In an effort to avoid sudden hikes in property values caused by a countywide reassessment, Nassau County officials created an exemption that allowed homeowners to spread assessment increases over a five-year period.
But the move had an unintended impact: Owners of seven of the 385,000 residential properties in the county didn't pay property taxes at all in the 2020-21 tax year because the exemption eliminated their bills for school, town and county taxes, according to county records and officials.
That’s because the amount of the exemption was higher than the properties' assessed value based on a complicated formula approved in a 17-0 vote by the Republican-controlled Nassau County Legislature, with two abstentions.
County officials said it was a one-time issue and that the assessments of the seven properties have risen this year and they will be paying property taxes.
County assessment officials used this formula to determine the size of exemptions for all residential properties:
- Calculate the difference between the property's 2019-2020 assessment and the 2020-2021 assessment.
- Multiply the difference by .8. For 2020-2021 only, this exempts 80% of the assessment increase from taxation.
- For example, consider a home assessed at $500,000 in 2019-20, and reassessed at $1 million for 2020-21. Under the county exemption formula, $400,000 of the $500,000 increase is exempt from taxes in 2020-21. The owner pays taxes that year only on $600,000 in assessed value — the $500,000 increase in value, plus the $100,000 that was not exempt from taxation.
Under the exemption, homeowners' tax bills will climb gradually over a five-year period, county officials said.
By the time the exemption expires, in 2024-25, assessments will have risen to reflect full market value, officials said.
Curran administration officials said the tax avoidance was an "anomaly" caused primarily by the exemption, which is intended to allow property owners to delay the impact of hikes caused by Curran's countywide property reassessment.
Owners of the seven untaxed properties declined to comment for this story, did not respond to requests for comment or could not be reached.
Of the 385,000 residential properties countywide, the seven were the only ones for which the exemption eliminated school, town and county property tax bills completely last year, assessment officials said.
The seven properties include a home in Point Lookout with an assessment that rose from $1,008,000 in 2019-2020 to $4,012,000 in 2020-21.
Another of the properties was a Kings Point guesthouse assessed at $898,400 in 2019-20, and $3,173,000 in 2020-21, according to online Nassau assessment records.
Assessment officials confirmed the seven properties for which taxes were eliminated after Republicans in the county legislature — acting on a complaint by a neighbor of one of the properties — raised the issue in a news conference in July.
The officials did not research taxes on other county properties.
All seven homes were among thousands that became significantly undervalued during the nearly decadelong period when former County Executive Edward Mangano, Curran's Republican predecessor, froze the tax rolls, Curran administration officials said.
The county did not update home values during that period.
By the time reassessment took effect in 2020-21, a gap between the seven properties' assessments compared with 2019-20 had developed, officials said.
"In the case where you have a property that has so much market value after … a very long assessment freeze …, there’s going to be a big difference" from year to year, Charles Berman, North Hempstead Town tax receiver, told Newsday.
Over time, Berman said, "that will create an exemption that’s greater than the taxable value remaining."
Michele Spara, deputy Nassau County assessor, said if the exemption "exceeded your final assessed value [for 2020-21], there was nothing left to tax you on, so your net result was zero."
GOP lawmakers who have complained about reassessment issues, including the accuracy of estimated tax bills for homeowners and failures to correctly apply exemptions to hundreds of new condominiums, said the situation with the seven properties highlighted continuing problems with reassessment.
Presiding Officer Richard Nicolello (R-New Hyde Park) said the situation with the seven homes may represent, "the most egregious, maybe the most obvious and visual manifestation of problems" caused by reassessment.
Bruce Blakeman, a Republican Hempstead Town Council member who is challenging Curran, a Democrat, for reelection in November, is raising the issue of the untaxed homes.
In a television campaign ad, Blakeman says, "Millionaire's taxes went down while yours went up," as a photograph of a sprawling estate appears on screen.
"There’s no excuse for every other Nassau resident, middle class, low income, picking up the tab for these multimillion dollar estates," Legis. John Ferretti Jr. (R-Levittown) said at an Aug. 2 legislative hearing into the untaxed properties.
Nassau County officials have argued that the temporary tax reprieve for the seven properties didn't shift a sizable portion of the tax burden onto other property owners.
Owners of the seven properties paid a total of $137,417 in property taxes for 2019-20 tax year, according to county records.
That compares with the total school and general property tax levy in 2021 of $6.38 billion, according to county data.
"Less than one-thousandth of a percent of the county's total residential parcels received a taxable value of zero," Deputy County Assessor Robert Miles told Nassau County legislators at the Aug. 2 hearing.
"Homeowners have benefited largely from this taxpayer protection plan, and having seven properties be this anomaly speaks to it being a solid law," Miles testified.
Curran ordered the reassessment of all properties in the county after taking office in 2018, prompting an update of the tax roll for the first time in nearly a decade.
Mangano, a Republican, froze tax rolls in 2011 as he sought to develop a new system for reassessing county properties.
At the same time, Mangano's administration awarded settlements to large numbers of property owners who challenged their assessments.
In tax years 2012-13 through 2019-20, when the freeze was in place, Nassau County settled 1,003,434 of 1,252,099 tax challenges, or 80%, county records show.
The mass settlements caused a shift of hundreds of millions of dollars in property tax burden onto homeowners who did not appeal their assessments, or lost their assessment challenges.
In December, a county analysis found 65% of homeowners would receive school tax bill increases under reassessment, compared with 35% who would get reductions.
Nassau officials said they were considering revisions to the exemption program to prevent a repeat of the situation with the seven untaxed properties.
Deputy Nassau County Attorney Conal Denion said his office was, "exploring possible changes that could be made to the New York State Real Property Tax Law to address this very rare circumstance." County officials did not provide specifics about the proposal.
Nassau County "plans to work with state lawmakers to ensure this issue does not arise again," Denion said.
Guesthouse, Dock Lane, Village of Kings Point, Great Neck School District.
- 2019-2020 assessment: $898,400
- 2020-21 reassessment: $3,173,000
- 2020-21 final valuation after successful tax challenge by homeowner: $1,785,000
Calculating the exemption:
$3,173,000-$898,400 = $2,274,600
$2,274,600 multiplied by .8 [80%] = exemption value of $1,819,680
- Result: No taxes due for 2020-21 because the exemption ($1,819,680) exceeds the final home valuation ($1,785,000)
Source: Nassau County Department of Assessment