Our property tax system is based on the principle that owners pay taxes on a percentage of their real estate’s value. Yet in New York, that value depends on the method assessors use to determine how much a piece of real estate is worth.
Single-family homes are valued on their fair market value – what they’d fetch in the open market. Condominiums, however, are valued on what they’d be worth if they were rental apartments. That valuation system significantly lowers the taxable value of condominiums.
In Sunday’s Tax Watch package, columnist David McKay Wilson explores what this means for the region’s 41,000 condominiums owners. He also looks at the decisions to be made in Scarsdale and Mamaroneck, which have the opportunity to change that system this year as they undertake a community-wide revaluation of their property.
The impact can be substantial. In Scarsdale, for example, the owner of a condominium he bought in 2009 for $1.3 million pays just $7.600 a year in property taxes because its fair market value is only $362,000. A single family homeowner, meanwhile, with a house valued at $971,000, pays $21,000 in taxes.