Trustees Review Potential Change to Local Tax Code
- Real Estate
- Published on Wednesday, 04 December 2013 15:54
Owners of single family homes in Scarsdale could realize a small tax savings if the Scarsdale Board of Trustees and Board of Education elect to adopt a "Homestead" provision in conjunction with the village-wide reassessment now in process. A joint meeting of the Scarsdale Board of Trustees and Board of Education was held on Monday night December 2 to explore the Homestead Tax Option and what, if any provisions would be appropriate for Scarsdale to adopt in conjunction with the ongoing tax revaluation. John Wolham, from the NYS Department of Taxation and Finance was invited to make a presentation on the Homestead Tax Option to the group.
Though the Homestead Tax Option was initially drafted by NYS to mediate the tax burden on residential homeowners in relation to commercial property owners after a reassessment, this would not be the goal of adopting the Homestead Option in Scarsdale. Village officials are looking into the possibility of enacting Homestead to change the method for assessing condominium properties in Scarsdale, that are now taxed at a lower rate than single-family homes with the same market value. Condominiums are now taxed based on their potential rental income rather than their full market value.
For instance, the owners of a condominium in Scarsdale Village with a market value of approximately $1.5 mm now pay about $11,500 in real estate taxes per year, while the owners of a single-family home of that value pay more than three times that amount, or $36,000. The Village Tax Assessor will need to have the final reassessment numbers to do an analysis, but rough estimates show that the increased taxes on condominium owners would result in a savings of about $160 per household for owners of single-family homes in Scarsdale.
By law, the Homestead tax option can only be adopted in conjunction with a revaluation. If the Village were to adopt this new local law, it would first need to be passed by the Scarsdale Village Board of Trustees. Once they adopted it, the provision it would be considered by the Board of Education as village and school taxes are determined by two entities. As with all local laws, the provision would be considered in public hearings and the community would have the opportunity to express their views. The provision would not be subject to a referendum and would need only to be passed by majority votes of the two Boards.
Scarsdale has only one group of condominium properties, which are the 42 units at Christie Place in Scarsdale Village that were purchased between 2008-2011. Under the current tax code the residents enjoy substantial tax savings over homeowners with single-family homes of the same value. However, many of the residents of Christie Place are seniors, as the units were designated for buyers age 55 and up, and are therefore not utilizing the schools. When they purchased the units, it is not known whether they were made aware that their assessment status could change. Since a change in the law would impose a burden on a very small segment of older residents and offer a minimal benefit to the community, Board members appeared skeptical about adopting the Homestead provision for the solo purpose of re-assessing Scarsdale's limited inventory of condominiums.
Bill Natbony commented, "All these people are over 50 – are there any laws to protect these people from such a large tax increase?" David Lee of the BOT asked whether an increase in taxes could be phased in over a five-year period and Stacey Brodsky inquired whether this change would devalue condominiums and favor co-ops, which would not be affected by the new code.
The next step is for the Village Board of Trustees to review the option and determine whether or not they will pursue the change in the local law.
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