How NYC Property Tax Is Calculated

The NYC Property Tax Formula

NYC property tax is calculated in three steps:

1. Market Value - DOF determines the market value of your property using comparable sales, income data, and cost approaches.
2. Assessed Value - The market value is multiplied by the assessment ratio for your tax class. Class 1: 6%, Class 2: 45%, Class 4: 45%.
3. Tax Bill - The assessed value is multiplied by the tax rate for your class, then reduced by any exemptions or abatements.

Example Calculation

For a Class 1 property (1-3 family home) with a market value of $800,000:

• Assessment Ratio: 6%
• Assessed Value: $800,000 x 6% = $48,000
• Tax Rate: ~20.3%
• Gross Tax: $48,000 x 20.3% = ~$9,744
• Less STAR exemption: -$1,400 (approximate)
• Net Tax: ~$8,344

Assessment Caps

Class 1 properties cannot have their assessed value increase by more than 6% per year or 20% over 5 years. Class 2 is capped at 8% per year or 30% over 5 years. These caps protect owners from sudden increases but may mean assessed value lags behind market value for rapidly appreciating properties.

Common Exemptions

• STAR - Basic STAR reduces the school tax portion for owner-occupied homes. Enhanced STAR provides a larger reduction for seniors 65+.
• Senior Citizen Homeowner (SCHE) - Exemption for seniors 65+ with income under $58,399.
• Disabled Homeowner (DHE) - Similar to SCHE but for disabled homeowners.
• Veterans - Various exemptions for eligible veterans based on service period and disability.
• 421-a - Tax benefit for new construction providing partial exemption for up to 35 years.
• J-51 - Tax abatement for building renovations in residential buildings.

Challenging Your Assessment

If you believe your property is over-assessed, you can file a challenge with the NYC Tax Commission. The filing deadline is typically March 1 for Class 1 and March 1 for other classes. Evidence of lower market value (comparable sales, income data) strengthens your case.