PROPERTY ASSESSMENT

Quite simply a property’s assessment when assessed is based on the market value of that property.

Market value is “the most probable price which a property should bring in an open and competitive market under all conditions requisite to a fair sale.”

The grievance process in its essence is a complaint that the equalized value of your property is incongruous with the actual market value of the property. The assessed value of the property is determined by the Town Assessor. While there are four approaches to value which the Courts recognize, Assessors tend to favor: (1) the comparable sales approach for condominiums, single-family and two-family homes (2) income approach for multi-family residential, co-operative buildings, and commercial property broadly. As to industrial and warehouse property assessors still favor the income approach but also give heed to the reproduction cost less depreciation.  Please note:  in 2005 a law was passed which requires municipalities to accept the capitlized income approach for rental property from petitioners when it is properly documented. 

Assessments are determined by the assessor and tend to be periodically updated when (1) the assessment is contested (2) the property is altered by construction (3) the property is sold in an “arms length transaction.” or (4) when the Town reassesses broadly. While these are not the only times assessments are changed they are the most notable examples. Note: absent policies which apply to all properties municipalities should not be selectively reassessing individual properties. The State has produced a manual to assist assessor's in the task of assessing property.  This manual is available at the below link:

http://www.orps.state.ny.us/assessor/manuals/vol7/part1/index.htm.

There are a few municipalities which are currently reassessing properties annually based upon a State program which provides a credit for those municipalities which keep their assessments at full market value. The vast majority of jurisdictions submit sales data to the State enabling the State to set an Equalization Rate (which is essentially a conversion factor between the Assessed Value and the Market Value).

Since most New York jurisdictions have not undergone a re-valuation in a large number of years the assessed value tends to be a minor fraction of the Market Value. For instance in the Town of Mount Pleasant the Assessments were equal to 48% of value in 1954 and now are equal to 1.4% of value. In municipalities which have not reassessed tax burdens have marched higher in lockstep across property types and levels of upkeep while actual market values have undergone significant variation based upon both upkeep and property type. The disparities generally increase over time as property assessments are adjusted based upon building permit additions and other factors which often do not impact long-term value as significantly as they do in the first couple of years.

For 2008 the Westchester County Board of Realtors (WCBR.net) reported that the mean sale price for condominiums was unchanged from 2007 while the mean sale price for 2-4 family homes decreased by 14.5%. Conversely, there was no change or virtually no change in the equalization rate at all in White Plains and several prominent communities in Westchester. Thus according to the Assessor’s office your condo and you 4 family house would maintain the same tax burden. The reality is that all things being equal you should be able to contest your Assessment on the 4 family house and receive an almost 15% reduction in taxes based upon this one year.

It is a rule of thumb that professional appraisals are valid for six months, Assessor’s It is a rule of thumb that professional appraisals are valid for six months, Assessor’s spend less time valuing a property and their valuations are carried forward often for decades on end. There are clearly inequities in this taxing scheme. Under Administrative Review and Judicial Review pages we explain how you can ensure you are only paying your fair-share of the property tax burden.