Reassessments are again underway after being put on hold due to the pandemic and homeowners are concerned that their property taxes could also go up.

But that’s not necessarily the case.  

If your property assessment is changing you will likely receive an impact notice from your town's assessor in March. The change could be due to a complete revaluation of an assessment unit, adjustments for certain types of residences due to trends in the market, or additions/deletions of buildings. Read more on this

What a property owner pays in property taxes is ultimately based on the budgets of the schools and municipalities.  

• Tax rates for each budget is based on the net worth of the city.
• In a perfect world, as the city or town's net worth goes up the tax rates would go down.
• Unfortunately we do not live in a perfect world.  The 2% tax cap was supposed to help prevent any large increases in the amount of taxes a property owner would pay. However, municipalities, especially schools, have learned how to circumvent the 2% cap and take advantage of the increase of their town's net worth.  
• On average, many property owners should not see a substantial increase in their taxes when there are reassessments, but for those who are further outside the average  could see a significant increase or decrease.

What can you do?

The argument should begin with the municipalities and schools when they plan their budgets for the current year. Instead of complaining after the fact, people can form (watchdog) groups that go to budget planning meetings, and it could help reduce wasteful spending.  Otherwise, the property owners will need to learn how to grieve their assessments.

• If you disagree with the new assessment, make an appointment with your assessor right away to discuss why it went up.
• If no satisfaction is gained at the meeting, follow the grieving process we have outlined on our website.
• Remember, if your assessment increases, this does not necessarily mean that your taxes will go up.
• We have lots of resources on our website to help you in this process.

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2022 Housing Report from the New York State Association of REALTORS

See Full Report

The report outlines changes by county in various key categories.

According to the NY State  Association of REALTORS in its latest annual housing report:

• 2022 began where 2021 left off: Mortgage rates were at historic lows, buyer competition was fierce, and homes were selling at a breakneck pace, often with multiple bids and all-cash offers, due to pent-up demand and a shortage of housing supply, causing sales prices to soar to new heights.
• All that changed a few months later as mortgage rates began to rise, adding hundreds of dollars to monthly mortgage payments and causing housing affordability to plummet to its lowest level in decades. As borrowing costs continued to increase, home sales and home prices began to slow, and after two years of record-breaking activity, the red-hot housing market was finally cooling.
• Pending sales decreased 13.5%
• Closed sales were down 11.6%
• The number of homes available for sale was lower by 8.7%
• New listings decreased by 11.0%
• Sellers received, on average, 101.5% of their original list price at sale, a year-over year improvement of 0.8 percent.
• Home prices were up compared to last year. The overall median sales price increased 6.2 percent to $393,000 for the year.

During the pandemic, why were property tax assessments going up?

You might call it a "perfect storm." And a matter of supply and demand.  

• When Covid-19 spread across America and shut down many activities, people stayed at home and many worked from home.
• Money not being spent on travel, leisure, and work expenses such as gas and clothing was saved and often spent on home improvements.
• Mortgage interest rates for 30-year mortgages fell to an all-time low of 2.65% in 2021, making it more affordable to buy.
• When Covid-19 became more manageable and communities began to re-open, an influx of new homebuyers and renters were unable to purchase or rent a new home due to low inventory or high prices.
• The New York State Association of REALTORS® (NYSAR) reported on April 20, 2022, that, “Inventory of homes for sale across New York State fell 22.6 percent from 39,707 homes available in March 2021 to just 30,724 units last month.”
• As inventory dropped, prices increased. Increased demand for the limited supply of homes drove up prices as sellers entertained multiple offers.
• New home building couldn’t make up for the increased demand as it was slowed by supply chain issues.

In its 2021 Annual Report on the New York State Market, the New York State Association of Realtors reported: “The overall median sales price increased 19.4 percent to $370,000 for the year. There was also a 26.8% drop in homes for sale priced $100,000 and below… so housing affordability will remain an important factor to watch.”

In those towns where assessments resumed, assessments were up because housing prices increased.‍

As New York state explains, “Municipal-wide reassessments (which review the market value of all the properties in the community) are the best way to ensure that assessments are fair and accurate…. If the increase in your assessment is less than the average increase, your taxes will actually decrease.” When all properties are not reassessed, some become over-assessed, and some are under-assessed.

