COVID-19 Impact: Long Island Real Property Tax Alert

March 25, 2020

UPDATE: The Nassau County ASIE filing deadline has been extended to June 1, 2020 for Nassau County commercial properties.

Original post:

As we confront the threat posed by COVID-19 to our very survival, we are also confronting the threat that it poses to our financial survival.  Our federal, state and local governments are fighting on two fronts – protecting human life and trying to keep the frozen economy afloat.  Real property taxes play the primary role in financing all levels of local government and schools on Long Island.  Unfortunately, the system underlying real property taxes is ill-equipped for any rapid response to the current crisis.

Events are unfolding rapidly in all areas and we will endeavor to keep you informed of future changes as they unfold.

Real Property Tax Payment Deadlines

Due dates have been pushed forward for federal income tax payments, but as of this writing, real property tax due dates remain unchanged.  There are many officials asking Governor Cuomo to step in to alter the last day to pay without a penalty.  As currently configured, the last day to pay Nassau County Second Half School taxes is May 10.  The last day to pay Second Half Suffolk County taxes is May 31.

Nassau County Grievance Filing Deadline Extended

The last day to file a grievance to protest the assessment, which will determine your 2021/22 School and 2022 General taxes, is now April 30, 2020.

Suffolk County Towns’ Grievance Filing Deadline

May 19, 2020 is currently the last day to file a grievance to protest the assessment which will determine your 2020/21 real property taxes.  For a grievance to be filed, there must be a tentative assessment roll published by May 1, 2020.  Given the current “shutdown”, it is doubtful that the towns will be able to comply.  It was reported today that the towns are looking to move the May 1 publication date to August 1 and the grievance deadline from May 19 to August 18.  Stay tuned.

What happens to real property values?

Near term, the impact on real estate values can only be negative.  On the residential side, brokers cannot show homes, so buying for now has in effect stopped.  On the commercial side, if businesses are shutdown, they cannot pay rent.  Long term, too early to tell.

If values are down, will my property taxes go down?

Not without intervention from the federal or state government.  As noted above, the real property tax system is not designed to rapidly respond to market value changes.

A prime example of the design problem are the May (maybe August – see above) assessment rolls for the Suffolk towns.  These assessment rolls will be used to calculate the taxes due starting in December 2020.  Under the law, the assessed values published are supposed to reflect the physical condition of the property as of March 1, 2020, but are to be valued using a valuation (appraisal) date as of July 1, 2019.  In July of 2019, the economy was fine and COVID-19 was not even on the radar.  Under the current system, any value declines would not be reflected until the 2021 assessment roll is published and the December 2021 tax bills are issued.

The lag time is even greater in Nassau County.  The most recently published tentative assessment roll will be used to calculate taxes for the 2021/22 School and 2022 General taxes.  The valuation date is January 2, 2020, before any real impact was felt in New York or the US.  Ironically, next year’s tentative assessment roll as of January 2, 2021 could reflect the market decline but would be for taxes starting in October of 2022 – two and a half years after the spread of COVID-19.

But, there is more.  The real property tax system is designed to pay for the budgets of the municipalities.  It is not designed to allow for deficits spending in lieu of tax collections.  If all values were to decline 10%, the tax rate would need to rise 11% to make up for the budgetary shortfall.  Offering no relief to anyone.

Sadly, without some form of government funded real property tax bailout, taxpayers will remain straddled with unreduced property tax bills.  Given all of the market uncertainty and the system design, taxpayers are left with only one choice – filing an assessment grievance to perhaps reduce their taxes on an individual property basis.

If you have questions regarding your Property Tax situation or anything that is affecting you, your family, or your business, the Farrell Fritz team is here to support you.

Arthur K. Feldman, Partner – (516) 227-0707 – afeldman@farrellfritz.com

Willets S. Meyer, Partner – (516) 227-0678 – wmeyer@farrellfritz.com

Please feel free to access our COVID-19 Crisis Response and Help page here: https://www.farrellfritz.com/covid-19-update/