I have seen a lot of people with questions about what the impact of their 2021 assessment increase will be and how that will affect their taxes. Obviously, people are concerned because for most of us, our home is our largest asset and our tax bill is our biggest expense. I am going to do my best to provide some background information on this so people feel more comfortable.
Some quick key points:
1. Assessment changes have NO IMPACT ON THE TOTAL TAX REVENUES RAISED. All changes in assessments do is shift the proportionate share of the total tax pie. The assessor could triple the assessment of every single property in the Town and the Town would not collect even $1.00 more in additional taxes. This does not raise or lower your taxes.
2. The valuation of your property is based on a number of factors such as lot size, square footage, #of bathrooms/bedrooms, and property condition. Recent sales of like properties in your area will also heavily contribute towards the valuation. A list of recent sales used in these calculations was published here. Note that condo’s and co-ops are valued differently due to NY state law and as a result end up with valuations about 60% of their market value.
3. It is possible for your property to increase in assessed value and you have a resulting decrease in taxes. Similarly, a 10% increase in your property value does not mean your taxes will increase 10%. More on this below.
4. Condo’s and co-ops are valued differently due to NY state law and as a result end up with valuations about 60% of their market value.
So, how does the town calculate your tax bill? To start, the calculation has 3 data inputs, the dollar value of taxes to be raised by the municipality (I’ll use town as an example), the taxable value of your home, and the value of all other taxable properties in the Town. Once the Town has determined how much money needs to be raised in taxes, the tax rate is determined, and you pay your % of the overall property value in the town. So if there are 10 properties in the town each worth $1mm($10mm total), and the Town needs to raise $500k in taxes, the rate is 5% or 500k(taxes to be rasied)/$10mm(total assessable value). Then each home pays taxes based on their assessment. So an individual would pay $50k in taxes or $1mm(home value)*5%(tax rate=$50k. If we keep the scenario exactly the same, but let’s say one home builds a huge new addition so that it is now worth $2mm, that home would pay more in taxes as a result. The tax rate is now 4.5% or $500k(taxes to be raised)/$11mm(total assessable value), and the $2mm home pays $91k in taxes or 4.5%(tax rate)*$2mm(home value), and the remaining 9 $1mm homes would pay $45.5k in taxes. In both examples, $500k in taxes is raised. The fact that assessments increased does not result in an overall tax increase, just a shift in who pays what in taxes.
So now, what happens if the town raises taxes and your assessable value goes up. The formula remains exactly the same, but the impact to you in terms of actual taxes paid depends on what happened in your community. The other thing to note is that your tax bill and tax rate is not just one number. There are separate budgets and tax rates for School Taxes, Fire Taxes, Village Taxes, Town Taxes and others. The County website has a good table that can show you the different rates here- https://www3.westchestergov.com/property-tax-rates. Your assessment stays the same for all these tax categories but who is included does(Example all of Greenburgh is included in Westchester County Assessables but only properties in Ardsley School District are included for the Ardsley School budget)
The preliminary 2021 assessment has an average increase of 7%.
I have posted a spreadsheet where you can see examples of different scenarios, and even plug and play to see the impact of changing different inputs. Click Here to Download. I have also composed a sample example that is similar to what is happening in the town below. There you can see that a property owner with a small assessment increase, actually faces no property tax increase(2 ABC Street) or even a tax decrease(4 ABC Street). Similarly, the increase/decrease in taxes is different from the change in assessed value of the property.
I hope this has been helpful.
If you have any questions please email me at eric@ericzinger.com.