Most people accept the fact that we must pay sales tax on almost everything we buy. But for the most part, those rates rarely change, which may be why we pay little attention. However, with property taxes, we take notice when the new school, town, and county tax bills are received because they change every year and almost always go up.

If your tax bill increases, it is not because your assessment went up.

• Assessments are based on the current market value of your property. The taxes may not go up because of a higher assessment.
• The amount you pay in property taxes is based on the tax rates needed for the local school, town, and county to achieve their current budgets.  
• So, for example, if a school used say 10 percent of reserve money for the current budget (out of the revenues raised locally), it would then lower the amount needed by taxpayers, thus lowering the tax rate per one thousand dollar of assessment. The same could be said with the local towns and counties.
• School budgets are based on several things.

• In New York State, estimated 2001-02 public education funding comes from three sources: approximately 5% from federal sources, 49% from State formula aids and grants, and 46% from revenues raised locally.
• Local property taxes constitute close to 90% percent of local revenues.

• Town revenue sources include local sales tax, transfers from the federal and state governments, other taxes, miscellaneous charges, and individual income taxes. The balance is raised from property taxes.

As the net worth of a village, town or county goes up with higher assessments, the rate charged by the school, village, town, or county should go down if local municipalities do not go on spending sprees and take unfair advantage of the additional revenues.  

Public Education Spending in New York

New York schools rank 1^st in spending and 2^nd in funding. Home to 5.21% of the nation’s K-12 students, the state receives 9.86% of all U.S. public primary school funding.

• New York schools rank 1^st in spending and 2^nd in funding. Home to 5.21% of the nation’s K-12 students, the state receives 9.86% of all U.S. public primary school funding.
• New York K-12 schools spend $24,881 per pupil for a total of $65,549,087,000 annually.
• Expenditures are equivalent to 4.65% of taxpayer income.
• New York K-12 schools receive $3,682,993,000, or $1,398 per pupil from the federal government.
• State funding totals $29,698,937,000 or $11,273 per pupil.
• Local funding totals $42,029,493,000 or $15,954 per pupil.
• State and local funding is equivalent to 5.09% of New York’s taxpayer income.
• Federal education funding is equivalent to 0.26% of the state’s taxpayer income.
• Funding for K-12 education in New York totals $75,411,423,000 or $28,625 per pupil.
• The difference between spending and funding is $9,862,336,000 or $3,744 per pupil.
• At the postsecondary level, public colleges and universities spend $30,293 per pupil, 32.1% of which goes toward instruction.
• Federal funding for public postsecondary institutions averages $1,126 per student.
• State and local funding averages a combined $11,778 per student.
• Tuition accounts for 14.5% of all funding, a 5.05% smaller proportion than in the previous academic year.
• 3.18% of all postsecondary funding comes from sales and services of auxiliary enterprises.
• New York’s 2-year community colleges spend 21.2% of what its 4-year public colleges spend in a year.

Source: Hanson, Melanie. “U.S. Public Education Spending Statistics” EducationData.org, June 15, 2022, https://educationdata.org/public-education-spending-statistics#new-york

References

How property taxes are calculated

U.S. Public Education Spending Statistics

‍What you can do

1)    It is very important for property owners to attend their local school board, town or village, and the county meetings when the new budgets are being prepared. Let your voice be heard in the process. This is the time to complain or understand the process better, not when you receive your property tax bill.

2)    If you disagree with the amount of your property tax assessment and feel it does not reflect a fair market value you should first discuss the assessment with the local assessor. Some are still scheduling informal meetings prior to Grievance Day. If you are still unhappy with the decision, you should continue to grieve the property assessment through the property tax grieving process. Help with the grieving process can be found here on our website.

Challenging Your Assessment: What You Can Do if You Feel Your Assessment is Incorrect

5 Ways to Grieve Your Assessment

The Fears of Grieving Your Property Tax Assessment

Grieving by Excessive Assessment & 2 Case Studies

Updated March 15, 2023

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