July 1 marked the beginning of the NYC Fiscal Year 2025 (FY25). The New York City Council approved a $112 billion budget for FY25, highlighting a significant focus on property tax revenue. Below is an overview of the key changes and updates that will impact property owners, investors, and residents.
Budget Highlights
- Property Tax Revenue Increase:
The property tax revenue budget has risen by $1 billion (+3.1%) to $33.7 billion, making it the city’s largest revenue source at 44% of all tax revenue. - Tax Rate Changes:
The new FY25 property tax rates have been established but are subject to amendments by November 1, 2024.
Property Tax Class Updates
- Tax Class 1 (One- to Three-Family Homes):some text
- Rate Increase: +81.4 basis points (bps), marking the largest percentage rise in 13 years.
- Overall Tax Impact: Combined with a +4.65% increase in taxable assessed value, taxes for this class are estimated to rise by +8.9%.
- Tax Class 2 (Other Residential Properties: Rentals, Co-Ops, Condos):some text
- Rate Decrease: -20.6 bps.
- Overall Tax Impact: With a +4.53% increase in taxable assessed value, taxes are projected to increase by +2.8%.
- Tax Class 3 (Utility Property): No specific rate changes mentioned.
- Tax Class 4 (Commercial Property: Office, Retail, Hotel):some text
- Rate Increase: +9.4 bps, the third-highest rate in 20 years.
- Overall Tax Impact: Combined with a +3.47% increase in taxable assessed value, taxes are expected to rise by +4.4%.
Key Deadlines for Property Owners
- June 1, 2024: The Department of Finance (DOF) issued tax bills based on FY24 rates. Adjustments reflecting FY25 rates will appear in November 2024 bills for payments due after January 1, 2025.
- Pending Legislation: A state bill could limit the tax rate increase for Class 1 properties, potentially redistributing increases to Classes 2-4.
Interest Rates for Late Payments
The interest rates for late property tax payments have increased by 100 bps for all tiers and will compound daily.
Revival of the Property Tax Lien Sale Program
- The City Council revived the property tax lien sale program, effective through December 31, 2028, to enforce tax collection.
- Liens can be sold for:some text
- Tax Class 4: Commercial properties with $1,000+ of debt overdue by at least one year.
- Tax Class 2: Rental buildings with similar debt.
- New Provision: The Department of Housing Preservation and Development will inspect certain apartment buildings for code violations before placing them on the lien list.
Important Filing Deadlines
- August 15, 2024:some text
- File Supplemental Storefront Registration to report vacancies as of June 30, 2024.
- October 24, 2024:some text
- File NYC real estate tax certiorari Article 7 petitions to challenge FY25 property taxes.
- March 1, 2025:some text
- Apply for Industrial & Commercial Abatement Program (ICAP) property tax abatements.
- March 15, 2025:some text
- Apply for Childcare Center property tax abatements.
What This Means for Property Owners
These updates underscore the importance of staying proactive about property tax planning:
- For Residential Property Owners (Class 1): Monitor potential legislative changes that could mitigate the large rate increase.
- For Commercial Property Owners (Class 4): Be prepared for increased rates and consider programs like ICAP to offset tax burdens.
- For Late Payers: Be aware of the higher compounding interest rates for late payments.
Disclaimer: This content is meant for informational purposes only and is not intended to be construed as financial, tax, legal, or insurance advice.
