Tag Archive for tax grievance

Are my property taxes fair? What is the relation between my assessment and fair market value?

The assessment represents a percentage of the market value of all real estate, in a given municipality.

In Westchester County the majority of municipalities are assessed at a percentage of their true market value which typically results in confusion for the homeowner trying to determine if their assessment is fair or needs to be challenged.

In order to convert an assessment into a fair market value you must apply the Residential Assessment Ration to the assessment.  Essentialy you divide the assessment by the RAR and the result is the equalized or fair market value

Confusion often arises because there are several different ratios that may appear on the tax bill.

The rates you may see are the equalization rate, or the level of assessment.  However, neither of these rates are appropriate for calculating market value for the purposes of tax grievance for residential properties.  You must find the RAR which can be obtained through the assessor’s office or the Office of Real Property Services (ORPS).

The assessment represents a percentage of the market value of a given property.  Depending on the county and the town it is located in.  Properties can be assessed at any percentage of their market value.  Typically from 1% to 100% of market value.

In Westchester county the majority of properties are assessed at a percentage of their market value which often results in a good deal of confusion for the homeowner.  In order to see the percentage of value that a particular municipality is assessed at go to www.orps.state.ny.us/munipro/.

In my experience many homeowners have no idea what their assessment is or how it is relevant to their taxes.  Much of this confusion results from homes being assessed at a percentage of their market value. You see if homes were assessed at full market value it would be relatively easy to understand your assessment and whether it was fair or not.  For example, if all homes in your neighborhood were selling for $500,000 and yours was assessed at $650,000 it would be pretty clear that your house was over-assessed.

However, lets say you live in Philipstown where homes are assessed at 49% of their value.  Let’s assume you live in a neighborhood where homes are selling for $400,000 and you want to see if your assessment and taxes are fair. You look at your tax bill and you see that your assessment is $318,000.  Now if the homeowner knows that the property is assessed at 49% of its market value they would convert the assessment into a market value by dividing it by 49%.  Let’s do the math and see whether the house is fairly assessed.  $318,000(assessment)/49%=$648,979.

Wow, the house that the uninformed homeowner thought was under-assessed is really over-assessed by approximately $248,000.  I know this is scary and probably hard to swallow but it happens every day, so don’t let it happen to you.

In this particular case the homeowner is over-assessed by approximately 39%.  On a $10,000 tax bill that equates to $3,900 in additional, unnecessary taxes that the homeowner is paying each and every year and it happens every day.  Is it happening to you?

Okay, so now you know better.  You know that in order to see what market value your town is taxing you on you have to convert your assessment into a market value.  So how do you know what percentage of value your town is taxing you on?

Well, here is where it really gets interesting.  Before we go any further do you know what percentage of value you are being taxed at?  Did I just hear you say NO?

Alright. No problem, you can handle this.  Where can you find this information?  Think hard, how about your tax bill?  Go ahead and check your bill and it will likely indicate a market value for your property and the percentage that was used to calculate it.

That was helpful right?  Wrong!!  Whatever you do don’t count on this information to make your conclusion.  You see the rate that is used on your tax bill is often the equalization rate which is used to calculate the value of commercial property.  This rate is typically higher than the rate you would use for residential properties.  The result of using this higher rate is the illusion that your house is being assessed at a lower market value.

I can’t tell you how many homeowners have told me that their house is fairly assessed based on the information listed on their tax bill.  Let’s put some real numbers in play so this makes some sense.

Here is the situation, you live in Yonkers and your home is located in a neighborhood of similar homes that sell for approximately $300,000.

You take a look at your tax bill and you see your assessment is $10,000 and the market value is $298,500 and you also see that your property is assessed at 3.35% of its market value.  Based on this information it looks like your assessment is fair right?  Wrong again!!

The 3.35% represents the equalization rate which is used for commercial properties.  Your property is a residential property and you should be calculating your market value based on the RAR, which is conveniently omitted from your bill, in many cases.

But don’t worry, I am going to tell you what it is.  The RAR for Yonkers is 2.70% for 2013.  So now that we have the correct rate let’s check your $10,000 assessment and determine if you are fairly assessed.  Remember similar homes in your neighborhood are selling for $300,000.

Here is the math we will use to check your assessment $10,000(assessment)/2.70%(RAR)= $370,000 (Taxable Fair Market Value)

Wow, that’s some difference, you just went from being fairly assessed to being over-assessed by $70,000, or a whopping 19%.  If your tax bill was $6,500 per year you would be over paying by $1,235 each year without knowing it.

Can you really afford to not review your assessment?


Property Taxes – Don’t Give Up!

Many homeowners file tax grievances and fail to achieve their desired result, a reduction in their tax assessment.  Unfortunately, often times this initial rejection can result in the homeowner not pursuing their grievance any further.  This may be the result of many different factors. For example, many homeowner’s do not have the time, or the grievance may get lost in the shuffle of an already hectic schedule, perhaps they do not understand the process.

Whatever the reason, homeowners must understand that in many cases the initial filing may merely represent an admission ticket into the grievance process.  At the initial stage the Board of Assessment Review is not compelled to grant any reductions and are accountable only to the appeal process, known as SCAR or Small Claims Assessment Review.

There are many reasons why a homeowner may not get an initial decision.  Among these reasons may be:

  • poor documentation of market value,
  • limited resources of the Board of Assessment Review in the face of increasing numbers of tax challenges, and
  • being unaware of the tax grievance process.

Keep in mind that the board of assessment review is made up of ordinary tax payers, some with extensive real estate experience, some with little or no experience, and they are reviewing hundreds or thousands of cases in a short period of time.

It is for these reasons that the initial tax grievance filing should be viewed only as an entry into the process.  It is important that homeowners carefully review the boards decisions and follow up with a SCAR appeal if appropriate.  If you have any questions or comments regarding the process, contact me today.

You can also leave a comment here, but whatever you do Don’t Give Up!