Long Island Property Tax Alert | Farrell Fritz, PC
Pandemic changes to the property tax system have been or will be reinstated
Over the past year, grievance deadlines and tax due dates have been changed by almost all jurisdictions to suit the circumstances. Most, if not all, of these dwellings have been removed.
If changes occur, we will continue to post them on our firm’s website.
For most homes, the pandemic has pushed up values as city dwellers sought refuge in the suburbs and mortgage interest rates remained at historically low levels. This trend has not yet abated.
Commercial ownership is another story. The break / shutdown and partial reopens continue to negatively impact businesses and the properties they occupy. Perhaps the hardest hit is the office market where tenant workers continue to work from home. This negative, perhaps structural change makes grieving your commercial property taxes more critical than ever.
How did the Nassau County reassessment affect the 2020/21 tax bills?
Last year we highlighted the reassessment issues to watch out for. Here are our observations from last year and what we observed:
- Any increase in business valuation unrelated to new construction should be phased in over the next 5 years. This was generally done, but there were a number of implementation errors. If your 2020/21 assessed value (VA) is greater than your 2019/20 VA, please check your tax accounts to ensure that your taxable VA is less than the total VA.
- For homes – the “Taxpayer Protection Plan” will gradually introduce tax increases for properties valued at increasing market value. The set-up will appear as an exemption on your tax bill. As observed last year, the 5-year phased-in benefits properties with increasing market value, but hurts properties with declining market values. Since the phase-in was based on the provisional (unreduced) 2020/21 VA, some properties received disproportionate cuts on their tax bills.
- For the 2021/22 tax year, many properties have undergone changes to their PV and special attention should be paid to changes in value as well as the application of the proper set-up and exemptions.
- As the phased implementation of the TPP continues into 2021/22, residential tax rates are expected to decline. Given the many changes to the assessment roll, the extent of the reduction is uncertain.
Nassau County Class 4 Commercial Property – Contested Assessment Fund (“DAF”) program continues with 2021/22 bills.
All Class 4 advertisements properties finance potential property tax refunds by contributing to the DAF. The program has been redesigned with the charge shown as a levy (an additional general tax line item) that can be used for tax refunds on any commercial property in Nassau County. The 2020/21 general business tax bills included a DAF fee of $ 24,363 for every $ 100 of VA, a 10% decrease from the previous tax year.
You can still go from a non-rising star
If your income is greater than $ 250,000 and less than or equal to $ 500,000 and you currently benefit from the basic STAR exemption, you now automatically receive a check for STAR credit instead of a reduction on your school tax bill. No need to change.
If your income is $ 250,000 or less and you are currently on the STAR exemption, you can choose to enroll in STAR credit to receive a check instead; you could receive a larger benefit and your savings will never be less than the STAR exemption benefit. The value of the STAR credit savings can increase up to 2% each year, but the value of STAR exemption savings cannot increase. For the most part, it’s time to move on STAR Credit and grab a rising STAR. A word of warning, if your bank pays your taxes through a mortgage escrow, the initial change will create an escrow deficit. Your tax bills will increase by the amount of the STAR, but you will receive a check from New York State for that amount.
To upgrade to STAR credit, go to https://www.tax.ny.gov/pit/property/star/default.htm