New York Property Tax Liens

Although there are many perks to living in New York City, like visiting Times Square, taking a walk in Central Park, or the Brooklyn Bridge to enjoy city views, there’s one thing that is not so exciting: paying property taxes as a New Yorker. 

COVID hit all of us hard, and it could be challenging to pay bills, including your property taxes if you have low income coming in during this difficult time. 

If it makes you feel any better, your taxes are used to fund schools, roads, and the police department. Regardless, financial hardships have affected us all, and there are a few things you should know about the NY property tax system and how you can afford to pay your property taxes in New York State.

The New York Property Tax System Overview

The New York Property Tax System Overview

Now you must be wondering, what is the sales tax for New York City? Well, believe it or not, taxes in the rest of New York are very different from the taxes in NYC. The property tax rate is only 0.88%, while the average rate statewide is 1.69%.  

As of 2022, the New York county sales tax rate is 8.88%, a combination of both county sales tax and state tax rates. While this is fairly high, the New York State sales tax rate is just 4%, as this is the sales tax in upstate New York. 

It’s simple how real property tax works; first, a town assessor or local official can give you an assessment of your property, and after that, your market value is determined, you can find out how much you will pay in property taxes. Finally, the market value of your property will be assessed based on the sale prices of properties that are similar to yours.  

Another way your property is assessed is by the labor required to replace it and the cost of materials after depreciation. The total assessment is then calculated from the uniform percentage of value multiplied by the market value.  

After this amount is calculated, the taxable assessed value is the total assessment subtracted from any property tax exemptions in NY. Although the taxes are quite low in the city, you will still pay a lot in taxes due to Manhattan’s high real estate values. The statewide median payment is around $5,732, while it is a whopping $8,980 in New York City. For further information on assessments, check out the nyc.gov website to find out more.

Your real estate tax bill will include different tax rates, including a rate for your school district, city, and county. Every year, the amount of taxes you pay is recalculated based on the amount of revenue the tax authority needs and the total value of the real estate in a tax district.  

Every county in New York State has an average effective tax rate, and millage rates are how New York rates are given out. For every $1,000 in property value, you will pay $1 of tax, otherwise known as a mill.  

You can look at this chart to get a better idea of the average effective tax rates for counties across New York State. 

New York Property Tax Liens

Tax liens are unpaid property taxes that accumulate from property owners not being able to pay their water bills and property taxes. The Department of Finance sells tax liens in a tax lien sale, so it is in your best interest to pay off your taxes as soon as possible. The amount you owe will be sold to an authorized buyer, but only if your debt qualifies for a lien sale.  

Interest and other fees are added to your debt by a lien servicing company after receiving four warnings in the mail notifying you that you must pay off your debt or your property’s lien will be sold.  

As you can see, if your taxes are sold as a tax lien, you could have lots of added stress and have more debt to pay. However, there are a few ways you can stay away from New York State property tax liens.  

As mentioned earlier, the first thing you can do is pay off your debt, and you can do this in person, by mail, or even online. If your property taxes accumulated during the pandemic, you can submit a COVID-19 hardship declaration after seeing if you’re eligible. In short, if you are an individual and want to be eligible for the declaration, you can’t own more than ten residential units.  

Another option is to look through a range of payment agreements that you can find here. You will need proof of identity, such as a driver’s license, and you can have up to 10 years to pay off your unpaid debts. Payments can be made monthly or quarterly but keep in mind the total amount you owe will be increased over time due to interest.  

For example, if you owe a total of $11,000 in property tax and have a 4-year plan with 7% interest, you’ll end up paying over the years. If you are interested in a payment plan, keep in mind that if your assessed value of the property is under or equal to $250k, your annual interest rate will be 3%. 

If the value is greater than $250k but less than or equal to 450k, your annual interest rate will be 6%. If the value of your property is greater than 450k, then your interest rate will be about 13%. If you cannot follow through with your payments for more than six months, your payment plan will be canceled, and your agreement will be in default.  

Another option is to submit an emergency repair certification that you can be eligible for if your property is a tax class one property and only if you owe emergency repair charges.  

Your last option for keeping your property out of a lien sale is to apply for a property tax exemption. Tax exemptions include the Disabled Homeowners’ Exemption, Senior Citizen Homeowners’ Exemptions, and a few veteran exemptions.  

A tax exemption that applies to many people overall can be the STAR credit or School Tax relief. You will be eligible for this if you make less than $500,000 a year and own a one, two, or three-family home, apartment, condo, or farm.  

It only applies to school taxes and is based on the first $30,000 of the assessed value of your home. If you have property tax delinquencies that span over the course of the year, then you will not be eligible for the STAR credit program.

Personal Liability for Property Tax Liens in New York

If you accumulate unpaid property taxes for over a year, then the property’s former owner will be liable. As long as the property is titled in an individual’s name, the person is liable. However, the entity is liable if the property is titled in an entity.  

Even if your property goes up for sale, you can still be held liable. Until your bill is paid in full, it is possible that your local tax authority can charge penalties and interest that can reach up to 43% more than your original bill.

What Happens if You Don't Pay Property Taxes in New York

What Happens if You Don’t Pay Property Taxes in New York

Your home may be sold to a tax foreclosure if you don’t pay your property taxes in New York. If you don’t know how foreclosure works, it goes like this: interest and penalties from accrued taxes become a lien on your house. To collect the debt from you, the taxing authority forecloses the lien.  

After the taxing authority buys tax liens in New York, there are a few places where they sell tax lien certificates when the taxing authority decides to sell the lien rather than foreclose it.  

At the beginning of the foreclosure process, a petition is filed in court. If you don’t respond, you will automatically lose what is known as “default judgment” against your property. Your tax district will quickly gain ownership of the property; otherwise, an auction will be held to sell it.  

At the tax lien auction, people are welcome to buy your property as it is auctioned by a county sheriff, clerk, or local tax authority office. These auctions can occur in a hotel conference room, a courthouse, or even online.  

Luckily for you, even after your property goes up for sale, you may still have the chance to catch up on your payments.

If you are interested in selling your home, whether it’s because you are relocating or you cannot afford the payments on your home anymore, you can look into selling your property to Companies that buy houses in Nassau County. If you need assistance finding affordable housing, if you decide to sell your home, then you can apply here. You can also receive help from an attorney general who can offer you consumer protection and inform you of your rights as a taxpayer.

As your property value goes up, so do your taxes. One New York resident explained that her house was assessed and valued at $975,000 but now is worth $1.48 million 3 years later. She finds that living in New York is quite expensive and believes that she will have to work for the rest of her life.  

Whether you live in Queens, the Bronx, or NYC, you cannot escape property taxes. There are always forms you can fill out to decrease the amount you have to pay. It doesn’t hurt to try and remember that property owned by governments or religious organizations may be exempt from paying property taxes.

Conclusion

Remember your rights and the taxation rules when it comes to your property. When in doubt, don’t hesitate to contact the Department of Taxation and Finance as you can receive assistance, especially if you have a low income coming in. 

You can also contact your county’s assessor or local town representative for any other questions about your property. If you feel that you are really struggling to pay your taxes and even a mortgage on your home, you do have the option of putting your home up for sale. 

If you happen to be in Brooklyn, there could be cash home buyers in New York ready to make you an offer on your home, no matter what condition it is in. The city of New York is a very exciting place to live, so don’t let high property taxes stop you from enjoying the Big Apple.