In an effort to avoid sudden increases in property values caused by a county-wide revaluation, Nassau County officials created an exemption that allowed homeowners to spread valuation increases over a five-year period.
But the move had an unintended effect: Owners of seven of the 385,000 residential properties in the county did not pay property taxes at all in the 2020-21 tax year because the exemption eliminated their bills for school, city and county taxes, according to county records and officials.
That’s because the amount of the exemption was higher than the property’s estimated value based on a complicated formula approved in a 17-0 vote by the Republican-controlled Nassau County Legislature, with two omissions.
County officials said it was a one-time issue and that the valuations of the seven properties have increased this year and that they will pay property taxes.
County appraisers used this formula to determine the size of exceptions for all residential properties:
- Calculate the difference between the property assessment 2019-2020 and the assessment 2020-2021.
- Multiply the difference by 0.8. Only for 2020-2021, this exempts 80% of the tax increase from taxation.
- Consider e.g. a home valued at $ 500,000 in 2019-20 and revalued at $ 1 million for 2020-21. Under the county exemption formula, $ 400,000 of the $ 500,000 increase is tax-exempt by 2020-21. The owner only pays tax that year of $ 600,000 in assessed value – the $ 500,000 increase in value plus the $ 100,000 that was not exempt from taxation.
Under the exemption, homeowners’ tax bills will increase gradually over a five-year period, county officials said.
By the time the exemption expires, in 2024-2025, valuations will have risen to reflect the full market value, officials said.
Curran administration officials said the tax evasion was an “anomaly” caused primarily by the exemption, which aims to allow property owners to delay the impact of increases caused by Curran’s county-wide property revaluation.
Owners of the seven untaxed properties declined to comment on this story, did not respond to requests for comment or could not be reached.
Of the 385,000 residential properties in countywide, seven were the only ones for which the exemption eliminated school, city and county property tax bills completely last year, appraisal officials said.
The seven properties include a home in Point Lookout with a valuation that rose from $ 1,008,000 in 2019-2020 to $ 4,012,000 in 2020-21.
Another of the properties was a Kings Point guest house valued at $ 898,400 in 2019-20 and $ 3,173,000 in 2020-21, according to online Nassau appraisal records.
Appraisal officials confirmed the seven properties for which taxes were eliminated after Republicans in the county legislature – following a complaint from a neighbor to one of the properties – raised the issue at a news conference in July.
Officials did not investigate taxes on other county estates.
All seven homes were among thousands that were significantly undervalued during the nearly ten-year period in which former Curran Republican predecessor Edward Mangano froze the tax bills, Curran administration officials said.
The county did not update housing values during that period.
By the time the revaluation took effect in 2020-21, a gap had developed between the seven property ratings compared to 2019-20, officials said.
“In the case where you have a property that has so much market value after … a very long valuation stop …, there will be a big difference” from year to year, said Charles Berman, North Hempstead Town taxpayer, to Newsday.
In time, Berman said, “it will create an exemption greater than the remaining taxable value.”
Michele Spara, deputy Nassau County assessor, said that if the exemption “exceeded your final assessed value [for 2020-21], there was nothing left to tax you off, so your net profit was zero. “
GOP lawmakers, who have complained about revaluation issues, including the accuracy of estimated tax bills for homeowners and the lack of proper application of exemptions for hundreds of new condominiums, said the situation with the seven properties highlighted continuing revaluation issues.
President Richard Nicolello (R-New Hyde Park) said the situation with the seven homes may represent “the most violent, perhaps the most obvious and visual manifestation of problems” caused by reassessment.
Bruce Blakeman, a Republican city councilor in Hempstead who is challenging Curran, a Democrat, for re-election in November, raises the issue of the untaxed homes.
In a TV campaign ad, Blakeman says, “The millionaire’s taxes fell while yours rose,” as a photograph of an expansive property appears on the screen.
“There is no excuse for every other low-income, middle-class Nassau resident picking up for these multi-million dollar property,” Legis said. John Ferretti Jr. (R-Levittown) said at a law hearing on Aug. 2 about the untaxed properties.
Nassau County officials have argued that the temporary tax deduction for the seven properties did not shift a significant portion of the tax burden onto other property owners.
Owners of the seven properties paid a total of $ 137,417 in property taxes for the 2019-20 fiscal year, according to county records.
That compares with the total school and property tax in 2021 of $ 6.38 billion, according to county data.
“Less than one-thousandth of one percent of the county’s total residential plots were given a taxable value of zero,” Deputy Assessor Robert Miles told lawmakers in Nassau County at the Aug. 2 hearing.
“Homeowners have benefited greatly from this taxpayer protection plan, and from having seven properties if this irregularity speaks to it being a solid law,” Miles testified.
Curran ordered a revaluation of all properties in the county after joining in 2018, leading to an update of the tax list for the first time in nearly a decade.
Mangano, a Republican, froze tax bills in 2011 as he tried to develop a new county property revaluation system.
At the same time, Mangano’s administration granted settlements to a large number of property owners, who challenged their assessments.
In the tax years 2012-13 through 2019-20, when the freeze was in place, Nassau County settled 1,003,434 of 1,252,099 tax challenges, or 80%, county records show.
The mass settlements caused a shift of hundreds of millions of dollars in property tax burden to homeowners who did not appeal their valuations or lost their valuation challenges.
In December, a county analysis showed that 65% of homeowners would receive school tax increases under reassessment, compared to 35% who would receive reductions.
Nassau officials said they were considering revisions of the exemption program to prevent a recurrence of the situation with the seven untaxed properties.
Deputy Nassau County Attorney Conal Denion said his office “explored possible changes that could be made to the New York State Real Property Tax Law to address this very rare circumstance.” The county authorities have not provided details on the proposal.
Nassau County “plans to work with state lawmakers to ensure this problem does not recur,” Denion said.
Guesthouse, Dock Lane, Village of Kings Point, Great Neck School District.
- Estimate 2019-2020: $ 898,400
- 2020-21 revaluation: $ 3,173,000
- 2020-21 final valuation after successful tax challenge from homeowner: $ 1,785,000
Calculation of the exemption:
$ 3,173,000- $ 898,400 = $ 2,274,600
$ 2,274,600 multiplied by 0.8 [80%] = exemption value of $ 1,819,680
- Result: No tax is payable for 2020-21 because the exemption ($ 1,819,680) exceeds the final housing valuation ($ 1,785,000)
Source: Nassau County Department of Assessment
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