Challenging Your NYC Property Value Assessment May Be Easier Than Ever

Last month, all property owners in New York City received property value assessments from the city’s Department of Finance. The value, which is determined based on past data submissions, current market conditions and other factors, determines the real estate taxes that will be charged for the upcoming year.

Property value assessments often increase annually but do not coincide with the actual financial conditions of the property for the year of assessment. For this reason, these assessments can be appealed to the New York City Tax Commission, which will perform an independent administrative review.

How to Challenge Your Assessed Property Value

To challenge the property value assessment for an income-producing property, a Real Estate Tax Certiorari filing can be made. Working together with property owners and their respective attorneys, a certified public accountant can assist in preparing the information necessary to determine if filing a certiorari is the right action for the upcoming year.

Changes to Certiorari Filings

The type of certiorari filing to be used depends on the property class. The most common is Form TC201 for “income-producing property” and presents general information on the property, rental occupancy and the income and expenses schedule.

On January 24, 2019, the New York City Council approved a measure that reduces the filing burden for properties assessed under $5 million. Prior to the ruling, income-producing properties with assessed values of $1 million or more and income exceeding $100,000 required an accountant’s certification (Form TC309) to accompany Form TC201. That actual assessed value threshold has now been raised to $5 million. Therefore, if the property’s actual assessed value (not transitional) is under $5 million, only Form TC201 is required.

If your property value is assessed at $5 million or more, Form TC309 will still need to be completed by an independent certified public accountant who will perform an audit of the information provided by the property owner on Form TC201 and reconcile any items that are not included in the income and expense schedule.

Behind the Numbers

The information reported on the certiorari form is governed by the Tax Commission of the City of New York and will not reflect the exact operations as they appear on the real estate owner’s internal financial statement. Some of the most common items needing to be reconciled on the accountant certification are estimated allowances and projections, building depreciation and interest income and expenses, along with amortization of mortgage costs.

The certiorari process does not end with the certiorari filing. Once the report is filed (by March 22, 2019) the property owner’s attorney files a petition, upon which questions may be raised by the city’s Tax commission related to matters such as the increase and decrease of income and expenses from previous years.

Time is Running Out

If you have not already, it is important to review your current property value assessment in light of your annual year-end financial position. Consult a CPA and an attorney who specialize in the real estate industry and can help guide you through the process of identifying the best plan for your property, complying with upcoming deadlines and potentially discovering real estate tax savings for the following and upcoming years.

Darya Shneyder, CPA is a Partner in the Real Estate Group at Marks Paneth LLP, a premier accounting, tax and advisory firm. She can be reached at 212.324.7092 or dshneyder@markspaneth.com.