Q: I live in a two-bedroom penthouse in a 174-unit apartment building in Midtown, with about 1,800 square feet of interior space and 900 square feet of exterior space. I bought it eight years ago for $2 million. My annual property tax is $60,000. I've seen real estate listings in the city with much lower taxes, such as a four-bedroom home in the Bronx with taxes of $696 per month and a one-bedroom home in Turtle Bay for $1.6 million with taxes of $894 per month. Why is my property tax bill so high and can I appeal it? Or are there ways to lower it?
A: The property tax for condominiums in New York City is calculated differently than the tax for other residential properties. Therefore, comparing tax assessments without taking the type of property into account does not make sense.
Most condos are Class 2 properties and are assessed by the city when calculating taxes as if they were market rate rental properties. Your Fifth Avenue condo is taxed this way and your building's projected net operating income is part of the tax calculation.
“The net operating income will be significantly higher for an apartment on Fifth Avenue than for a similarly sized apartment in most parts of the Bronx,” said Brett J. Gottlieb, a partner in the real estate department of the Herrick law firm in Manhattan.
For larger condominiums, the city determines a building's market value, including estimated revenues and expenses, by comparing it to rental properties that are similar in size, location, number of units and age. The city also uses appraiser valuations and statistical models of similar properties. It then applies a capitalization rate – the expected return based on the revenue allocated to the property – to the building's estimated net income.
After the city sets taxes for an entire building, it divides the tax amount for each unit owner. This is usually done by unit size, depending on the terms set out in your building's offering plan.
As a condominium owner, you can contest your own property tax assessment, but the law requires you to have the entire building assessed. This can be a complicated process that requires professional help. A tax lawyer is more likely to take your case if you can get all of the condominium owners to contest the building's assessment, says Peter E. Blond, an attorney at Brandt, Steinberg, Lewis & Blond LLP, a Manhattan firm specializing in tax matters.
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