Do taxes change based on purchase price?

[Jared Paul]

Hello Everyone!

I am in the process of closing on my first multi-family property in the next couple weeks and I am about to put in an offer on a second.

I was curious about what/if there is any change to the tax rates on properties if the purchase price of a property is different than the assessed value of the property.  i.e. - If you purchase a property that was renovated and the current taxes are based off of the assessed value (original purchase price prior to rehab), will the taxes shoot up and be based off of the most recent purchase price?  And vice versa, if you are able to somehow negotiate down in price and purchase for below the assessed value, could you get the taxes decreased?

Thank You!

Jared

[Jessica Zolotorofe]

Hi Jared! Unfortunately, the taxes will probably go up significantly, but you can get a good idea of what they will be based on the following formula. The assessments are a percentage of the town's determination of fair market value after the renovations, and that percentage varies. I can find it for you if you quick if want to share the towns the houses are in so i can give you a more concrete example. You can appeal your taxes before March 1 of each year (I think that's the date in Nassau,  but please double check), but I highly doubt anyone would change the purchase price to help lower your taxes. What would their incentive be? Plus, the purchase price is a good argument for lowering taxes if it is lower than the equalized assessment, but only if the purchase price was  market value in an arms length transaction, so if the County's appraiser shows comps of reno'd houses going for much more, your purchase price won't matter.  Hope that helps some and congrats on the purchases!