Although taxes are not the most interesting subject, nor are they likely to bring much happiness to anyone having to pay them, they are a necessary part of the government. New York City residents know all too well how expensive property tax bills can be. About 45% of all NY City tax dollars collected each year come from real estate taxes. So how does the government go about calculating residential property tax bills? And is there any way to have property taxes lowered?
In plain terms, the city estimates your home’s value, applies an assessed value based on your property class, subtracts any exemptions, and then applies the tax rate. Some owners also qualify for abatements and caps that can soften the blow. There are paths to challenge a bill, and we’ll touch on common savings, the tax benefits of owning a condo, and how purchase costs like the mansion tax in NYC fit into the bigger picture.
Knowing how New York City property taxes are determined is the first step toward effective tax management. If you’re ready to explore options like exemptions, appeals, and other cost-saving measures, an experienced NYC real estate lawyer at Avenue Law Firm can assist you. Our team can review your options and guide you on steps that may lower your payments. Contact Avenue Law Firm today at (212) 729-4090 to schedule a consultation.
Property Classifications in NYC
Properties in New York City are split into four classes. Class 1 is small homes with one to three units. Class 2 is larger residential buildings with more than three units, including co-ops and condos. Class 3 covers utility equipment and special franchise property. Class 4 includes everything from offices and factories to stores, hotels, and lofts.
In this post, I’ll concentrate on Class 1 properties. The first step the government takes in calculating Class 1 residential property tax bills is determining the market value of your residence. The government determines the market value by using statistical analysis that incorporates data such as recent selling prices of similar properties in your neighborhood. Similar properties are classified as those that are close in size, style, and age to your property.
The second step is determining a property’s assessed value. A property’s assessed value is a percentage of its market value. The good news is that the state law limits the increase of the assessed value of a Class 1 property in New York City. For a Class 1 property, the assessed value cannot rise more than 6% in one year or 20% over five years, no matter how quickly the market value of your home increases. This is true unless you make a physical change to the property, such as an addition or renovation. Because of the caps, it is possible that the assessed value of your property continues to increase even if your market value decreases. This is because it can take years for the assessed value to “catch up” to the market value.
Assessed value can change for many reasons, including but not limited to:
- Your property’s market value changing;
- Making physical changes to your home, such as additions or renovations;
- You lost a tax exemption or abatement, or its value was reduced;
- Your assessed value is catching up to prior changes in market value.
The third step is applying exemptions that are on file. Exemptions reduce your assessed value before your taxes are calculated. The City of New York offers exemptions to seniors, veterans, clergy members, people with disabilities, and other homeowners. If you are granted an exemption, the amount of the exemption is subtracted from the assessed value of your home. This reduces your taxable value.
Property Tax Exemptions
Property tax exemptions can make a notable difference in your annual tax bill. In New York City, homeowners may reduce their tax liability through various exemptions, each designed to address different aspects of taxation and social policy.
STAR Exemption: New applicants receive the STAR credit from New York State. If you already had the older STAR exemption before the program changed, you may keep it, but most homeowners now apply for the credit, which is paid by the state and does not reduce the assessed value on your DOF bill. Basic STAR is available if the combined income of owners and spouses is $500,000 or less; Enhanced STAR adds age and income requirements and provides a larger benefit. Savings vary by school district and year.
Tax abatements can reduce the bill after taxes are calculated. Examples include the cooperative and condominium abatement, the J-51 exemption and abatement for qualifying residential rehabilitation, the solar electric generating system abatement, and the green roof abatement.
Senior Citizens Exemption: For senior citizens, local governments and school districts may reduce property taxes by up to 50% for those qualifying by age and income. This exemption is flexible, with sliding-scale options for those with slightly higher incomes, but each locality sets its own income limits, so checking with your local assessor is crucial.
Veterans Exemption: Veterans who have served in the U.S. Armed Forces can apply for one of three property tax exemptions tailored for them. However, these are not granted automatically. To receive these benefits, you must apply by March 15. The benefits will then start on July 1. If March 15 falls on a weekend or holiday, the deadline is the next business day.
Exemptions for Persons with Disabilities: Lastly, there’s an exemption for persons with disabilities with limited incomes, potentially halving the assessed value of their legal residence. As with the senior citizens exemption, localities set income limits and may offer sliding-scale reductions for those with incomes just above the threshold.
