Real Estate Tax Reduction/Super Storm Sandy

I sincerely hope that each of you and your possessions are safe. My home and cars were damaged by the rising waters but those things can be replaced.

Many residential and business properties were physically damaged to a much greater extent. Since real estate tax assessments are based on market value, everyone should carefully evaluate any physical damage. Simple concise reports should be made directly to the Assessor and hopefully appropriate adjustments will be made to the tax assessments. However, these reports do not take the place of formal complaints/grievances that must be filed in January for Nassau and New York City and in May for Suffolk properties. Separate complaints must be made for property that is also taxed by a Village. If the assessment is not lowered or a formal complaint is not filed in a timely manner, the taxes will not be reduced regardless of the damage to the property.

Hurricane Sandy Notice for Nassau County

It is with a heavy heart that I write this blog post today. Our entire block and most of the neighborhood have lost their cars to the waters and still have no heat or power. We were warned not to start the cars – some of those who did, started electrical fires.

If your business or home has sustained physical damage, it should be reported by you directly to the Nassau County Department of Assessment at one of the following numbers: (516) 571-2002; 2003; 2008; 2016; 2025 or 2028. This is a separate and different reporting than the regular complaints that are filed each January. If further information becomes available, I will certainly pass that on as well. Good Luck!

Nassau County School Tax Increases

For many who received their Nassau County School Tax Bill in October, it was a terrible surprise. Although many assessments were reduced, those tax payers were not likely to see a reduction in their tax bill from the prior year. This is because commercial and residential tax rates were significantly increased, in some cases in upwards of 30%. If your real estate tax assessment did not decrease there was definitely an actual increase in the tax bill. These tax rate increases have created an unfortunate hall of mirrors for Nassau County taxpayers. Market values are down, real estate tax assessments are down, tax rates and tax bills are up.

To complicate matters, the ratio of assessment to market value has decreased for both residential and commercial properties. Therefore, the market values the taxes are based on is actually higher than the County reports on their website.

The County’s real estate tax system literally pits one neighbor against another. When a substantial amount of properties in a school district receive lower tax assessments, from either the Assessment Review Commission or Court tax certiorari proceedings, the other properties in the district must pick up the slack. District budgets must be covered one way or another. Of course, if everyone had a fair and equitable tax assessment the bills would be less volatile - tis a consumption devoutly to be wished.

Long Island Residential Tax Assessments in the News

All of a sudden newspaper reporters are realizing that there are over 100,000 residential and 20,000 commercial tax assessment complaints in Nassau County alone each year. There seems to be a disproportionate number of complaints from the “affluent” communities on the North Shore and much less a proportionate number of complaints from the “less affluent” communities on the South Shore.

The Nassau Assessor has reduced many of the assessments protested on both commercial and residential properties. However, taxpayers have found out when their tax bills arrive that lower assessments do not necessarily mean lower taxes. Mathematically, when budgets do not decrease then assessments decreases mean higher tax rates. Another way to look at this situation is that if your neighbors or commercial competitors are getting tax assessment reductions, most assuredly your taxes are going to increase. Not checking your assessment every year is just plain negligent.

Tax assessments are not the only problem that taxpayers face. Tax rates vary from school district to school district, from town to town, from village to village. Some districts have literally double the tax rates of other school districts; so even assessment reductions are not going to create equality.

Would a single tax rate for all residences and a single tax rate for all commercial properties work? That is the way New York City has approached the problem. The worst part of the “broken” Nassau County system is that even after getting an assessment decrease the County has literally stopped issuing refunds.

But don’t give up your rights to protest and get a fair assessment. Eventually, the settlements will turn into real dollars.

Suffolk County Property Tax Grievance Filings - Small Window of Opportunity

Generally speaking, the fair market value of both residential and commercial property throughout New York State has decreased over the past few years. One would think that the Suffolk County assessor's would realize how the economy has adversely affected the local real estate values and thus lower tax assessments accordingly. No such luck. For the vast majority of properties in Suffolk County, the assessments have remained the same over the past several years. Making matters worse, although assessments have not decreased, tax rates have increased. Property owners and tax paying tenants must resort to tax certiorari proceedings in an effort to reduce their tax burden.

