Tax Assessment: With Real Property Values On The Decline, Now Is The Time To Ensure That Your Property Is Not Overassessed

April 28, 2008

The value of real property fluctuates with the economy, which in today's environment is ripe for tax savings. The recent crises with residential subprime mortgages may be spilling over into the commercial real estate markets. For example, the premium to insure $10 million of triple-A rated commercial mortgage-backed securities has skyrocketed to nearly $200,000, up from just $35,000 in October 2007. Investors are tightening their credit standards and are forecasting precipitous drops in property values.

All too often, municipal assessors do not have the time or the resources to keep up with these changes and in many cases rely on generalities or formulaic approaches that can considerably diverge from actual values resulting in drastic over assessments of real property. The only way to correct such over assessments is to challenge your real property tax assessments in the appropriate administrative and judicial forum. However, to exercise your rights in these forums, you must be knowledgeable of the strict procedures to secure possible tax savings and/or tax rebates to which you may be entitled.

Generally, assessors determine if real property is subject to taxation each March 1, which is known as the taxable status date. Assessors determine a property's taxable status by its present condition and ownership, which means its current use and not some future contemplated use. Once assessors determine a property's taxable status, it will assess the property based on the property's value as of the preceding July 1, known as the valuation date. Tentative tax rolls are filed each May 1, which is typically when property owners first learn of their assessments.

In order for a property owner to challenge their assessments, they must file a grievance with their local assessor's office. Generally, "Grievance Day" is the fourth Tuesday in May, which this year is May 27. At that time, the Board of Assessment Review ("BAR") will conduct hearings, after which it will determine final assessments, and the final assessment roll will be filed July 1. If you are not satisfied with the BAR's determination and you want to further challenge your tax assessment, you must commence a special proceeding in New York State Supreme Court within 30 days after the filing of the final assessment roll (usually July 31). Failure to file a grievance by May 27 and/or failure to commence the special proceeding by July 31 will foreclose any possibility of reviewing the assessment for that tax year. Please note that some municipalities have different deadlines, so it is imperative to know each municipality's procedures.

If you have any questions or would like to discuss this further, please contact us.