NYC Property Tax Reform Commission Releases Final Report
When Bill de Blasio campaigned to be mayor eight years ago, he pledged to fix New York City's property tax system. In May 2018, Mayor de Blasio and Council Speaker Corey Johnson convened the New York City Advisory Commission on Property Tax Reform to recommend reforms to the system to make property taxes more fair, straightforward, and transparent.
Ultimately, the former mayor fell short of his goal to reform the property tax system. With two days left before the end of his second term on Dec. 31, the commission released its final recommendations.
One level deeper: The commission’s final report, entitled “The Road to Reform: A Blueprint for Modernizing and Simplifying New York City’s Property Tax System,” recommends sweeping changes to the current system, with a particular emphasis on smaller residential properties. The Final Report includes "structural changes that would make the system more equitable and understandable" by:
- Creating a new tax class for small residential property owners: one- to three-family homes, condos, co-ops, and four- to ten-unit rental buildings, ensuring that rules are applied uniformly regardless of property type;
- Valuing property in this new residential class based on sales-based market value, thereby ending the statutory requirement to value co-ops and condos based on comparable rental buildings;
- Ending fractional assessments that differ by property class and “confuse” property owners;
- Removing assessed value (AV) growth caps, “widely recognized as one of the primary drivers of inequity, and phasing in market value changes over five years instead;” and
- Replacing the class shares system with a “simple, more transparent system” where individual tax class rates are fixed for five-year periods, unless deliberately changed by the City Council and the mayor.
Other recommendations from the de Blasio commission include:
- Primary residents with incomes below $375,000 would receive a 20 percent property tax exemption based on sales-based market value. Those with incomes between $375,000 and $500,000 would receive exemptions between 4 percent and 16 percent;
- Primary residents with incomes below $375,000 would receive an exemption of up to 30 percent based on their home’s sales-based market value. The exemption would decrease for higher-valued homes and, for those with incomes between $375,000 and $500,000, the exemption would be further reduced.
The bottom line: The commission’s recommendations are not binding and it’s up to the new mayor’s administration now to decide whether or not to tackle a reform of the city's property tax system. As a candidate, Mayor Eric Adams has pledged to resolve inequities in the city’s property tax in his first year in office. In a Bloomberg television interview, then-candidate Adams stated, “It is my desire to get this resolved within the first year. Let’s put together a task force that sits down and comes up with real recommendations and solutions.”