The Property Tax

The property tax is a local tax, raised and spent locally to finance local governments and public schools.

It is the largest single revenue source for local governments in New York State. In 1998, some 9,200 taxing jurisdictions levied approximately $25 billion in real property taxes. While State government receives no money from the real property tax, this stable revenue source is vitally important to New York State's ability to deliver its services.

Owners of real property pay taxes on their land and structures built on the land, such as The amount of real property tax they pay depends on the value of the property. The local assessor or board of assessors determines what the value is.

Assessment

Once the assessor has determined the value of property, the value is listed on the assessment roll. Each assessment can be listed as the full value of the property or a fraction of the full value.

Uniform Assessments

The assessor is required by State law to assess property at a uniform percentage of full value. That means assessments can be listed at a percentage of full value or at full value. The key point of the law is that, if the assessments are made at a fraction of full value, the same percentage of full value must be applied uniformly to each and every property.

For example, if the percentage of full value chosen for listing assessed values of property is 50, then the assessments of all property should be listed at 50 percent. Therefore, a house worth $100,000 should have an assessed value of $50,000; a factory worth $1 million should have an assessed value of $500,000, and so on. This method provides equity in assessments.

The Tax Rate

It is the responsibility of the local taxing authority -- not the assessor -- to determine the rate at which property will be taxed.

The local taxing authorities consist of counties, cities, towns, villages, schools and special districts (sewer, water, fire, library, etc.).

Each year these taxing units determine how much money has to be raised from the property tax to help pay for local government services and public schools. This amount is divided by the taxable assessed value of all the property in the taxing unit to determine the tax rate for that year. The tax rate is expressed as the amount to be houses. paid on each $1,000 or $100 of assessed property value.

For example, in the fictional Town of Jones, property is assessed at 50 percent of its actual value. A house worth $100,000, has an assessment of $5 0,000. The tax rate is $ 1 0 for each $ 1,000 of assessed value. So, the town taxes for this property will be $500 ($50,000 divided by $1,000 = $50; $50 x $10 = $500).

Fairness and Equity

The question in the minds of property tax- payers should be whether their property assessments are fair. They have the responsibility and the right to make sure their assessments are fair and accurate.

Informing the Taxpayer

Each year, the local assessor produces a list of all property assessments in the locality. The first list is called the "tentative assessment roll." This tentative assessment roll is made available for public inspection. Property owners have a right not only to look at the assessments of their properties, but also the assessments of all other properties.

By looking at the assessments of properties that are similar to their own, taxpayers can determine whether they are being treated fairly. For example, if two houses have assessed values of $10,000, their full values, or market values, should be approximately the same, and less than that of a house assessed at $15,000.

Filing a Complaint

If a property owner believes the assessment is wrong, he or she can file a written complaint, called a grievance, with the local Board of Assessment Review on or before Grievance Day. A complaint form can be obtained from the assessor's office or from the State Office of Real Property Services. In most towns, Grievance Day is the fourth Tuesday in May. In Suffolk County, it is the third Tuesday in May. In Nassau County, it is the third Tuesday in January. Property owners should check with the assessor's office to determine when Grievance Day is in their community. (Grievance Day)

The State Office of Real Property Services (ORPS) offers a free publication to assist property owners who want to file a grievance.

NYS ORPS (New York State Office of Real Property Services)

Click Here to See Your Municipalities Residential Assessment Ratio.

Exemptions

Many different types of exemptions are available to qualifying property owners as a result of State laws.

Among the most common exemptions are those for veterans, low-income senior citizens, farmers, clergy and non-profit educational, religious and charitable organizations. Governor Pataki's State-funded School Tax Relief (STAR) exemption program is for owners of primary residences. (Please see Page 2.)

ORPS offers free pamphlets explaining the exemptions for STAR, veterans, low-income senior citizens and the disabled: "Q&A About the STAR School Property Tax Relief Plan," "Q&A Veterans' Exemptions," "Q&.A Senior Citizens' Exemption," and "Q&A Exemption for Persons With Disability and Limited Incomes."

NYS ORPS (New York State Office of Real Property Services)

Although local governments do not have this authority to create exemptions, the localities in some cases are authorized by State law to determine whether they will grant the exemptions and, if granted, what the amounts will be. The more exemptions that are permitted, the smaller the property tax base becomes in the community. The property tax burden then becomes greater for those property owners who have no exemptions. An exception to this is Governor Pataki's School Tax Relief (STAR) program, which is a State-funded exemption that does not reduce local tax bases.

Many Taxing Authorities

Many property owners in New York State have difficulty understanding the local property tax and assessment systems because there are so many types of government and so many over- lapping taxing authorities.

One of the most difficult situations for a tax- payer to understand is when his or her property is located in a school district that contains several towns or portions of towns. This is especially difficult when the taxpayer's property located in a small portion of a town in a school district, and most of the other properties in the town are located in another school district. is not unusual in New York State. There are more than 700 school districts statewide. And approximately 75 percent of these districts are located in more than one town or city.

That is one reason why there is a need for equalization rates."

Equalization Rates

Editor's Note: ORPS has developed a new municipal full-value measurement method that is planned to be reliable, faster, and less expensive. The new model relies more on good property data from local governments and property sales information and less on State appraisals Please see Page 4 for more details on this initiative.

An equalization rate represents the ratio of the total assessed value to the State Board's estimate of full value in a community.

In the past, it took about four years to complete the market value survey used to establish an equalization rate. This resulted in the estimate of value from the survey being based on a valuation date that was several years old. In 1991, the agency achieved a major goal by reducing the amount of time in which -a survey introduced to two years. This two-year "lag" was maintained in 1992. For the State equalization rates determined for assessment rolls completed in 1993, this "lag" was further reduced to one year. The one-year lag was maintained in 1997. One of the most important uses of the equalization rate is to fairly divide, or apportion, the tax burden among two or more towns or portions of towns that are in the same school district.

If the Smith and Jones School District needs totals to raise $1 million from the property tax, and there are only two towns in the district, it would seem that the simple solution would be to have each town pay half of the property taxes. But rates the shares must be based on the real property 'wealth in each town. Otherwise, a poor town, in terms of real property wealth, would pay the same as a rich town.

The equalization rate attempts to solve the problem. The assessed value of taxable property of each town's segment of the school district is Value divided by the State equalization rate for each town, respectively, to determine the full value of taxable real property in each town. If it turns out that the Town of Smith has 40 percent of the taxable real property wealth, and the Town of Jones has 60 percent, then those are the percentages of the property tax levy that each should pay to make their shares equitable. If the equalization rate is correct and if the assessment practices are sufficient, this will be the result.

The same process is used to distribute the county government property tax levy among the towns and cities in the county. Equalization rates are applied to the assessed value of each town and city to determine the real property wealth in each place. Then the property wealth are added, and that amount is divided into each town's property wealth to determine the percent age of the county property tax levy that will pay. From that information, county tax can be determined for each town and city in the county.

For a detailed explanation of equalization rates, please request the State Board's free publication "Understanding the Equalization Rate."

For an explanation of the new method,- please request "An Overview: The State's Full- Measurement Program for the Future."

Property owners often blame the assessor for high property taxes even when their property assessments are fair and correct. The assessor has no control over spending by the local government or school district. Taxes can be on controlled by through limiting expenses. If a property owner believes budgets are too high, he or should complain to the appropriate local taxing authority, not to the assessor.

For more basic information about the property assessment and tax systems, please request the State Board's free publications: "The Facts About Property Assessment," How the Property Tax Works," and "The Job of the Assessor."