NYC Residential Property Taxes

In 1993 the New York City Real Property Tax Reform Commission (commonly known as the Greyson Commission) declared, ​“the property tax in New York City not only appears unfair, it is unfair.” Since then it has been accepted that the way we tax residential property in New York City is unfair and inequitable.

Attempts at reform have been proposed since but not gained much traction. Operating under a revenue-neutral system, changes to the property tax must involve some people paying more, in addition to others paying less. This leads to some form of opposition for almost any proposed reform.

However, a combination of lawsuits and growing support for reform led New York City in 2017 to commission a panel of experts to propose possible changes to the system, although almost all reforms would need New York State legislative action and some would likely need New York State Constitutional changes as well. This panel, the New York City Advisory Committee on Property Tax Reform, is charged with developing proposed reforms to the property tax system on a revenue-neutral basis.

It is difficult to examine possible reforms in isolation – each part of the system has effects on the other, and all changes to the system would have ripple effects which would need to be addressed. A short introduction to the system is provided as an appendix to this report, and for a full explanation of the system, how it works, and legislative avenues to reform, please see RPA’s 2018 working paper ​“Residential Property Taxation in New York City.”

While building a new system from the ground up may seem to be the best solution, this still cannot be done absent consideration of the current system. An entirely new system would inevitably lead to drastic changes in individual property tax bills. This would necessitate phase-ins and other mechanisms to soften the immediate impact on taxpayers, and as such who pays what under the current system needs to be taken into account.

RPA examined four topics that are consistent subjects of the New York residential property tax debate and developed recommendations. These topics were chosen based on a goal of moving the overall system in a direction which is fairer and more equitable, their ability to be implemented in a revenue-neutral manner, and their ability to be implemented either as stand-alone reforms or in conjunction with more comprehensive reform. It should be noted that recommending certain reforms in certain areas does not mean other reforms are not needed or should not be considered. And because of the complicated and interrelated nature of the tax system, these reforms are not necessarily the most comprehensive or would lead to the most equitable system for residential taxation overall.

Our recommendations include:

• Reset the taxable assessed value of Class 1 properties upon title transfer or non-occupation by the owner
• Institute a universal renter’s credit in the case of Class 2 reform
• Evaluate the impacts of reforms to land valuation or a tax surcharge on vacant land
• Institute an additional tax or surcharge on pieds-àterre and non-primary residences