Joseph and Sherrie Azizollahoff are among thousands of owners of...

Joseph and Sherrie Azizollahoff are among thousands of owners of new homes in Nassau County who can phase-in property assessments over an eight-year period under a new law. Credit: Debbie Egan-Chin

A new Nassau County tax exemption designed to stave off potentially huge tax increases for owners of new homes has shifted more than $2 billion in property value onto other homeowners, a Newsday analysis of county data shows.

The exemption went into effect in the current tax year and affects about 22,000 owners of new homes or residential properties with substantial new construction.

Owners of such properties can reduce their tax bills this year by spreading out as much as $750,000 in assessed value over an eight-year period.

The idea is that at the end, the homes will be assessed, and taxed, at full market value.

WHAT TO KNOW

  • A new Nassau County assessment exemption for new construction has shifted more than $2 billion in property value onto other homeowners.
  • The exemption affects about 22,000 owners of new homes or residential properties with substantial new renovations.
  • Those owners can reduce their tax bills this year by spreading out as much as $750,000 in assessed value over an eight-year period.

In the meantime, however, their tax burden for 2021-22 — estimated by county officials at $2 billion — will shift onto the approximately 365,000 other homeowners in Nassau.

County records provided to Newsday don't detail the impact of the shift on the tax bills and assessments of other county homeowners.

But as a basic measurement, the $2 billion shift would cause average assessment increases of nearly $550 this year for owners of existing homes.

The new exemption represents an effort to correct an oversight in 2020-21 that left owners of new construction complaining they were carrying higher tax burdens than other homeowners. 

The owners of new or substantially renovated properties cited the fact that, under former County Executive Laura Curran's countywide reassessment, which took effect last year, owners of existing homes were able to spread large assessment hikes over a five-year period.

Owners of new construction didn't qualify for the exemption.

That was because the new homes, or the substantial renovations, essentially were being assessed for the first time, so owners had no assessment increase to spread out.

Sherrie and Joe Azizollahoff, both 70, said the new eight-year exemption helped make it possible for them to stay on Long Island.

How the exemption is helping the Azizollahoffs stay on Long Island

Their home: A new townhome in Plainview's Country Pointe development, bought in 2018 for $878,500

Their first tax bill for for 2020-21: $36,724 for school, Nassau County and Oyster Bay Town property taxes

What they paid this year after receiving the exemption$3,632

In 2018, they paid $878,500 for a new townhome in the Country Pointe development in Plainview after selling their home in Farmingdale, where they had raised two daughters.

Early that year, Curran, a Democrat, had proposed a program to reassess all residential properties in Nassau.

The five-year phase-in was approved in March 2020.

The Azizollahoffs said they were shocked by their first tax bill for 2020-21: $36,724 for school, Nassau County and Oyster Bay Town property taxes, according to online Nassau County records.

This year, after receiving the exemption, they paid $3,632 in taxes, county records show.

"We wouldn't be able to stay here or sell our place with the taxes that high," Sherrie Azizollahoff, a retired occupational therapist, told Newsday. "We are seniors here."

Assessment experts said initiatives such as the five-year and the eight-year exemptions illustrate the consequences of failure to keep property values up to date.

Curran's reassessment followed a decadelong freeze on property values throughout Nassau County.

During the freeze, the value of many residential properties fell significantly behind their actual market values.

"The most important thing is keeping values up to date," said Joan Youngman, a senior fellow and chair of the Department of Valuation and Taxation at the Lincoln Institute of Land Policy, a Cambridge, Massachusetts, a nonprofit think tank that studies land taxation issues to inform public policy.

"As soon as you let values slide, there’s always a political incentive to keep the old values in the books," Youngman told Newsday.

"There are no surprises and things are quiet, but you are guaranteed problems down the road,” Youngman said.

The full $750,000 exemption available in 2021-22 was applied to 775 homes.

After taking advantage of the eight-year exemption this year, the owners of a new home In Plainview, valued at $903,000, paid a total of $5,671 in school taxes and general taxes for Nassau County, Oyster Bay Town and special districts.

$27,799 How much the owners of a new Plainview home saved in property taxes after getting the exemption

The exemption, worth $750,000, saved them a total of $27,799 in property taxes, according to online county records.

In Bellmore, a house valued at $861,600 owed a total of $4,160 in property taxes for 2021-22.

$27,862 How much the owners of a Bellmore home saved in property taxes after getting the exemption

The exemption, worth $750,000, saved the property owner a total of $27,862 in school and general taxes, county records show.

Curran's reassessment was designed to bring assessments into line with true market values, in order to lessen inequities in the county property tax system.

But that meant many properties that had become undervalued during the tax freeze saw their tax bills rise — sometimes sharply.

Nassau County data show in the first year of reassessment, 2020-21, 65% of property owners received school tax increases, while 35% got reductions.

Curran's plan had an olive branch for the many owners of existing homes whose properties were expected to rise in value — an exemption that allowed them to spread assessment hikes over a five-year period.

Owners of new homes or those with substantial new construction complained to county and state officials about having to pay big tax bills immediately, while owners of existing homes got five years to phase-in assessment hikes.

"The new construction shouldn't have to bear the brunt of all these higher taxes to support others that have not had to experience that," Debra Quinn Petkanas, a licensed associate broker with Daniel Gale Sotheby's International Realty, told Newsday.

Help came in legislation sponsored by state Sen. Kevin Thomas (D-Levittown) and Assemb. Charles Lavine (D-Glen Cove) that passed last year in the state budget.

The law gives owners of new homes the ability to spread their first assessment over an eight-year period, and homeowners with renovations to phase-in assessment increases over the same period.

The law sunsets on Jan. 2, 2023, so that anyone buying a new home or incurring substantial new construction costs through the 2023-24 tax year are eligible.

Backers of the law say, beyond helping individual homeowners, the new construction exemption spurred renovations and sales of new homes in Nassau as the construction industry was coming out of the downturn caused by the COVID-19 pandemic.

After passage of the exemption last year, an online ad for Country Pointe in Plainview proclaimed: "New lower taxes!"

The new exemption, "pretty much saved the construction industry in Nassau County,” said Michael Dubb, founder and chief executive of The Beechwood Organization, which manages developments such as Country Pointe.

“On the construction end, it’s almost incalculable what was done, what was saved by correcting the mistake,” Dubb told Newsday.

Mitchell Pally, chief executive of the Long Island Builders Institute in Hauppauge, said owners of new construction are "providing some real property taxes even though maybe not the full amount, because of the exemption."

"But it's better than not providing any taxes at all, which in our opinion would have happened without" the exemption," Pally told Newsday.

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