Tax Certiorari: Fast Facts for Boards and Owners in New York City

Unlike most other jurisdictions in the United States, New York City reassesses all properties on an annual basis to calculate annual real estate taxes. The city’s property assessments process presents a window of opportunity for condo and co-op boards to protest these assessments and secure a reduction in real estate taxes owed in a fiscal year. The protest process is called real estate tax certiorari or tax certiorari. There are a relatively select group of law firms that represent owners in this process.
 
Considering the staggering cost of real estate taxes in New York City, annual tax certiorari filings can result in significant savings and should be considered an essential component of the co-op or condo’s financial plan. Working with an attorney at a tax certiorari firm to file the protest for your co-op or condo is a key ingredient for a successful outcome.
 
At FirstService Residential, we strive to provide unmatched value to our clients and recognize that the tax certiorari process is particularly intricate and somewhat mysterious. Among our many value-added services, our clients have access to the tax certiorari experts at Goldberg Weprin Finkel Goldstein LLP, a New York City-based real estate law firm that we believe is the premier firm in this specialized field. With their help, our managed properties have saved millions of dollars on real estate tax assessments, as well as legal fees associated with tax protests.
 

Fast Facts: The Tax Certiorari Process in New York City

 
Property tax assessments determined by New York City’s Department of Finance are presumed correct by the city when issued each January. The calculated assessment of a co-op or condo property is unrelated to the market value of its apartments. Instead, it’s assumed that the condo or co-op operates as a rental property. The assessment is based on finding comparable multifamily rental apartment buildings, using the rents and operating costs to impute income and expenses to the coop or condo and applying a capitalization rate to determine the assessment. Property tax assessments for a conventional multifamily rental property are supposed to be determined based on a capitalization of the actual income and expenses for the property, but the Department of Finance makes many errors that a tax certiorari firm can uncover and use to reduce the assessment.
 
The burden falls on boards, building owners and the representing tax certiorari attorney to present evidence that the assessment should be reduced. As part of the tax certiorari process, eligible properties can schedule a hearing before the New York City Tax Commission, during which assessments for the current year and one year prior can be reduced. If a reduction of the assessment acceptable to the property owner is offered and accepted, the settlement is communicated to the Department of Finance to reduce the assessment and the real estate taxes due from the owner. Usually, the process is completed after the property owner has started to pay taxes based on the original assessment. Thus, the savings typically consists of a cash refund, and savings in property taxes for the balance of the tax year and for the next four years.
 
If the protest at the Tax Commission is not successful, the tax certiorari attorney will preserve the board’s or building owner’s right to continue to protest through a civil action in which the City of New York is the defendant.
 
Buildings have until March 1 of each year to file a protest with the Tax Commission.
 

Working With Tax Certiorari Attorneys in New York City


Tax certiorari attorneys work on a contingency basis and only earn a fee if they are able to reduce your tax bill. Therefore, the attorney’s interest is aligned with the property owner’s to get as much of a reduction as possible. Legal fees are always negotiable, but it is common practice for tax certiorari attorneys to charge from 15% to 20% of total tax savings. This can be a staggering amount for six or seven-digit assessment reductions.
 
On behalf of our clients, FirstService Residential has negotiated a reduced fee structure with Goldberg Weprin that is significantly lower than competing firms. Our managed properties pay a contingent fee that will not exceed 9% of the total tax savings. Goldberg Weprin also provides an alternative fee calculation based on the actual tax savings for the first year of the reduction. This alternative formula typically works out to be even lower than 9% of total tax savings. As an added perk, the fee is calculated using both methods, and our clients’ final bill is always the formula that results in the lower fee.
 
Since many properties can protest their assessment for a number of years without obtaining a reduction, tax certiorari firms often have no reason to update the owner. As part of our commitment to provide value added services to our clients, each property receives complimentary semi-annual reports on the status of the assessment and the efforts to obtain a reduction.
 

Tax Certiorari Success Stories

 
While reduced fees are certainly beneficial, they are only of value if the services rendered result in a reduction of assessed property taxes. The attorneys at Goldstein Weprin were chosen as our trusted, third-party tax certiorari experts because of their superior service and track record of success in protesting property tax assessments, as illustrated in these FirstService Residential client success stories.
 

Upper East Side Manhattan Condominium Board Awarded $450,000 in Reduced Property Taxes

After obtaining a minimal reduction of its assessment from the Tax Commission in 2018, an Upper East Side building managed by FirstService Residential retained Goldberg Weprin to facilitate its 2019 tax certiorari filings. In 2019, the Tax Commission again offered a minimal reduction of property tax assessments. Goldberg Weprin advised the board to reject the offer, and instead waited to argue for a larger reduction of the assessment as part of the 2020 tax certiorari filing.
 
This time around, the board was successful at the Tax Commission and was awarded a 15% reduction of the property tax assessments for both the 2019 and 2020 fiscal calendar years. The immediate tax savings to the unit owners of the condominium is estimated at over $450,000.
 

Upper West Side Manhattan Condominium Board Awarded $400,000 in Reduced Property Tax

After issuing a reduced property tax assessment in 2018, the Department of Finance increased its assessment on an Upper West Side property by 21% in 2019, and an additional 7% in 2020. In response, Goldberg Weprin argued for reductions for both the 2019 and 2020 fiscal years. The law firm successfully obtained a reduction for 2019 greater than the reduction issued in 2018. For the following 2020 fiscal year, the assessment was increased by a mere 1.5% over the reduced 2019 assessment. The immediate tax savings to the unit owners is estimated at approximately $400,000.
 

Working with FirstService Residential

 
As New York’s leading property management company, FirstService Residential advises against skipping the process to file tax protests each year, because the potential refunds or reductions can be substantial. With no legal fees due unless there is savings, filing fees are the only required costs and are minimal. Collectively, our properties have been awarded millions of dollars in property tax reductions.
 
For condo and co-op boards, just imagine the reaction your unit owners and shareholders will have following an announcement that their property taxes have been lowered as a result of the tax certiorari proceedings. In practice, this solution to help manage the rising cost of building operations will be perceived as a welcomed endeavor compared to raising your property’s maintenance fees or common charges.
 
To learn more about how FirstService Residential can help lower your building’s property taxes and successfully complete the tax certiorari protest process, contact us today.