Co-ops and Condos got their 2019-2020 property tax notices in mid-January of this year, and it’s a safe bet that everyone is unhappy – particularly condo owners. Their average taxes citywide will go up over $1,200, more than twice the average increase per unit for co-op owners (see table on page 8 of print and digital magazine).
“Condos’ percentage increases exceeded co-op increases in every category,” says attorney Benjamin Williams, a member at Rosenberg & Estis. In particular, taxes per apartment are increasing faster than market value per apartment, most likely as a result of several factors, including:
• new construction;
• the phasing out of exemptions such as the 421-a tax exemption; and
• the phasing in of prior years’ assessments, called “transitional” assessments.
Transitional assessments phase in the past five years of changes in actual assessment, according to Williams. What that means is, if last year you were assessed at $5 million, and this year your assessment doubled to $10 million, your actual tax bill would not double immediately. Instead, the taxable assessment increases by one-fifth of the difference between $5 million and $10 million, or $1 million per year for five years, giving you a transitional assessed value of $6 million in the first year.
The city’s Department of Finance assesses co-ops and condos as if they were rental buildings. Even if co-op and condo apartments aren’t selling for more money, if area rents are going up, then co-op and condo assessments will go up.
“Brooklyn has the biggest increase in average tax per apartment, at 25 percent,” says Williams, “while the average market value only increased location type average tax per apartment average Market Value per apartment get a property’s actual assessment] and multiply that by the 12.6 percent tax rate, you’d see that without the transitional assessment phase-ins of prior years’ assessments, and without exemptions, the taxes on a typical Brooklyn condo apartment would approach $10,000” – instead of the roughly $4,000 they actually are. As exemptions end and assessments phase-in and stabilize, taxes go up. Since co-ops have been around longer than condos, they have more stabilized assessments. Co-ops also do not usually get a 421-a exemption. So the difference between co-ops’ current and future assessments is not as great, which means smaller tax increases over time compared to condos.