The COVID-19 pandemic has caused property tax disparity to worsen in New York City, driving housing costs higher for many, according to a report released by New York State Comptroller Thomas DiNapoli.
Property tax disparities have been well documented for decades, but the report found even when property values declined for many condos, co-ops and rental apartments due to the pandemic, property tax bills continued to rise. DiNapoli determined this was due in part to market volatility and aspects of how the city calculates property taxes — a system that has been widely derided for years yet continues to defy reform efforts.
“New York City’s residential real estate market has proven resilient to the pandemic as prices remain strong,” said DiNapoli. “This benefits the city because property taxes account for about 45% of the city’s revenue. However, property tax disparity has gotten worse since the pandemic, which is concerning because it’s driving up housing costs for those less able to afford it, and at the same time, the city faces a shortage of affordable housing. A recalibration of the process used to determine tax bills is needed if the city wants to remain accessible to working- and middle-class families.”
New York City sets different tax rates based on class of property, including for single or multifamily homes with more than three units. In addition, co-ops and condos are generally not assessed based on market value driven by sales prices, but instead on the value of similar rental apartments, including rent-stabilized units or those in a building receiving a tax exemption.
Market value increases are also limited by annual and five-year caps that differ based on property type. As a result of these caps, a decline in market value on lower-valued properties does not necessarily result in a lower tax bill. Instead, lower-valued properties more often bear a far greater tax burden than the city’s highest valued properties, such as those in brownstone Brooklyn.
For example, during the Great Recession the median market value for family homes dropped by 14.3%, but the median tax bill increased by 32.5%. Similarly, during the pandemic, the median market value for multifamily properties declined by 2.7% but the median tax bill increased by 5.8% from fiscal years 2021 to 2023.
DiNapoli’s report found these differences were even more pronounced from fiscal years 2007 to 2024 as the gap in tax burden based on property value continued to widen. The median tax bill for the city’s most expensive family homes grew by 131% during this period, compared to 149% for the city’s least expensive homes.
Translation: the rich get richer and the middle class gets higher taxes.
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