Tax break “saved” Nassau home builders but cost everyone else
Exemption shifts $2B in assessed valuation to other homeowners
By: TRD Staff
(iStock, Illustration by Kevin Cifuentes for The Real Deal)
Owners of new homes in Nassau County don’t have to worry about property taxes. As a result, owners of older homes will pay more.
A tax exemption in the Long Island county shifted more than $2 billion in assessed property value from owners of new homes to owners of old ones, Newsday reported. That doesn’t make the old homes any more valuable; it just increases their property taxes.
The exemption, which went into effect this tax year, affects about 22,000 owners of new homes or homes with significant construction.
It allows eligible homeowners to reduce tax bills by spreading out up to $750,000 in assessed value over the course of eight years, essentially delaying a full property tax bill until the end of that time.
One big winner is the construction industry, as homes without a tax burden allow sellers to charge more for them. Michael Dubb of the Beechwood Organization told Newsday the exemption “pretty much saved the construction industry in Nassau County.”
According to Newsday, 775 homeowners were able to take advantage of the maximum exemption. The law sunsets on Jan. 2, 2023.
Naturally, someone has to pick up the slack. County officials estimate the tax burden shift for the year to the rest of the county’s 365,000 homeowners at $2 billion, according to Newsday. That averages out to about an assessment increase of $550 increase per existing home. Actual property taxes are based on assessed value.
The exemption is meant to even the playing field between the two types of homeowners. During last year’s reassessment, owners of existing homes were able to spread big assessment hikes over five years, leaving new construction owners holding the bag. The reassessment was the first in 10 years after a freeze on valuations that resulted in many properties paying less tax than they should have.
Prior to departing as Nassau County executive, Laura Curran froze the values on which homes are taxed for the 2023-24 tax year, the second straight year she had done so. A tax freeze, although it leads to an imbalance between new and old homes, can help politicians get re-elected, but Curran still lost to Republican Bruce Blakeman.
Over time, a freeze leads to assessed values straying too far from market values and can lead to problems, such as homeowners appealing their assessments en masse when they eventually do rise.
[Newsday] — Holden Walter-Warner