If there’s one thing that consistently confuses buyers, sellers, and even seasoned investors in New York City, it’s property taxes. As a local realtor who’s been in the trenches helping people close deals across all five boroughs, I can tell you this: understanding NYC property taxes is not optional. It can mean the difference between a smart purchase and a financial headache.
Whether you’re a first-time homebuyer looking at a co-op in Astoria or an investor eyeing a brownstone in Bed-Stuy, this guide will help you wrap your head around one of NYC real estate’s most misunderstood topics.
How NYC Property Taxes Actually Work
Assessed Value vs. Market Value
First, let’s bust a myth: your NYC property tax is not based on what you paid for your home. Instead, it’s based on something called the assessed value, which is determined by the NYC Department of Finance (DOF). This value is often much lower than the market value.
Formula:
Assessed Value × Tax Rate = Annual Property Tax
NYC’s Four Tax Classes
NYC property is divided into four tax classes:
- Class 1: One- to three-family homes
- Class 2: Co-ops, condos, and rental buildings with more than 4 units
- Class 3: Utility properties
- Class 4: Commercial and industrial properties
Most of my clients fall into Class 1 or Class 2, so we’ll focus there.
2025 Property Tax Rates in NYC
As of 2025, here are the latest property tax rates:
- Class 1: 21.233% (applied to 6% of market value)
- Class 2: 12.267% (applied to 45% of market value)
Sound confusing? It is. Here’s a real-life example:
I had a client buy a two-family house in Queens. The market value was around $950,000, but the assessed value came in under $60,000, making their yearly tax bill much lower than they expected. We had to triple-check it because they didn’t believe it.
Condo vs. Co-op Taxes: What You Need to Know
Condos
Condos are taxed individually. Each unit is assessed and taxed separately.
Co-ops
In a co-op, the entire building is assessed, and the total tax bill is split among shareholders. Your monthly maintenance fee will often include your share of the property taxes.
Tip: Always ask for the tax breakdown in the co-op’s financials before you buy. I once had a buyer back out because 40% of the monthly fee went to taxes alone.
NYC Property Tax Exemptions & Abatements
STAR (School Tax Relief)
Available to eligible homeowners on their primary residence. Offers a small but helpful annual reduction.
Veterans Exemption
A benefit for those who served, reducing assessed value based on service details.
Senior Citizen Homeowners’ Exemption (SCHE)
Available to seniors 65+ with income under a set limit (currently ~$58,399). Can cut property tax bills substantially.
NYC Co-op and Condo Tax Abatement
This program reduces property taxes for qualifying units by 17.5% to 28.1% depending on your ownership share.
One of my clients bought a one-bedroom condo in Harlem and was thrilled to find out they qualified for a 25% tax abatement. That alone saved them over $2,000 a year!
How Property Taxes Affect Your Mortgage and Monthly Budget
PITI: Principal + Interest + Taxes + Insurance
When budgeting, remember that taxes are escrowed into your monthly mortgage payment.
A lower purchase price doesn’t always mean a lower monthly payment if taxes are sky-high. I always advise clients to look at the full monthly picture.
Planning for Increases
NYC does reassess property values annually, and while caps are in place (especially for Class 1 properties), taxes do go up over time, especially in hot neighborhoods.
I had a buyer in Crown Heights who was shocked when their taxes increased 18% in just two years. It wasn’t a mistake—the neighborhood was booming, and so were property values.
What Investors Should Watch Out For
How Taxes Affect ROI
High property taxes can eat into your cap rate, especially if you’re planning to hold long term.
Always calculate:
- Current taxes
- Any abatements or exemptions set to expire
- Likely increases based on area appreciation
Multi-Family vs Single-Family Tax Strategy
Class 2 properties (like multi-family buildings) are assessed differently and often have less protection against sudden increases than Class 1 homes.
If you’re an investor buying a walk-up or small rental building, don’t forget to build in room for higher taxes as the property gets reassessed.
How to Check and Estimate Property Taxes in NYC
Tools to Use
- NYC Department of Finance Property Tax System
- ACRIS Property Records
- NYC Tax Estimator tools (many real estate brokerages have these built-in to listing platforms)
Pro Tip
Always look at the last 3 years of property tax bills to identify trends. Sometimes a tax break is about to expire, and you don’t want that surprise.
Personal Stories from the Field
- A first-time buyer in Park Slope nearly passed on a brownstone because of the $14K tax bill. Once we factored in a STAR exemption and a senior living unit that could qualify for SCHE, the real cost dropped by almost $4,000 annually.
- An investor bought a 4-unit building in Harlem and thought he hit the jackpot with low taxes. Turns out, it was under-assessed and due for reassessment. Year two, his bill doubled. Always do your due diligence.
Final Thoughts: NYC Property Taxes Are Manageable When You Know the Rules
I get it—NYC property taxes are confusing. But when you take the time to understand how they’re assessed, what exemptions apply, and how they fit into your larger homeownership budget, they become manageable.
If you’re buying your first property, I highly recommend working with a knowledgeable realtor and real estate attorney who can guide you through the due diligence process.
Want Help Navigating NYC Taxes?
I offer personalized consultations for buyers and investors looking to understand how taxes affect their deal. Whether you’re buying your first co-op or a million-dollar townhouse, we’ll make sure you understand exactly what you’re signing up for.
Download free guide: “NYC Property Tax Cheat Sheet for 2025” or book a call today.