What is effective market value on my NYC property tax notice?
What is effective market value on my NYC property tax notice?
Effective market value is your NYC assessed value divided by the level of assessment (6% for Class 1, 45% for Classes 2/3/4) — because assessment caps hold AV down, it can be lower than the city's stated market value, which matters when deciding what to challenge.
On a NYC Notice of Property Value you may see both a market value and an effective market value — and they can differ because of New York City's assessment caps.
Two assessment ratios. Per the NYC Department of Finance's Determining Your Assessed Value:
- Tax Class 1 (1-3 family homes): the level of assessment is 6%. Assessed value = market value × 6%.
- Tax Classes 2, 3, and 4 (co-ops, condos, rentals 4+, utilities, commercial): the level of assessment is 45%.
How effective market value is computed. Effective market value = assessed value ÷ the level of assessment (÷ 6% for Class 1, ÷ 45% for Class 2/3/4). It is the market value you are effectively taxed on after the caps are applied.
Why it can be below the city's market value. NYC caps how fast assessed value can rise:
- Class 1: AV can increase no more than 6% per year and 20% over five years (RPTL §1805).
- Class 2a/2b/2c (small buildings, ≤10 units): AV increases no more than 8% per year and 30% over five years.
When the city's market value rises faster than the cap, your assessed value lags, so your effective market value is lower than the stated market value. See Determining Your Transitional Assessed Value.
What it means for your appeal. Because the caps already hold your assessed value down, an appeal that only attacks the headline market value may not lower your taxes if the cap is what's actually controlling your AV. The most productive NYC challenges target the assessed value, a factual error, or the underlying market value when the property is newer construction or recently sold below the city's estimate.