The math behind Nassau County’s DIY assessment challenge system, and how it sets homeowners up for failure

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As a Nassau County homeowner, it’s hard to go a day without thinking or hearing about property taxes. One thing we can all agree that our taxes are too high. Most have heard the concept of “grieving” your taxes with the goal to get them lowered. We’re going to discuss what that actually means, how to do it, and the tricks Nassau uses to make it difficult.

Per NY State, property taxes are an ad valorem tax, or a tax based on the value of property. Two owners of real property of equal value in the same municipality should pay the same amount in property taxes. Also, the owner of more valuable property should pay more in taxes than the owner of less valuable property. Sound fair enough? The problem is, in Nassau, it simply doesn’t work that way.

There’s some amount of taxes that must be paid to schools, police, fire districts, etc. For illustration, let’s say the total tax burden in a neighborhood is $100,000 that needs to be paid (if only). Now let’s say there are 10 homes total, all exactly the same. $100,000 divided by 10 is $10,000, which is what each home has to pay.

Sounds simple enough. Then how did Nassau go so wrong? How do two neighbors with split-level homes have tax bills that vary for $4,000 dollars per year? Without going into politics, the short answer is that the county gave up on trying to keep up with real assessments long ago. Instead, they actually “locked” assessments, meaning, your assessed value is the same each year unless you 1) proactively challenge it to get it lower or 2) do work to your home that the county deems value-enhancing, which makes it higher.

In our sames example, let’s say homes 1 through 5 challenge their assessments successfully and 6 through 10 do not. Homes 1 through 5 now only owe $8,000 per year! So that means the school district and county get less money, right? Far from it. That same $100,000 is still owed no matter what. The tax burden is now simply shifted to homes 6 through 10.

As silly as it sounds, this is exactly what is happening in Nassau County. In direct violation of what the State proposes, homes are not taxed based on real, actual value anymore. It’s whoever does a better job convincing the County that their home is worth less than their next door neighbor.

So what can you do as one of the many who are being over taxed?

We get bombarded with letters in the mail from a number of law firms out there telling us we’re over-assessed and thus pay too much. We’ve also seen that those same firms charge 50% of savings, which can end up costing thousands.

We also know you can “do it yourself”, but the whole processes is incredibly confusing at first glance, and sets homeowners up for failure. While the physical act of logging into the County’s website and filling out the form is easy, we hear too many stories of people who do it themselves and lose. Nassau even hosts seminars to teach people how to go through the motions of filing an appeal.

When you look up your property on Nassau County’s Land Record Viewer, you’ll see something that looks like this:

Fair Market Value: $400,000
Level of Assessment: 0.25%
Assessed Value: 1,000

But what do they mean?

Fair Market Value: This should be self-explanatory. It’s what the county is saying your home is worth, right? WRONG! This number has more in common with a bowl of guacamole than it does the real, actual value of your home. This number used to try to have some relation to actual fair market value, but it doesn’t anymore due to assessment freezes county-wide. As the market changes, these numbers remain stale. From here out, we will call this number “Guacamole”.

Level of Assessment: For all intents and purposes, this is a made up number that the county uses to multiply with your “Guacamole” number, to ultimately land at your “Assessed Value”. In Nassau County, the stated number is 0.25%. Except it isn’t. Let’s call this the “Fudge Factor”.

Assessed Value: This is the only number that really matters. This number is what is ultimately multiplied by the tax rate for the school district, police, etc, to come up with what you owe.

Let’s walk through a real-life example. This is a real analysis we performed for a customer in a south-shore school district who recently purchased a home for $100,000 more than Nassau’s stated “Guacamole Number”. The homeowner assumed that meant they were paying too little in tax if anything, and while their taxes were insane, they should be happy it isn’t higher.

We provided this to the homeowner as an illustration as to why there’s more than meets the eye. We took the assessed value of the home divided by the price the homeowner actually paid for the home. Let’s call that the real “fudge factor”. The homeowner’s number landed at 0.21%, in red. The blue homes are similar homes that sold within the past year.

Nice to be homeowner in “Comparable 1”! Their fudge factor is .12% – nearly half! That means they’re paying about half of what they should be vs our client.

Not 10% less.
Not 25% less.
Half.

And there are a few homeowners worse-off than our client. Homes 5, 17, 21 and 22 are paying way, way too much in taxes. These are insane numbers. This means that your tax bill can be as much as double as your next door neighbor with the same house.

Ok, now how can I use this information to pay less in taxes?

The chart above shows “Fudge Factors” ranging from 0.12% to 0.26%. This demonstrates that the County’s 0.25% is indeed a made-up number. The below shows the average of our data from this data set including and excluding the homes who clearly never successfully challenged their assessment.

Now, let’s say your home is really worth $500,000 and your “Guacamole Number” is $400,000 with an Assessed Value of $1,000 using the county “Fudge Factor” of 0.25%. But using the “Double Secret Fudge Factor” of 0.15%, your home is actually being assessed as if it’s worth $666,666 (1,000 divided by 0.15%). Over $160k more than it’s worth – not $100k less!

In real terms, this is a situation where you’d likely be paying thousands of dollars per year too much. If you decide to challenge your assessment yourself, there is a section where you can change the “Fudge Factor”.

Of course, TaxEnvy can also do this on your behalf, always at a better price than the other guys. Guaranteed. Learn more about that here.

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