Should I Appeal My Property Tax Assessment?

By J. Joseph McGowan, Esq.

No one likes receiving tax bills — least of all those in excess of your fair share.

If you own property in upstate New York, you receive at least two tax bills every year. Early in the year, you get a combined State, County, Town or City tax bill, then in the fall a school tax bill. Property owners in some incorporated villages receive a third tax bill.

If you believe that your property tax bill is unfair, a process commonly known as "grieving" is available to you. This simply means the lodging of a formal complaint with respect to your tax assessment with the object of getting your assessment and taxes reduced. Grievance Day comes but once a year; in most municipalities it falls on the fourth Tuesday in May — check the date with your local Assessor's office.

Remember that every tax bill is determined by two components: the tax rate and the assessment (assessed valuation) of your real property. Playing a part in arriving at your assessed valuation is the equalization rate or, for qualified one- to three-family dwellings, the residential assessment ratio ("RAR").

The tax rate means how many dollars of the total tax burden are allocated to each $1,000 of assessed valuation and is a product of the budgeting process. This, a political issue, could be the real culprit if your taxes seem too high. The assessed valuation of your property is its value for taxation purposes (the value to which the tax rate is applied), but it is not always the same as its current market value. The assessed valuation is set by your municipality and whereas some towns and villages use market value, others do not. Because different rates and methods are used by many municipalities throughout the State, the result could be that widely different taxes would be assessed on properties with similar value; and since the State has to allocate tax money in the form of aid back to the municipalities and school districts based on the taxes they generate, this too could result in inequities. In order to compensate for the inconsistencies in assessment rates and methods, the State calculates and assigns to your municipality a ratio which it believes to be the percentage of the market value of property in that municipality represented by the assessed valuation. Hence the idea that the rate "equalizes" and makes more equitable the allocation of State funds (your taxes) based on the "true" underlying value of real property. From time to time the municipalities go through their own appeal procedure to the State to change their equalization rate. The higher the equalization rate — the closer it is to 100% — the closer your assessment is considered by the State to be to the actual market value of your property.

You can obtain your local Equalization Rate or Ratio from the Assessor's office or the County's Real Property Tax Office. Once you know your assessment and your equalization rate, you can calculate the market value of your property determined by the Assessor. Simply apply your local equalization rate to your property assessment. For example, if your property is assessed at $100,000 and the equalization rate is 50%, the indicated market value is $200,000. If you feel that the actual market value of your property is significantly lower, you may be justified in starting a grievance procedure. Before investing too much time and effort in this, however, it would be prudent to seek a preliminary opinion from a real estate professional.

You can find the names of real estate appraisers in the Yellow Pages or you could call on a knowledgeable realtor who may be willing to give an informed opinion. You can also research comparable property values yourself by examining the records of recent property sales.

March 1st is usually the date as of which the Assessor determines the value of your property, the "tax status date." The card showing the components of your assessment and the Assessor's computations can be reviewed in your Assessor's office.

If the appraiser or realtor supports your belief that your property has been over assessed, the next step is to grieve – in other words, to lodge a formal complaint with respect to your assessment. You will need to prepare a standard State form to be filed with your municipality's Board of Assessment Review ("BAR"). On Grievance Day, the BAR meets to hear such grievances. The BAR later reviews all the grievance filings and issues a determination. It is not necessary for you to appear in person before the BAR, but you must submit a proper filing.

Completing the form which must be filed with the BAR is not complicated but will require you to gather all the facts. Be sure to complete it accurately and to file the form on or before Grievance Day.

Here is a step-by-step description of the steps to follow:

You must obtain the standard form, "Complaint on Real Property Assessment for (year)." The form is available in your local Assessor's office. On Page One, you will enter data identifying the property (which should be found on your tax bill) and your estimate of the current full market value of your property (Item 7). This estimate is the key to your complaint and while it can be conservative, it should be fair and credible.

In Part Two you must provide data to help determine the value of the property. Your filing is valid even without any of Part Two being completed, but this part of the form provides you with an opportunity to support your claim to a lower assessment and it is therefore in your interest to give appropriate supporting information. This might include information about recent sales of comparable nearby property or the assessed value of comparable properties.

Part Three contains two sections, A and B. You should complete section A if your equalization ratio is not very close to 100%, if it is 95% or lower. Look carefully at Sections 1 and 2 of Section A — one or other must be checked depending on the nature of the property. You must also state what you believe to be the equalization ratio used in your assessment. Ordinarily this should be the equalization ratio as determined by the State or a rounded off version of it.

Subparagraph (a) should be checked and the latest state equalization rate entered, unless your property is a qualified one- to three-family residence, in which case you should check Subparagraph (b) and enter the latest "RAR". The final blank in Part Three should be your estimate of value multiplied by the percentage you have inserted immediately above.

Section B of Part Three of the form deals with excessive assessment. If your equalization ratio or RAR is 95% or more and you estimate that the assessed value exceeds the full market value, subparagraph (a) of this Section is the place where your entire case for having your assessment reduced is stated. However, you really do not have a case if the estimate of value shown in Paragraph 7 of Part One does not support a greater than nominal reduction. The cause of your dissatisfaction may be the tax rates. Even if the main thrust of your argument is inequality, it is wise to complete this Section B, showing your estimate of market value and showing it as reduced by the equalization ratio in Section –A. Subparagraphs (b) and (c) of Section B are specialized and need not concern us here. In the same way Sections C and D of Part Three are limited to special circumstances not encountered with the typical business or residential property. How these subparagraphs apply is clear from the form.

Part Four should be completed if you are designating another party, perhaps an appraiser or an attorney, to make the filing as your representative.

You or your designated representative must sign Part Five to certify that the statements made in the form are truthful.

The Board of Assessment Review may ask you to provide additional information in support of your request for relief. You should endeavor to be as cooperative as possible. If you do not provide such additional information, the BAR may refuse to reduce the assessment. Still, so long as the basic filing is proper, the BAR cannot deprive you of the right to seek judicial review of your assessment. Nor can the BAR increase your assessment.

On or before the first day of July in each year, in municipalities with a Grievance Day held in May, the BAR issues its determinations and the assessment roll is closed. A public notice of the closing of the assessment roll will be published. If you are dissatisfied with the relief (reduction) which you obtained from the BAR, if any, you have thirty days from July first to seek judicial review of the assessment. Speed is of the essence and your next step will depend on the nature of your property. If it is not a one- to three-family qualified dwelling, you need to seek immediate advice from an attorney experienced in tax review proceedings. At this point a whole new, often more complicated, phase in the process of challenging tax assessments begins.

In order to avoid paying more real property taxes than should fairly be required of you, you should make it a regular habit to inquire into your assessment, the equalization rate or RAR, and the possible justification for filing a grievance.