Property taxation, assessed value, and computing the tax rate and tax

From value to tax

Real property taxes are generally ad valorem: based on value. Keep market value, assessed value, taxable assessed value, and the tax bill separate. Market value describes what property would bring in the market. Assessed value is the valuation placed on the assessment roll. Taxable assessed value is the assessment after applicable exemptions for the particular levy.

In New York, an assessment includes determining value, including exempt property, and whether property is taxable. Assessors assess; collecting officers receive taxes. The board of assessment review hears assessment complaints.

New York's assessment standard

Real Property Tax Law § 305 generally requires a uniform percentage of value within an assessing unit. Assessment need not equal full value. A qualifying city's classified assessment system is an exception; do not assume every New York parcel uses one statewide assessment percentage. Section 502 requires the roll to show the applicable percentage, land assessment, total assessment, and full value, with an exception to the land-value entry requirement for condominium property. A partially exempt parcel appears with taxable property, with its exemption separately shown.

Calculate in two stages

First calculate the tax rate for the levy: amount to be raised by property taxes divided by the total taxable assessed value supporting that levy. If a budget has other revenue, subtract that revenue before calculating the property-tax requirement. Second, apply the rate to the individual parcel's taxable assessed value.

Suppose a district must raise $3,000,000 from a taxable assessment base of $150,000,000. The rate is $3,000,000 ÷ $150,000,000 = 0.02, or 2%, or $20 per $1,000. One mill equals $1 per $1,000, so this is 20 mills. These are example rates, not statewide rates.

A home has a $400,000 market value and is assessed at 50%: $400,000 × 0.50 = $200,000. An applicable $25,000 assessed-value exemption leaves $175,000 taxable. At $20 per $1,000, the bill for this levy is $175,000 ÷ 1,000 × $20 = $3,500. Do not multiply market value by a rate designed for taxable assessed value.

Interpret changes carefully

An assessment increase alone does not tell you the tax increase. The levy and other parcels' assessments affect the rate and each parcel's share. New York's assessment disclosure law recognizes that budgets, changes in other assessments, and apportionment can affect liability. Equalization helps allocate taxes across assessing units with different assessment levels; the county equalization rate is not the parcel's tax rate. Verify which exemptions and taxable base apply to each levy before combining bills.