Brooklyn homeowners could see an increase in their property tax bills if proposed reforms get the green light from the new city administration.
The commission’s final report was released in the last days of former Mayor Bill de Blasio’s administration, and the four “structural reforms” it includes would see an increase in Brooklyn’s “effective tax rate” (ETR) from $0.63 to $0.80 per every $100 of property value.
Brooklyn is the only of the five boroughs that would see an increase in the ETR if the reforms are adopted.
According to Brooklyn Paper, a plank in the city’s byzantine tax code has capped annual property tax increases for small homeowners, which has largely favored long-term owners of Brooklyn’s brownstones — which have soared in value in recent years.
The commission recommends getting rid of the caps, saying the caps are “among the primary drivers of the current inequitable system,” and instead assessing taxes based on year-over-year changes in a property’s fair market value.
If adopted, the new system would be transitioned into over five years.
Given some Brooklyn homeowners would face an increase in property taxes, the commission proposed measures to help homeowners who are asset-rich but cash-poor — which includes many longstanding brownstone owners — adjust to the new taxation amount.
According to Brooklyn Paper, “targeted owner relief” would include tax exemptions on home value above a certain amount, which will phase out as personal income and property values rise, and a “circuit breaker,” which would allow those whose property taxes represent a substantial portion of their income to get a refund from the city.
With the relief measures, the increase in ETR would be slightly less at up to $0.71 per $100 under a graduated rate exemption and $0.75 for a flat rate exemption.
The commission also recommends combining 1-3 unit homes with condos, co-ops and small rental buildings as one property class and getting rid of valuations based on “comparable rental properties” in the area. The commission says that practice has seen buildings being valued at a fraction of what they are worth.
It also recommended ending “fractional” assessments so all properties are valued at “full market value.”
Commission member Allen Cappelli, an attorney based in Staten Island, said the commission had drawn a roadmap toward real estate tax equity in New York’s property tax system, “which has treated too many New Yorkers unfairly for decades.”
“What frightens me the most, is that if government doesn’t take the steps towards fairness and transparency now, the inequity between homeowners is going to grow more and more disparate each and every year to come.”