Calls for a Fairer New York City Property Tax System Intensify
New York City’s property tax system that was enacted in 1981 “has been broken for decades;” and although it is apparent to many, wide-ranging reform plans that City Hall officials say they had, remain in limbo since they are unable to “find lawmakers willing to sponsor it” despite transmitting the bill to state Legislature and conducting extensive outreach in the spring according to recently released articles by Crain’s New York. Over time, shifts in real estate values have produced “absurd disparities” and the current tax system “was never equipped to handle a housing market as complex and unequal as today’s;” and as a result, the system “quietly penalizes working-class homeowners and rental housing providers while giving a break to the owners of high-value condos and co-ops.” Furthermore, the tax disparities also “disincentivizes the construction of new rental housing, especially affordable units, further constraining supply and pushing rents higher; and since landlords often pass rising tax costs onto tenants, the tax structure is directly fueling the city’s affordability crisis.” The widening of the property tax disparity is “driven partly by a longstanding cap on how much a property’s assessed value can increase each year, which means homeowners in neighborhoods that have exploded in popularity pay less taxes as a share of their property values compared to neighborhoods where values have risen more slowly.” Helping to further contribute to the taxation disparity is a “state rule that requires condos and co-ops to be assessed as if they were rentals” with the city’s assessments of owned units currently based on a comparison to rent-stabilized units instead of market-rate rentals only — a needed change which according to reported statements by Martha Stark, a former city finance commissioner and currently the policy director of Tax Equity Now New York, asserts “the city has the authority on its own to change.”
The March 2025 report Footing the Bill by the Community Service Society (CSS) cites as example of property tax inequity a pair of buildings in the West Harlem neighborhood of Hamilton Heights that sit aside one another. Both properties were considered to be worth around $4.2 million in 2022 by the New York City Department of Finance (DOF). One of the buildings was a 43-unit, 42,000-square-foot multi-family building receiving a “J-51 tax exemption to fund building repairs, which puts the units into NYC’s rent stabilization program,” and the other 4,700-square-foot building housed a single family. However, the multi-family building paid $71,500 in taxes, or an effective tax rate (ETR) of 1.6% in contrast to the single-family building which paid only $12,200 in taxes that year, or an ETR of 0.3%. Acknowledging that property tax reform is difficult and would require state action, a further challenge comes directly from lawmakers that “remain fearful of voter backlash,” since some homeowners could see significant annual tax increases, but would be needed to pass the reforms. However, the lack of any action to address tax system reforms is pushing the costs of delay to the point where courts “may soon compel a reckoning,” Crain’s citing decisions last year by New York State’s highest court, the Court of Appeals to allow “a challenge to the constitutionality of the city’s system to move forward, brought by Tax Equity Now New York,” a coalition of renters, homeowners and landlords.