2022 could be a Very Important Year for Your Property at the New York City Tax Commission

New York City property owners have experienced hardship unlike anything that many of us have seen in our lifetimes.

On January 15, the New York City assessor will publish the 2022 tentative assessment roll. The roll release coincides with the opening of the timetable to file a property tax appeal.

As we emerge from the pandemic, 2022 could be an important tax reduction opportunity for your property. 

At its 2022 hearings, the Tax Commission will issue assessment reduction offers based as of the condition and use of properties as of January 5^th by reviewing their 2021 financial figures.

Now is the time to prepare for the 2022 assessment season. 

The Tax Commission has a myriad of rules governing its applications and the filing process. Filers can easily run afoul of rules, causing the Tax Commission to reject their applications. But if properly prepared, filed, and presented, the 2022 finding could generate significant property tax relief for the 2022 assessment and future years’ tax bills.

We are working with our clients to review their portfolios to ensure that they are prepared for2022. Below is a guide to some of the issues we will be analyzing.

Review your 2021 pro forma financial statement.

The 2021 income and operating expenses are the essential data that makes the case for a property tax appeal. Make sure the information is complete and accurate. For example, applications filed using rounded numbers — zeroes at the end — are a big flag. The Tax Commission will refuse reduction offers on these applications.

Be aware of these 13 problems. Commonly referred to as the ‘13 deadly sins,’ these errors will cause the Tax Commission to deny your reduction claim without an appropriate explanation. Among the ‘13 deadly sins’ are:

• an operating loss;
• more than 10% decrease in gross income;
• continuing vacancy of 15% or more;
• decrease or increase in operating expenses of 15% or more over the previous year’s expenses
• Repairs and maintenance expense higher than 15% of gross rent;
• more than 15 percentage point increase in vacancy; and
• Total commercial rent substantially below market rental levels.

For the coming year, these situations may be the norm rather than the exception.  Nonetheless, anticipate that the Tax Commission will continue to requires that filers address these issues in detail as sworn statements to be provided as part of the Tax Commission application or by the time of hearing, accompanied by a sworn and notarized TC159 form.

Review your December 2021 rent roll.

The application requires that owners summarize the monthly residential rent roll, using December 2021 or January 2022 figures. For properties with residential income, The 13 Deadly Sins also include:

• the the rent roll multiplied by 12 equals total residential rent;
• the rent roll x 12 is 110% or more of the total residential rent roll; or
• the rent roll x 12 is less than total residential rent roll.

Again, the no reduction offer will be made without an adequate explanation of the situation. Compare your residential rent roll against your 2021 income.  To remedy these situations, the Tax Commission requires the submission of rent rolls.

Review prior years’ Tax Commission filings.

The Tax Commission reviews applications for inconsistencies and errors within the current application, prior applications, and looks for any or patterns of inconsistency that appear across multiple filings. For example, an application may report store occupancy at full capacity for the current and prior year, while the current income figures show a significant drop in store income. It may be that the space was occupied by a new tenant, which was in a free rent period. Or perhaps the application reports income figures that are exactly the same, down to the penny, for two years in a row. While these situations are not on the list of 13 deadly sins, they can cast doubt on the credibility of the application. Look for these types of situations. The 2022 application can be used to amend and explain errors on the 2021 application and supply additional detail about unusual situations.

Review properties in your portfolio that are not currently filing property tax appeals.

You may have not filed tax appeals on that segment of your portfolio that has generally had low assessments or properties with high income. Other properties may have benefited from exemptions and abatements that are now phasing out. And still others may benefit from assessment caps. Now is the time to take a fresh look at those properties’ financial statements and consider filing tax appeals in 2022.

Consistency and credibility are key factors to maximizing success at the Tax Commission.

Your property can have the most compelling situation to warrant an assessment reduction. But if your tax appeal filing fails to meet the Tax Commission standards for accuracy and credibility, your property will not get property tax relief.

We are working with our clients now by reviewing their applications and financials to provide every feasible chance for 2022 property tax relief. By taking the steps outlined above, you can also improve your odds to minimize your property tax liability. We will be happy to review your case without charge and see if your property should be filing a property tax appeal in the coming year.