Glossary of Property Assessment Terms
The following alphabetical listing of terms is provided to help you understand property valuation and tax assessment:

[A-D] [E-R] [T-Z]

Abatements: Abatements reduce the amount of tax by providing a reduction. The City has several abatement programs: the J-51 housing rehabilitation, the Senior Citizen Rent Increase Exemption, the Lower Manhattan Revitalization and the Cooperative and Condominium abatement. (See also exemptions)

Actual Assessed Value: The assessed value established for each property prior to reductions for the five year phase-in requirements and exemptions.

Assessed Value: The property value determined for tax purposes. Assessed value is a percentage of market value and subject to limits on annual increases. In New York City, property may have three assessed values – actual assessed value, transitional assessed value, and taxable value.
Assessment Roll: A list of the assessed value of all properties in a jurisdiction. The tentative and final assessments for every property in the City of New York are published by Finance in January and May.

Capitalization: The process by which anticipated future income and benefits are converted to a present value.

Capitalization Rate: A rate of return used to produce the present value of an income stream.

Comparable Sales Method: The process of estimating a property’s market value based on the sales prices of similar properties. The method is also known as the market approach.

Exemptions: Exemptions provide tax relief by reducing a property’s taxable value. A property may be fully or partially exempt. (Also see Abatements)

Exempt Value: The amount or percentage of assessed value that is not subject to tax.

Fiscal Year: A 12-month period used for financial reporting. The City’s fiscal year runs from July 1 to June 30.

Income Capitalization Approach: A method of valuing property based on its anticipated future income.

Level of Assessment:  The percentage of market value at which properties in a tax class are assessed. The level of assessment for Class 1 is 6 percent and 45 percent for the other tax classes.

Market Value: The likely price a property would sell for in a competitive and open market.

Notice of Property Value: The annual notice mailed to New York City property owners in January of Finance’s determination of their property’s market and assessed value.

Operating Expenses: Includes all expenses necessary to maintain a property and its income stream, excluding debt service. Property taxes are omitted for assessment purposes.

Replacement Cost: The cost to construct, at current prices, an improvement equivalent in utility to an existing structure, using modern building materials and according to current standards and building requirements.

Reproduction Cost: The cost to replicate an existing structure, using the same materials, standards, quality, and design as the original construction.

Tax Class: Four categories (Classes 1, 2, 3, and 4) of property use. Every property in the City is classified in one of the four tax classes as follows:

• Class 1: Includes most residential property of up to three units (family homes and  small stores or offices with one or two apartments attached), and most condominiums that are not more than three stories.
• Class 2: Includes all other property that is primarily residential, such as cooperatives and condominiums.
• Class 3: Includes utility property.
• Class 4: Includes all commercial and industrial property, such as office, factory buildings.

Tax Rate: The amount, usually expressed in dollars per hundred of assessed value, which is multiplied by your taxable value to determine your tax liability. In New York City, the City Council and Mayor set an annual tax rate for each tax class.

Taxable Value: The assessed value on which annual property taxes are based for individual tax parcels.

Taxable Assessed Value: This is the assessed value minus any exemptions and limitations.

Taxable Status Date: The date the assessed value, taxable status and tax class are fixed for real propertyon an assessment roll.

Transitional Value: Represents the assessed value of a property during the five year phase-in of assessment changes. Applicable to all Class 4 properties and Class 2 cooperatives, condominiums and rental buildings with more than 10 units. Not applicable to assessment changes based on physical changes to the property.