Am I over-assessed? If so, how did it get that way and how are assessments lowered?

The rule of thumb is that 1/3 of the properties are over-assessed, 1/3 are under-assessed and the remaining 1/3 are properly assessed. Why aren’t all properties assessed properly to begin with?

Even if there was a correctly-assessed tax roll to begin with, it would not stay that way. Tax rolls deteriorate over time due to disproportionate appreciation or depreciation.

According to NY State Law, assessments are supposed to be proportional to value. This means that if you live in a $200,000 house and I live in a $400,000 house my assessment (and hence my taxes) are supposed to be twice as much as yours — provided we live in the same districts and have the same exemption status.

It is the responsibility of the assessor’s office to finalize the tax rolls every year in order for property taxes to be derived. Each taxing district, such as school, Town, County etc. must finalize a budget. After that, the Receiver of Taxes is responsible for deriving tax rates which will be applied to every property assessment in order to charge each property owner its fair share.

Your assessment is key to how much you are charged, and it is the assessor’s job to make sure that assessments accurately reflect true market value.

In New York State, we have the Uniform Assessment law, which means that all property must be assessed at the same percentage of value. However, the actual percentage is not mandated and can be any percentage the assessor chooses. Technically, it’s not important what the percentage is; what’s important for fairness is that all property be assessed at the same percentage or at a “Uniform Percentage of Value.”

In a perfect world, assessments would be at 100% of value so that a $500,000 assessment would mean that your home was being assessed and taxed at a $500,000 market value. This would make things very easy to understand and certainly make this explanation very simple. However, it is very difficult to maintain assessment rolls at 100% of value because market values usually change every year. To maintain assessments at 100% would require that assessments be adjusted as the market values fluctuate.

Now this wouldn’t be such a daunting task if all properties appreciated or depreciated evenly (at the same percentage change). For instance, if it was determined that every property on a tax roll had appreciated 20%, all assessments could be adjusted 20% and all would be good. Unfortunately, that’s just not how it works. When the “market is up 20%,” that is an average and does not hold true across the board. Some neighborhoods might have appreciated 20% while others, in a different school district, might have only increased 5%. This would throw off the entire tax roll because now different properties are assessed at different percentages of value. This is the assessor’s dilemma.

So in order to correct for shifts in market value the assessor would have to maintain the tax roll by periodically re-assessing. The problem is that most assessing districts do not have the time, staff or budget to maintain the rolls adequately and correct these shifts in value. In addition, re-assessment creates much confusion for the taxpayers and can be a political nightmare for elected officials.

An interesting aspect of this is when values change, the assessor does not get to pick the fraction of assessment unless there is a re-assessment. Instead, the fraction of assessment in a sense picks them. It’s based on shifts in value and the actual fractions of assessment to value as measured on the tax roll.

Every year the actual fraction of assessment for each assessing district is measured by the New York State Office of Real Property Services (ORPS). It is their responsibility to measure the fraction of assessment in all assessing districts across the state for purposes of resolving property tax disputes and for other needs that require estimates of wealth for school aid, etc.

So every year the average fraction of assessment is measured by ORPS and issued to each assessment office. It is this fraction that enables a taxpayer to determine the actual market value that their assessment and property taxes imply. It is this value that we are actually protesting when we lower property taxes. Our expertise is essentially in the valuation of real estate and it is our job to prove that our client’s properties have been over valued and hence over charged.

Paul Henry
Tax Reduction Services