It’s important to note that properties with the senior citizens exemption are not eligible for the disability exemption; you’ll need to choose the one that offers the most benefit. Always consult your local assessor to understand the specific rules and income limits applicable in your community. Leveraging these exemptions can lead to meaningful savings and enhance your financial well-being.
| Exemption Type | Eligibility Criteria | Key Benefit |
|---|---|---|
| STAR Exemption (Basic & Enhanced) | Basic: Income ≤ $500,000. Enhanced: Age 65+ with income ≤ about $98,700 | Reduces school property tax liability; amount varies by school district |
| Senior Citizens Exemption | Age 65+, income limits set locally (about $58,400 in NYC); sliding-scale possible | Up to 50% reduction in assessed property value |
| Veterans Exemption | U.S. military service; application due by March 15 | Partial exemption on property taxes, depending on service and combat status |
| Exemptions for Persons with Disabilities | Documented disability and limited income (about $58,400 in NYC); sliding-scale possible | Up to 50% reduction in assessed property value |
| Tax Abatements (Condo/Co-op, J-51, Solar, Green Roof) | Varies by program; for example, J-51 for building rehab, solar for renewable energy | Reduces tax bill after assessment, percentage or fixed credit varies |
NYC Property‑Tax Calendar & Payment Deadlines
Here is your NYC property tax calendar and the key payment deadlines you need to track.
Every January, you receive a Notice of Property Value (NOPV). This previews your assessed value for the coming tax year. Read it closely because it drives everything that follows. Appeals come next. Most properties must file with the NYC Tax Commission by March 1. Class 1 homes have a slightly later March 15 deadline. Miss it and you lose appeal rights for that year.
In May, the Department of Finance publishes the final assessment roll. Your first bill arrives in June, and the fiscal year starts on July 1. Tax rates are often finalized in the fall, with revised bills sent in November.
How often you pay depends on your property’s assessed value. Bills are posted and mailed about a month before they are due.
- If your assessed value is $250,000 or less, you receive quarterly bills with deadlines on July 1, October 1, January 1, and April 1. You also have an interest-free grace period until the 15th of the due month.
- If your assessed value is more than $250,000, you are billed twice a year, with deadlines on July 1 and January 1.
When a due date lands on a weekend or holiday, the deadline is the next business day.
Prepaying can save you money. The City offers an early payment discount for paying the full year by the July due date, with smaller discounts available in October and January. If you pay quarterly, paying after the grace period will incur daily compounding interest from the original due date. To manage cash flow, you can switch to monthly advance payments with automatic drafts.
A NYC real estate lawyer can review your NOPV, flag errors, prepare or oversee your Tax Commission appeal on time, and coordinate abatement filings. Your attorney can also help you enroll in the right payment option, request a payment plan or deferral program if cash is tight, and step in early if a balance risks a tax lien.
NYC Real Estate Lawyer
Peter Zinkovetsky, Esq.
Peter Zinkovetsky is the founder and managing partner of Avenue Law Firm, representing both local New Yorkers and international clients in real estate matters. Recognized for clear, business-minded counsel, Peter focuses his practice on residential and commercial real estate transactions as well as property and business insurance issues.
Widely regarded by peers and clients alike, Peter has been named a Super Lawyers “Rising Star” for eight consecutive years, an honor reserved for fewer than 2.5% of New York attorneys, and earned a perfect 10.0 Avvo rating. He was included in the New York Real Estate Journal’s 2018 “Ones to Watch,” and is frequently featured by major media outlets, including Forbes, the New York Post, The Real Deal, the New York Observer, Newsweek, and the New York Real Estate Journal. A committed educator, he teaches continuing legal education, writes a legal blog, and regularly presents at conferences in the U.S. and abroad.
Peter holds a J.D. from New York Law School and a B.B.A. in Finance from Pace University, and is a graduate of the United Nations International School. He is admitted in New York (2011) and the U.S. District Courts for the Southern and Eastern Districts of New York. He speaks English, Russian, and Ukrainian.
New York Property Tax: Constitutional Standards
The New York State Constitution limits the ability of municipalities, counties, and cities to levy property taxes. Statutes enacted to enforce these provisions require the Comptroller to withhold certain local aid payments from municipalities whose taxes exceed the municipality’s constitutional tax limit.
Real property taxes in New York State are the largest source of revenue for municipal governments. Property taxes are used to offset the gap between the appropriations and the expected non-property tax receipts under the traditional budget procedure.
The maximum amount of real property tax that can be collected in each fiscal year is called the Constitutional tax limit. This is done by multiplying the taxable value of the real estate by the percentage outlined in the Constitution. The hardest part of the process is determining whether the tax levy required by a yearly budget stays within the limit.
