DOF Publishes FY 2023 Tentative Assessment Roll
On Jan. 18, the NYC Department of Finance (DOF) announced the publication of the tentative property assessment roll for fiscal year (FY) 2023, which shows the total market value of all New York City properties for the upcoming year at about $1.398 trillion, an increase of 8.2 percent from the 2022 fiscal year. According to the DOF, the citywide taxable billable assessed value, the portion of market value to which tax rates are applied, increased by 8.1 percent to $277.4 billion. And FY 2023 values increased from last year but remain below FY 2021 values for many properties, because the city's economy is still feeling the impact of the pandemic.
At this time, the DOF sends each owner a Notice of Property Value estimating their anticipated tax responsibility. The release of the tentative assessment roll marks the beginning of the time period in which property owners can examine and challenge their property values before the roll is finalized in May. The assessed values in the final roll, along with the tax rates and any exemptions or abatements, are used to calculate property taxes for the fiscal year that starts on July 1, 2023.
Values for Class 2 Properties
The total market value for Class 2 properties, which include rental apartment buildings, registered $346.9 billion, an increase of $27.8 billion, or 8.7 percent, from FY 2022. The total assessed value increased by 7.2 percent, to $108.5 billion. Manhattan experienced the lowest market value percent increase for Class 2, at 6.3 percent; Brooklyn experienced the highest taxable billable assessed value percent increase at 11.7 percent.
Class 2 rentals saw a market value increase of 11.7 percent. And the total assessed value increased by 8.6 percent for Class 2 rental apartments. Manhattan had the least market value increase at 8.2 percent and Queens had the highest taxable billable assessed value at 13.5 percent for rental apartments.
Values for Class 4 Properties
The total market value for Class 4 commercial properties increased by 11.7 percent citywide to $300.8 billion. Manhattan had the smallest percent increase in market value, at 10.3 percent. Class 4 market value remains 7.7 percent below its FY21 level, down $25.2 billion.
Permitted Valuation Approach
State law requires that the DOF value all Class 2 properties as if they produce income. To determine a building’s market value, the DOF uses statistical modeling to calculate the typical income and expenses for properties similar to yours in size, location, age, and number of units. The process varies depending upon whether a property has more or fewer than 10 units.
Most rental building owners are legally required to file an annual Real Property Income and Expense (RPIE) statement. To determine a rental property’s market value, DOF uses income and expense information to estimate its current net income. This estimate includes adjustments to the filed information based on DOF's statistical models and assessment guidelines. DOF then applies a capitalization rate to the estimated net income to calculate a property’s market value. The capitalization rate is the expected rate of return based on the income generated by your property.
Smaller Class 2 buildings with 10 units or fewer are also valued as income-producing properties. However, since most of these buildings are not legally required to file a RPIE, the valuation approach is simplified by using the gross income multiplier method. The DOF estimates the typical income per square foot generated by comparable rental properties; generates a total income for the building by multiplying the income per square foot by the building’s total square footage; and multiplies the building’s estimated income by a factor to generate the property’s market value. For example, a building with income of $100,000 and subject to a multiplier of 10 would be valued at $1 million.
Challenging Assessed Values
The NYC real property tax assessment and appeal procedure is calendar driven. With the release of the tentative assessment roll, property owners will now have an opportunity to examine and challenge these values before the assessment roll is finalized in May. In June, the DOF will use the final roll to generate property tax bills for FY 2023.
Request for Review. Owners can file a Request for Review (RFR) form to request that the DOF reconsider a property’s market value based on factors such as finances, comparable sales, building use/classification, physical development, or structure features. The RFR application gives NYC property owners an opportunity to challenge their estimated market values as of Jan. 5, 2023, the taxable status date. The deadline for Class 2 and Class 4 properties is April 3, 2023.
Request to Update. Owners who believe that the DOF has incorrect property information, such as the wrong number of units or square footage, may file a Request to Update with the DOF. If you file your Request to Update form between Aug. 31 and mid-April of the following calendar year, and your changes are approved, you can expect to see the changes reflected in the final roll, published in June. DOF will send you a notification of the changes in a letter between January and June. If you file your Request to Update from mid-April to Aug. 31, and your changes are approved, you can expect to see the changes reflected on the tentative roll that’s published the following January.
Both of these forms are posted at https://www.nyc.gov/site/finance/taxes/property-forms/property-forms-assessments-and-valuations.page. However, filing a Request for Review or to Update with the DOF isn’t a substitute for challenging the assessed value with the Tax Commission.
Tax Commission Appeal. All properties are valued by law according to the property’s condition on the taxable status date of Jan. 5. Owners who want to challenge their properties’ Assessed Values can do so with the NYC Tax Commission, an independent city agency.
This year, the absolute deadline for filing a challenge to a property’s assessment for Class 2 and Class 4 properties is March 1, 2023, and owners who don’t file a tax appeal by March 1 lose any right to contest assessments for the ensuing tax year. Forms to file a challenge are available on the Tax Commission’s website at www.nyc.gov/site/taxcommission/index.page.
Between March and October, the NYC Tax Commission conducts hearings with property owners who have challenged their Tentative Assessments or their representatives to consider whether an assessment should be reduced. At such hearings, information and documentation supporting a property owner’s appeal may be presented. Hearing Officers typically render decisions within weeks of a hearing.
If the property owner accepts a NYC Tax Commission offer to reduce the assessment, the appeals process is concluded, the reduction is effective as of July 1, and the property owner may apply for a refund of any tax overpayment. If the NYC Tax Commission doesn’t extend an offer to reduce the assessment, or if an owner doesn’t accept the offer and believes that a greater reduction is warranted, the tax appeal for the current year may be continued by filing an Article 7 petition in New York Supreme Court on or before Oct. 24 within the tax year to which the assessment applies.