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Understanding Real Property Assessments
The amount of the assessment of real property directly impacts the amount of taxes payable on the property. Therefore, in order to lower the taxes on a parcel of property, you must obtain a reduction in the assessment of the parcel.
Technically, the assessment on a parcel of real property represents a fraction, or a percentage, of the market value of the property, which is the reason assessments within the Town of Huntington are typically low numbers. So, in order to reduce the assessment, and also the taxes, you must prove that the market value represented by the assessment is too high
Market value is defined as the most probable price a parcel of property would sell for in a competitive and open market.
Steps to Challenging Your Real Property Assessment
The first step in the process of challenging your real property assessment is to convert the assessment of a parcel of property to its market value, bearing in mind that the assessment is a fraction, or a percentage, of the market value. Once converted, we call this the Market Value Indicated by the Assessment, or, simply, the Indicated Market Value.
This Indicated Market Value is determined by dividing the real property assessment by the Town’s 2020 Residential Assessment Ratio (RAR) of .63%. The RAR is revised annually by New York State and the RAR for the upcoming tax year is typically set in May.
The RAR is adjusted by New York State annually. The valuation date used for the current 2020/21 tax year is July 1, 2019.
For example, if a parcel of real property has an assessment of 4,100, the Indicated Market Value of the assessment of this property is $650,793 (4,100/.63%) as of July 1, 2019.
The next step in attempting to lower the taxes on a parcel of property is to determine the potential market value, of the property as if it was sold on the open market on July 1, 2019.
The potential market value of a parcel of real property can be determined in a variety of ways, the best of which is a recent sale price of the parcel. In the absence of a recent sale price, a real property appraisal is the next best way to determine potential market value. In the absence of a recent sale price or a real property appraisal, a Comparative Market Analysis (CMA) can be prepared.
The purpose of an appraisal or CMA is to compare the sales prices of similar, or comparable, properties to the subject property being challenged. Any such appraisal or CMA must take into consideration the differences between the comparable properties and the subject property, as long as the differences have a positive or negative impact on the potential market value of the subject property. After applying the differences, an adjusted sales price of the comparable sale is arrived at. This is called the Adjusted Sales Price.
As an example, assume you are seeking to reduce the assessment on a 2,000 sq. ft. cape cod residence on Smith Street. Ideally, a good comparable sale would be the sale of another 2,000 sq. ft. cape cod residence on Smith Street, so that the sale price of the comparable residence on Smith Street could realistically be used to estimate the potential market value (or sale price) of your property on Smith Street. Unfortunately, finding such a good comparable property rarely happens.
Therefore, you must search for sold properties which are the most comparable to the property on which you are seeking to reduce the assessment, and the sale price of each such comparable property must be adjusted to reflect the differences between the comparable and the subject property.
In the example used above, assume the comparable sale on Smith Street sold for $400,000, with an in-ground swimming pool. It would be reasonable to assume that the subject, without an in-ground swimming pool, would sell for less. How much less is a function of the increased value attributable to an in-ground swimming pool. For the sake of discussion, assume a swimming pool adds $20,000 in market value to a typical residence. Therefore, the subject would have a potential market value (or sale price) of $380,000 ($400,000 - $20,000 = $380,000).
You must review each comparable, and make the appropriate adjustments to each, in order to arrive at a credible potential market value for the subject property.
Once you have determined that the potential market value of the subject property is lower than the market value indicated by the assessment, you must convert this potentially lower market value to a potential new assessment.
This is done by multiplying the lower potential market value by the RAR. In the above example, the new assessment would be 2,394 ($380,000 x .63%= 2,394).
Once you have determined that the potentially new assessment is lower than the existing assessment, you must file a complaint (often termed a “Grievance”) with the Assessor’s Office during the general complaint period, which is within a very specific and defined time-frame.
The general complaint filing time-frame varies from year to year, but always starts on May 1st and ends on the third Tuesday in May. The third Tuesday of May each year is the date on which the Town of Huntington Board of Assessment Review begins to consider reducing assessments and is the deadline to file a complaint.
Failure to file the complaint by this deadline forecloses any review or consideration of the complaint by the Board of Assessment Review. A late filed complaint requires immediate dismissal.
IMPORTANT: No faxed or emailed copies of the grievance complaint will be accepted by the Assessor’s Office during any complaint filing period. Original copies of the grievance complaint must be mailed or personally delivered to the Assessor’s Office at 100 Main Street, Room 100, Huntington, NY 11743, during any complaint period so as to arrive at the Assessor’s Office on or before the applicable deadline which is the meeting date of the Board of Assessment Review. Proof of receipt by the Assessor’s Office will only be acknowledged by presenting a copy of the complaint date-stamped by the Assessor’s Office.
There are other times throughout the year when grievance complaints are required to be filed with the Assessor’s office, but you will receive notification from the Assessor’s Office of your right to file during these other designated time-frames and of the deadline associated with each filing time-frame.
For a more extensive overview of the general process of challenging a real property assessment, you can download a copy of the publication Contesting Your Assessment in NY State here.