When we were first reviewing the finances for our house, we were struck by the low property taxes that the current owner was paying. We knew we wouldn’t get as good of a deal but didn’t know how to estimate them. Calculating New York City property taxes had always been a mystery to me. For the purposes of estimating our future expenses we simply rounded up to the nearest hundred and doubled her payment. Unfortunately, this strategy was flawed and our property taxes are more than we thought. On the bright side, with the help of our attorney, we learned a quick way to estimate them and it is much easier than we expected.
Basically, there are just 3 steps.
Step 1: Look up the assessed value of the property according the tax department records. You can easily look this up on the website www.propertyshark.com for free.
Step 2: If your income is less than $500,000 you qualify for the Basic STAR property tax exemption. To apply this exemption you subtract $1,670 from the assessed value found in Step 1. The amount of this exemption changes from year to year so verify the current STAR exemption rates with NY state’s website.
Step 3: Multiply the discounted assessed value by 18% and you have a good estimate of your tax bill. This rate applies to most residential properties such as homes and condominiums. The rate changes sometimes and you should verify it with the City’s website.
Here’s an example: Assuming the new home you’re looking at has an assessed value of $20,000 (assessed value has nothing to do with market value–so don’t freak out) and you qualify for Basic STAR. Your annual tax bill will be $3,299.40 that’s calculated by (20,000 – 1,670) x 0.18.
When you get your mortgage the bank should work with the title company to calculate your true tax bill for the next year (we learned the hard way). I believe they adjust the assessed value of the home in the process but it shouldn’t move by much and this formula should be accurate within a few hundred dollars.
There are a number of other exemptions you may qualify for if you are a senior citizen, veteran or disabled. If any of these apply I recommend researching this further on the NYC government website.