will then sign a settlement with the assessor and file it in the county courthouse.
If still we are not satisfied by what the assessor has offered, we go to trial and leave it up to judge to decide what the property is worth. When the judge makes a decision, we send you a copy of the decision and the bill. In some cases, the court case can take a period of up to one and a half years.
Upon a successful tax reduction grievance, your assessment will stay reduced for many years unless you make major improvements in your house or there is a town-wide re-assessment on all the properties. Heller & Consultants Tax Grievance only charge 50% of first year’s savings only if we succeed and your taxes get reduced.
If you have any further questions call us at 631-782-3177.
Commercial real estate transactionsare on the increase and the volume is expected to reach a new high in 2016. Because of this, a lot of owners have started to research this trend and the way their buying price is going to influence their commercial property tax. We have a lot of potential buyers that get in touch with our office and request our expertise to analyze their tax burden if they decide to sell. When reviewing a property purchase and its property tax situation, there are actually quite a few things to bear in mind. In the paragraphs below, we’re going to take a closer look at some of the most popular questions and focus on misconceptions about assessments and purchase prices.
Will my property taxes go up as a result of my purchase price?
A portion of our clients has contacted us with concerns that after the sale, their assessed value and corresponding property taxes are going to increase. Because of that, it’s important to keep in mind that the purchase price differs from one jurisdiction to another. For instance, there are no more yearly reevaluations performed by Nassau County anymore, but they do however plan on performing a reevaluation for the assessment roll in 2018. Therefore, if a property is found to be a part of the jurisdiction performing the reevaluations then, the sales price will definitely be considered during the process.
Also, it’s very important that the factors surrounding the sale are carefully considered prior to raise the assessment to the purchase price. It’s vital that the counsel informs the assessors about these factors and offers evidence as to why they need to be reviewed in accordance with the buying price.
There are many jurisdictions that haven’t performed reevaluations for many years and in these types of cases, the assessor won’t be able to raise the assessment as a result of a sale. It’s true that there may be cases when the property has been under-assessed, but even then the assessor cannot alter the assessment. If he does, then this is going to result in what is known as a selective reassessment. According to info form the highest court in the state, if a property is going to be reassessed based on its sale price in these jurisdictions, the assessment should be returned to its initial value because this change is illegal.
Will I get lower taxes if my buying price is below the assessment?
In this case, you need to file a grievance which is going to be reviewed by the assessor. He is going to check the property and also its claimed assessment. The assessor will require proper documentation, but also some information about the factors that influence the sale in order to make a decision on whether the sale was performed properly. After such a determination, those who’ve bought an over-assessed property will be able to save a lot on taxes.
What else could influence the assessor’s opinion?
In order to ensure that the seller and buyer aren’t related in any way, the assessor needs to review the closing documents and contract of sale. Counsel needs to also explain to him any extra considerations that may have impacted the transaction. For instance, a 1031 exchangemakes it easy for homeowners to defer capital losses or gains due upon sale, as long as the property is received in 6 months or one hundred and eighty days. Buyers whose 1031 benefits are almost expired are certainly going to pay a higher purchase price for a home rather than risk seeing their 1031 period expire. If the assessor isn’t aware of this vital info, then he’s going to be unable to consider it into their determination.
In the same way, property bought so that it can be used can impact the price paid. This is an even more important factor if the buyer occupied the home before buying it. In this case, the intangible value of a familiar location, not colleagues and clients, possible loss of staff and the price of moving may convince a current occupant to pay more for the property. Because of that, it’s important that such factors are presented to the assessor as vital elements in the buying price.
The assessor also wants to ensure that the sale wasn’t distressed and that the property was sufficiently exposed to the market. It’s true that bank sales are usually distressed, but the recession greatly impacted the way some banks shed assets. In fact, many of them have great relationships with the real estate community, making it a lot easier for them to market assets. Still, bank sales can still sound the alarm on a distressing situation. Because of that, property owners need to find a way to prove to the assessor that the price of their property is in line with the market value.
All the factors we talked about have to be considered in accordance with their specific jurisdiction.
Did you know that you can actually reduce your property’s tax bill if you appealthe value assigned to your property by the taxman? In fact, it’s the estimated value that is used for the purpose of calculating your taxes. If you want to reduce your taxes, the best way is to prove your property is worth less than its estimated value. Doing so is easy by researching online or calling your realtor. If in your research you discover that you’re right about this, then the process for appealing can take up to 18-24 months to finalize.
Read your assessment letter
Nassau & Suffolk Counties regularly estimate the real estate they tax. This means that when they receive your estimation, it’s going to contain info regarding your property (such as legal description and lot size), but also the estimated value of your land and property. To calculate your property tax, the local government will multiply your property’s assessed value by the local tax rate(values vary from town to town). However, if you think that your home’s value is a lot higher than its actual value, you should dispute it right away.
Consider these 5 steps when challenging your assessment:
1. Assess whether an appeal is worth your time
The amount of time and effort you may choose to put into a dispute is influenced by the stakes. In 2015, the median property tax was in Suffolk County was $7,192, Nassau County was even higher with a median of $8,711. That’s around 1.79 percent of the approximate $487 thousand median value property. Therefore, if you manage to reduce your home’s assessed value by 15% at a tax rate of 10 percent, you’ll save $1,838 dollars a year in the process.
However, if you live in certain parts of Nassau County, where the tax rates are about 15% of a property’s value, potential savings are even higher. The same thing is true for communities with property prices well above the Nassau and Suffolk’s median.
2. Verify the data
Ensuring the info about your property is accurate is very important. Is the size of the lot accurate? How about the number of fireplaces and/or bathrooms? If there are errors among the facts, then you should dispute them right away.
3. Get the comps
You may want to speak to a realtor and have him find 3 to 5 similar properties that sold recently. It’s also a good idea that you use websites such as realtor dot com to learn more about the average value of properties that are comparable to yours in terms of location, condition, style and also size. On the other hand, if you’re not short on cash, you could pay 350 and 600 dollars to hire an appraiser for the purpose of getting a professional opinion regarding your property’s value.
After you manage to determine the comps, verify the assessments on those houses. If your local government doesn’t maintain public databases, request a neighbor to share tax info or look for help from a real estate agent. If the estimation on their comps is lower, you can dispute yours if it’s too high.
Despite the possibility that the assessments are similar, individuals can still show that the comps are superior to theirs and therefore take advantage of relief based on equity. It could be that your neighbor added something to his property while you were having a hard time cleaning up storm damage. If this is the case, then you could no longer say that the properties are comparable.
4. Present your case
After careful research, get in touch with a local assessor. The majority of them will be willing to (informally) talk about your assessment on the phone. However, if the assessor’s review isn’t satisfactory to you or if he doesn’t want to discuss it on the phone, you may want to request a formal review.
Be mindful of procedures and deadlines. A standard review doesn’t require you to appear in person, yet it can take as little as 30 days and as long as 90 days. When it’s done, you’ll receive a written decision.
5. If you don’t like the review, appeal it
If you’re not satisfied with the review, the decision can be easily appealed to in New York State Supreme Courtand it’s your choice whether you hire an attorney or property tax grievancefirm for it or not. In case you’ll find yourself before a judge, the dispute can take up to a year to resolve. Fortunately, homeowners with good cases generally triumph and more than 66% of the tax appeals in Nassau County.
Things to bear in mind when weighing an appeal:
Another way to save on your property tax is to, first of all, establish if you qualify for property tax exemptions based on factors such as military service, disability, etc.
Only your real estate assessment can be lowered by the appeals board and not the rate at which you are taxed.