Understanding The Property Tax Grievance Process


Most people think that the property tax grievance process is complicated. It’s not. It only requires you to do a bit of research, fill out a form, and write a supporting letter, and get all your paperwork submitted by your municipality’s deadline. Here is a brief (and somewhat simplified) overview of that process.

The Assessment

People sometimes think that their property taxes are set by their assessor. That’s not the case. Your municipality’s Assessor does not determine your property taxes. Rather, the Assessor’s role is only to determine what the Fair Market Value is for your property by performing what is essentially the same sort of comparable sales analysis that an appraiser conducts when determining the value of your property when you are buying or selling.

Once the Assessor has determined your Fair Market Value, the Assessor then calculates your Assessed Value, which is a simple mathematical calculation that multiples the Fair Market Value by a predetermined Equalization Rate set by the municipality. The purpose of the Equalization Rate is to provide a standardized assessment calculation to ensure that every property receives an equitable assessment.

So, for example, if the Equalization Rate is 40%, and your market value is $500,000, your assessed value would be $200,000 ($500,000 times 40%). If your neighbor’s home has a market value of $400,000, her assessed value would be $160,000 ($400,000 times 40%).

The Assessment Roll

Once the Assessor has determined the Fair Market Value of all the properties in a municipality, the Assessor’s office will publish what’s called the “roll,” which is a comprehensive listing of all properties, their determined Fair Market Value, and their Assessed Value. For most municipalities, the roll is published in the first week of May, a few weeks before grievance applications are due. You can review the roll by going to your local municipality, and in some cases online. Sometimes the town will mail you a copy of the facts used to determine your Assessment.

The purpose of the roll is to provide property owners with fair notice to prepare their grievances once they see the Assessor’s determination of their Fair Market Value and Assessed Value. Again, the roll does not state your property taxes, but provides the Fair Market Value and Assessed Value upon which your taxes will be based.

Researching Grounds for a Grievance

Once we know the Fair Market Value determined by the Assessor, we can decide whether you have grounds for filing a complaint about your assessment. Technically, property owners can make four distinct claims for a grievance, including situations where the property is improperly classified (i.e., it’s not commercial property, it’s residential) or exempt from taxation (i.e., it’s a church or school). But the main grievance situation for most homeowners involves the basic complaint that the property is subject to an “Unequal Assessment” because owners of comparable properties have received lower assessments and thus will pay lower taxes.

Essentially, a claim of “Unequal Assessment” boils down to this: you contend that the Assessor over-estimated the Fair Market Value of your property, leading to an inflated Assessment Value, resulting in your having a higher assessment than other owners of comparable properties. In order to prove that claim, we need to show that the Fair Market Value of your property is actually lower than the Assessor’s determination.

If our review of your property’s Fair Market Value demonstrates that the Assessor’s determination of your Fair Market Value was too high, then we have solid grounds for filing a grievance petition.

Grievance Day

We have to file a complaint grieving your property taxes by the deadline established by your municipality. The deadline is usually a few weeks after the roll is published, and is called “Grievance Day”. On that day, a Board of Assessment Review (“BAR”) will meet to start the process of evaluating all the grievance petitions, and will hold an open hearing in which we can present your case.

We only need to submit two documents to file a petition to grieve your property taxes. First, you need the Complaint on Real Property Assessment for 2011 (Form RP-524), which is a standard New York State form used to file grievances across the state of NY. The form mostly requires us to fill out information on you, your property, and the nature of your grievance.

Second, we need to submit a letter in support. including a brief explanation of why we believe that you are over-assessed. As part of that letter, we can attach any documents that support your case, including an appraisal, comparative market analysis, public records, or anything else that would substantiate the claims.

In the letter we ask for the specific relief you want – a reduction in the Fair Market Value to the lowest level that we think is justified. We believe that we should always ask for as much relief as we believe you can possibly get.

You can attend the Grievance Day hearing with us if you wish, but even if you do not appear the BAR will consider the petition and make a decision within a short time of Grievance Day.

Appeals

If your grievance complaint is not successful, or you get relief but not as much as you asked for, you can appeal the decision in what’s called a Small Claims Assessment Review (SCAR) or a Supreme Court trial. We are not going to cover the details or requirements for that review here, but we can speak about it when we discuss your case.

Fair Market Value

Fair market value is an estimate of the market value of a property, based on what a knowledgeable, willing, and unpressured buyer.

Arms-length transaction

A transaction in which the buyers and sellers act independently and have no relationship to each other. The concept of an arm's length transaction is to ensure that both parties in the deal are acting in their own self interest and are not subject to any pressure or duress from the other party.

Small Claims Assessment Review (SCAR)

The Small Claims Assessment Review is a procedure that provides property owners with an opportunity to challenge the assessment on their real property as determined by the Board of Assessment Review (the Board) (in counties outside Nassau and NYC) or the Assessment Review Commission (ARC) (in NYC and Nassau County). It is a less costly and more informal alternative to a formal Tax Certiorari proceeding, which can be time consuming and expensive. As outlined in Section 730 of the Real Property Tax Law, property owners may petition the court for review of their property assessment before a specially trained hearing officer for a nominal fee of $30.

Tax Certiorari

The legal process by which a property owner can challenge the real estate tax assessment on a given property in attempt to reduce the property's assessment and real estate taxes. This is also known as an Article 7 action.