On May 1, 2012, the tax assessments for the Ten Towns in Suffolk County, NY will be published. Complaints to each of the town assessors can only be filed from May 1, 2012 through May 17, 2012. A word to the wise, have your Suffolk County tax assessment evaluated on May 1, 2012. Compare the market value the assessor "guesses" to the amount you would expect to receive on a sale of your property. If your assessment is appropriate, celebrate and make a donation to your favorite charity! However, if your assessment is too high, you must file a complaint with your assessor within the two week period listed above. If your property is in a Village, keep in mind a separate examination will need to be done for your Village tax assessment as the Village assessor's market value might be vastly different from the Town assessor's market value.

Beware, once the deadline passes, the assessment will be set in stone and the tax rate increase will not be known until the December bill.

Richard G. Fromewick is the Chair of the Tax Certiorari & Condemnation Law Practice at Meyer, Suozzi, English & Klein, P.C.

Where is My Nassau County Tax Refund?

Recently newspaper headlines in Nassau County have focused largely on the mass rounds of government employee pay cuts and firings. According to the County, the blame for these pay cuts and firings is a $300 million budget deficit.

I understand that expenses have to be cut. However, this layoff scenario in the County Attorney’s Certiorari Department, Assessment Review Commission and Treasurer’s Department is a classic “kick the can down the road” to the next administration. Who will suffer? Certainly, anyone entitled to a tax assessment reduction/refund might not have the wherewithal to wait for relief. Try and tell the mortgage company or the tax receiver “I expect to get an assessment reduction and refund, my attorney settled the case. However, it will be several years until I receive my refund. Can you wait?”

The failure of the Nassau County Legislature and Administration to work with NIFA in accepting over $100 million dollars in bonds to pay off the judgments ordering real estate tax refunds is not only disgraceful, it makes very little sense. Why would the County not want to payoff these interest earning judgments as soon as possible? The slower the real estate tax refund process is, the higher will be the ultimate payout because of the interest accrued. Wouldn’t the County rather spend their money some other way than just paying off interest due? Doesn’t the tax payer deserve their refund immediately?

CERCLA - ENVIRONMENTAL CONTAMINATION - POLLUTION & ITS EFFECT ON YOUR PROPERTY TAXES

Richard G. Fromewick is the Chair of the Tax Certiorari & Condemnation Law Practice at Meyer, Suozzi, English & Klein, P.C.

The real estate world is becoming increasingly environmentally conscious and polluted properties are not well-tolerated. As the mindset has formed on the environment there is increasing vigilance through requiring remediation of polluted properties. Whether the pollution is from above with chemicals and oil permeating the ground or chemical and oil leaks from underground tanks or even flowing underground from another property, citations for cleaning up are issued in increasing numbers.

The cost of clean up or remediation can be somewhat ameliorated by lower tax assessments due to the loss in market value. In a case of first impression litigated by my firm, the New York State Court of Appeals in Commerce Holding Corp. v. Board of Assessors of Babylon found that the taxpayer was entitled to deduct the cost of remediating from the market value of the property in its normal state.

This decision has a substantial impact on property owners facing an environmental clean up. Under the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”) of 1980, a property owner is liable for the cost of cleaning up polluted property even if that owner can prove that they were not in any way responsible for the contamination, as was the case in Commerce. Under CERCLA, the owner is considered a “potentially responsible party” and will be strictly liable for the clean up costs. This is true even if the property is purchased after the contamination has been discovered. This standard requires owners of real estate to take extra precautions because the cost of any clean up will be imposed on them if the property is contaminated or becomes contaminated.

To those owners who have been cited and must pay clean up costs, the decision in Commerce offers some relief because it allows them to petition the assessor to reduce their tax burden on the property. Under Commerce, the assessor must first determine the value of the property as if it was uncontaminated and then subtract the entire remaining cost of the clean up from that value. This reduction takes into account that anyone looking to purchase the property would require that the sale price reflect the cost of cleaning up the property. In effect, this decision recognizes that property worth $1 million if uncontaminated but requiring $500,000 worth of environmental clean up is only worth $500,000 and should be taxed accordingly.

Purchasing and owning real estate is becoming more complicated all the time. The key to making a profit despite these complications is to be well-informed about all of your options, particularly when dealing with complex matters such as environmental clean up and taxes. If you have been cited for contamination, you have the ability to have your property taxes reduced to reflect the reduced value of your property. If you have been paying clean up costs, you should verify that your assessment was adjusted to reflect the cost of the clean up. You can check your property assessments in Nassau County by going to http://www.mynassauproperty.com/ or by logging on to http://www.mlsli.com/. Typically, the assessor will not adjust an assessment on its own, leaving it up to you to make an application to reduce the assessment through a tax certiorari proceeding.