New York City’s convoluted property tax system, now exactly 50 years old, overtaxes large multifamily buildings, making it harder to build enough apartments to solve the city’s housing crisis.
The lowest property taxes are levied on homeowners, especially those who live in areas with fast-rising property values, even though two-thirds of city households rent.
Areas dominated by Black homeowners pay property tax rates that are double those of primarily white neighborhoods.
And the more expensive a cooperative or condominium unit, the more likely it will be to pay relatively low property taxes because of the city’s flawed system for assessing value.
Those are the major conclusions of a new report on the system called “Footing the Bill,” released Monday by the Community Service Society and the Progress and Poverty Institute, aligning those two progressive groups with fiscal organizations like the Citizens Budget Commission and real estate groups like the Real Estate Board of New York in calling for an overhaul of property taxes in the city.
The organizations will be hosting a “birthday party” panel discussion Monday in conjunction with the report’s release, all part of an effort to prompt mayoral candidates to address a looming issue campaigns have conspicuously avoided.
“I find it a little distressing that candidates are not mentioning the property tax,” said Martha Stark, the former city finance director who is a key force behind Tax Equity Now New York, the group trying to force changes through a lawsuit pending in state Supreme Court. “Maybe that is failure on our part.”
This year marks the 50th anniversary of a state Court of Appeals decision that found the city’s property system illegal. Since then, its replacement has “aged poorly,” according to the report — which echoes the findings of many other studies and media investigations in the past.
The unfairness of the system is clear, the Community Service Society and Progress and Poverty Institute’s study finds in its analysis of public data, including assessments and tax abatements.
Residential properties with one to three units pay an effective tax rate of only 0.7% of their value while apartment buildings with more than 10 units face an average effective tax rate of 3.6%, about five times as much.
“This disincentives development of multi-family housing,” said Iziah Thompon, one of the authors at CSS. “The cost of property taxes are passed along to renters.”
The city caps the amount of any increase in value that can be added to a residential property’s assessment in any given year. Property owners in neighborhoods that have seen sharp increases in values like Park Slope or the East Village pay far lower taxes as a percent of market value compared with areas that have seen values rise more slowly like Canarsie, East New York and Cambria Heights. Park Slope and the East Village are primarily white, while Black homeowners dominate the other three.
The city also assesses co-ops and condos as if they were rent-regulated apartments, which leads to assessed values and property taxes much lower for luxury units, especially in Manhattan, than their market values would justify.
The system “benefits the haves over the have not,” the report concludes.
Apartment building in Crown Heights, Brooklyn, March 28, 2025. Credit: Alex Krales/THE CITY
Court Case Looms
Meanwhile, the system could be upended by a case before a Supreme Court judge in Manhattan.
In 2017, frustrated by a lack of action, advocates and real estate groups behind Tax Equity Now filed a lawsuit challenging the system, charging it disproportionately affected racial minorities and perpetuated segregation. A lower court dismissed the lawsuit, saying the legislature could make changes if it wanted.
On the last day of the administration of Mayor Bill de Blasio in 2021, a commission he created in part because of the lawsuit recommended sweeping changes to deal with the inequities, but so far nothing has come of them.
But early last year the Court of Appeals, the state’s highest court, reinstated the lawsuit by a vote of 4 to 3 and sent it back to the Supreme Court. The ruling also indicated that the majority agreed with some of the arguments of Tax Equity Now and suggested steps the city could take to make the system fairer even while acknowledging many reforms would require approval of the Legislature and the governor.
Under the ruling, the city could adopt uniform assessment practices on all residential properties and end the use of rent-regulated comparison for co-ops and condos, said Stark.
“It’s been a year, and the city has done nothing,” she added.
Tired of waiting, Tax Equity Now in January asked the Supreme Court judge hearing the case to issue a summary judgement forcing the city to make the changes the Court of Appeals suggested.
Last week, the administration of Mayor Eric Adams finally filed a response opposing summary judgement, claiming action would harm taxpayers and hurt the city’s fiscal health.
But the mayor remains committed to reforms, said spokesperson Liz Garcia, and expects to see reform legislation introduced later in the current legislative session. She did not give details on what changes Adams might propose.
Meanwhile, candidates for mayor have virtually nothing to say about the issue as they campaign. Only four candidates responded to a request by THE CITY to detail their position.
Former city comptroller Scott Stringer’s campaign said it expects to issue a statement on property taxes soon but had no comment now.
A spokesperson for Assemblymember Zellnor Myrie responded that he has long supported changing the system and noted he had told a group of journalists that “my administration is going to be open to conversations about how we fix some of the inequities in our property tax system.”
A spokesperson for former governor Andrew Cuomo, who is far ahead in the polls, referred THE CITY to a white paper on affordability that called for extending a 2% cap on increases in property tax collections that exists elsewhere in the state to homeowners in the city.
“I am not sure what that means, but more caps would make the problem worse,” said Thompson of the Community Service Society.
A request to the Cuomo campaign to respond went unanswered.
City Comptroller Brad Lander, who has been one of the most vocal politicians on this issue, has endorsed reforms including putting most residential properties into a single class and cutting rates on rental housing by 30% to match the levies on condos and co-ops and encourage more building.
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