Do not confuse the Constitutional tax limit with the property tax cap enacted in 2011. That cap applies to most local governments and school districts except New York City and the Big Five dependent city school districts.
In the current fiscal environment, rising municipal budgets and falling non-property revenues can increase pressure on the property tax and bring a locality closer to its constitutional tax limit. If overall property values drop, the limit also declines because it is tied to the five-year average full valuation.
Property taxes in New York City can be difficult, both to your bank account and to understand. Although taxes are certain, if we arm ourselves with knowledge, we can make them a little less painful.
Manhattan Property Tax Rate
In Manhattan, property tax rates are determined according to the classification of the property. Each class of property is subject to a different tax rate, reflective of the property’s use and characteristics. For the tax year 2025, these rates are set as follows:
- Class 1 properties, which typically include most residential properties such as single-family homes and small multi-unit residential buildings, are taxed at a rate of 20.085%. This is the highest rate among the four classes.
- Class 2 properties, such as residential buildings with more than three units, including co-ops and condos, are taxed at 12.500%.
- Class 3 properties, designated for utilities and infrastructure, carry a tax rate of 11.181%.
- Class 4 properties, encompassing commercial and industrial properties, are taxed at a rate of 10.762%, the lowest among the classes.
These rates are vital for property owners in Manhattan to understand, as they directly impact the amount of property tax owed annually. Whether you own residential or commercial property, being aware of your property’s classification and corresponding tax rate can help in financial planning and budgeting for the upcoming fiscal year.
New York City Real Estate Taxes
When buying or selling property in New York City, it is vital to understand the various taxes involved. In addition to the city’s own property transfer taxes, there are also statewide transfer taxes and flip taxes, each with its own set of guidelines and rates.
New York City Transfer Tax
In New York City, the Real Property Transfer Tax (RPTT) applies to deeded transfers when the consideration exceeds $25,000. RPTT also applies to transfers of a controlling interest of 50% or more in an entity that owns or leases NYC real property. Rates differ for residential and other transfers. However, certain exemptions exist, such as for the United States Government and its agencies. Certain estate-related transfers are not taxed but must still be reported on an RPTT return. For example, a deed given by an executor pursuant to the terms of a will is listed as reportable but not taxable; however, a sale by the executor is taxable.
The amount of transfer tax varies depending on the property type and value. Residential property transfers, including one- to three-family homes, co-ops, and condos, are subject to a tax rate based on a percentage of the sale price, determined by the property’s value. Different tax rates are applied to transfers of other property types, such as multi-unit dwellings.
New York State Transfer Tax
In addition to NYC’s RPTT, New York State imposes a base transfer tax of 0.4% that is typically paid by the seller. There is also the buyer-paid ‘mansion tax’ on residential conveyances of $1 million or more. For conveyances in NYC, the 2019 law added two state-level surcharges: an ‘additional base tax’ of 0.25% on residential sales of $3 million or more (and non-residential sales of $2 million or more) paid by the seller, and a progressive buyer-paid supplemental mansion tax on residential sales of $2 million or more.
It’s important to note that these transfer taxes are distinct from the mansion tax, which is typically paid by the buyer. The mansion tax has progressive tiers based on the purchase price of the home.
Flip Taxes
When selling a property in New York City, there may be additional taxes known as “flip taxes.” These taxes primarily apply to co-ops and are intended to discourage frequent property flipping, which can impact a building’s culture or demographics.
The calculation of flip taxes can vary and may be based on a percentage of the gross sale price, a fixed dollar amount per co-op share owned, a flat fee, or a combination of these, depending on the co-op’s policy.
Getting the Help of a Skilled New York City Real Estate Lawyer
Property owners in New York City need a clear understanding of how property taxes are determined in order to make informed decisions and minimize their tax liabilities. The system of taxes considers elements such as property values, tax rates, exemptions, and reductions. However, this system can be difficult to manage due to constantly changing regulations.
This is where a New York City real estate lawyer plays a crucial role. A skilled attorney can review property valuations, identify errors or discrepancies, and challenge unfair assessments on behalf of their clients. At Avenue Law Firm, our NYC real estate lawyers may be able to help property owners explore various tax reduction strategies by identifying eligible exemptions, abatements, or other relief programs. In the event of a property tax dispute, our team may be able to provide representation and guidance, including negotiating with tax authorities, filing appeals, and representing clients in administrative or judicial proceedings. Contact us today at (212) 729-4090 to schedule a consultation.
