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How the Property Tax Works

What is the Property Tax?
The real property tax is a tax based on the value of real property. Counties, cities, towns, villages, school districts, and special districts each raise money through the real property tax. The money funds schools, pays for police and fire protection, maintains roads, and funds other municipal services enjoyed by residents.

What Determines the Amount of a Property Tax Bill?
The amount of a particular property's tax bill is determined by two things: the property's taxable assessment and the tax rates of the taxing jurisdictions in which the property is located. The tax rate is determined by the amount of the tax levy to be raised from all, or part, of an assessing unit, and the unit's taxable assessed value. The assessment is determined by the assessor and is based on the value of the property less any applicable property tax exemptions.

What Kind of Property Is Assessed?
Every parcel of real property in an assessing unit, no matter how big or how small, is assessed. Real property is defined as land and any permanent structures attached to it. Examples of real property are houses, gas stations, office buildings, vacant land, shopping centers, saleable natural resources (e.g. oil, gas, timber), farms, apartments, factories, restaurants, and, in most instances, mobile homes.

Though all real property in an assessing unit is assessed, not all of it is taxable. Some, such as religious or government owned property, are completely exempt from property taxes. Others are partially exempt, such as veterans who qualify for an exemption on part of the property tax on their homes.

What is an Assessment?
A property's assessment is a percentage of its market value. Market value is how much a property would sell for under normal conditions. Assessments are determined by the assessor, an elected or appointed local official who independently estimates the value of real property in an assessing unit. Assessing units follow municipal boundaries -- county, city, town, or village.

The assessor can estimate the market value of property based on the sale prices of similar properties. A property can also be valued based on the depreciated cost of materials and labor required to replace it. Commercial property may be valued on its potential to produce rental income for its owners. In other words, the assessor can use whatever approach provides the best estimate of a property s market value. Properties in suboptimal uses generally may not be assessed at market value; they must be assessed at their current-use value.

How Do I Know If My Assessment Is Right?
It is up to individual property owners to monitor their own assessments. Taxpayers should bring any questions about assessments to the assessor before the tentative roll is established (contact your assessor for the tentative roll date). In an informal setting the assessor can explain how the assessment was determined and the rationale behind it.

What Determines the Tax Rate?
The tax rate is determined by the amount of the tax levy. There are several steps involved in determining the tax levy. First, the taxing jurisdiction ( a school district, town, county, etc.) develops and adopts a budget. Revenue from all sources other than the property tax (State aid, sales tax revenue, user fees, etc.) is determined. These revenues are subtracted from the original budget and the remainder becomes the tax levy. It is the amount of the tax levy that is raised through the property tax.

(Do you have more questions about how the property tax works? The information above was excerpted from a pamphlet published by New York State: How the Property Tax Works. Read the entire pamphlet or talk to the Assessor.)

STAR Program

Basic STAR: All New Yorkers who own and live in their home are eligible for a STAR exemption on their primary residence. Basic STAR works by exempting the first $30,000 of the full value of a home from school taxes.

The Enhanced STAR exemption is available for the primary residences of senior citizens (age 65 and older) with yearly household incomes not exceeding the statewide standard. For these qualifying persons, the first $50,000 of the full value of a home is exempted from school taxes. See the STAR (School Tax Relief) program Q & A. You may get a STAR application from the Assessor's office or use this downloadable STAR application (in PDF format).

Veterans' real property tax exemption

The eligible funds veterans' real property tax exemption (Real Property Tax Law, section 458) provides a partial exemption where property owned by a veteran or certain other persons designated in the law has been purchased with pension, bonus, or insurance monies, referred to as “eligible funds.”

Another exemption, known as the alternative veterans' exemption (Real Property Tax Law, section 458-a), is available only for residential property of veterans who served during wartime or received an expeditionary medal. Each county, city, town and village (municipality) was given the option of deciding not to grant this alternative exemption.

For more information, see the state's Q & A on veterans.