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Information on Tax Reduction
BEST TIME IN YEARS TO FILE A COMMERCIAL TAX REDUCTION PROCEEDING
TWO PRINCIPAL FACTORS
>1. Assessment Equalization Rates have dropped dramatically because of a great increase in the value of residential properties.
e.g. TOWN OF BABYLON
EQUALIZATION RATE 2000 2.27% |
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2001 |
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2.06 |
2002 |
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1.66 |
2003 |
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1.48 |
2004 |
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1.33 |
2005 |
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1.18 |
2006 |
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1.03 |
2007 |
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.94 |
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e.g. TOWN OF ISLIP
EQUALIZATION RATE 2000 2.32% |
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2001 |
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2.09 |
2002 |
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1.78 |
2003 |
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1.56 |
2004 |
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1.38 |
2005 |
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1.12 |
2006 |
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1.07 |
2007 |
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9.6 |
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e.g. TOWN OF SMITHTOWN
EQUALIZATION RATE 2000 2.46% |
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2001 |
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2.22 |
2002 |
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1.76 |
2003 |
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1.56 |
2004 |
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1.44 |
2005 |
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1.30 |
2006 |
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1.21 |
2007 |
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1.12 |
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e.g. TOWN OF BROOKHAVEN
EQUALIZATION RATE 2000 1.78 |
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2001 |
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1.61 |
2002 |
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1.27 |
2003 |
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1.12 |
2004 |
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1.01 |
2005 |
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.84 |
2006 |
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.76 |
2007 |
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.70 |
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WHAT DOES THE DROP IN EQUALIZATION RATES MEAN?
TOWN OF ISLIP
If 2000 assessment was $50,000 - equalized value $215,331
If 2007 assessment was $50,000 - equalized value $518,671
HAS YOUR VALUE INCREASED MORE THAN 141% IN SEVEN YEARS?
TOWN OF BABYLON
If 2000 assessment was $50,000 - equalized value $2,202,647
If 2007 assessment was $50,000 - equalized value $5,319,142
THIS IS OVER A 140% INCREASE IN SEVEN YEARS.
RISE IN INTEREST RATES AND CAPITALIZATION RATES
>2. Rise in capitalization rates as a result of the increase in interest rates reduces the value of commercial property
Example: If net income of building after vacancy/expense $1,000,000
If cap rate is 9% (prior to tax factor) Value is: 11,111,111
If cap rate is 10% Value is l0,000,000
If cap rate is 11% 9,090,090
WATCH FOR RISING RATES!
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