When Nassau County property owners undertake renovations that significantly increase home value, they know there will be a tax whammy. Residents who build a new home or buy new construction in Nassau are aware that a big bill awaits them, too.
What they don’t expect is a double-whammy, and they shouldn’t have to endure one.
But thanks to yet another side effect of the county’s failure to assess properties for nearly a decade and County Executive Laura Curran’s effort to get the property-tax system back on track, more than 1,000 Nassau residents who own newly constructed or heavily renovated homes were hit with a financially crippling tax bill this year. Some got bills of $50,000, double what they expected, because of how the law handles new and improved real estate and because of how Nassau is fixing the tax roll.
For example, the purchaser of a newly constructed $1 million home in Nassau would immediately owe taxes on that $1 million in value. If you were moving in after selling an equivalent $1 million home valued on the tax roll at only $500,000, having appealed your valuation annually and received automatic reductions from a county government frantic to avoid judgments, you’d be appalled at your new bill, but not shocked.
But Curran’s five-year phase-in of accurate values after former County Executive Edward Mangano gave up on the process is making matters worse. Because it’s taking five years for under-assessed homes to be brought to full value, the taxable value of all residential property combined is artificially low, and the tax rate must be artificially high. And that means the owner of that new or renovated property is being taxed more.
The situation, beyond being unfair to this group of owners, also threatens to stymie renovations and new-homes sales in their tracks, bad news for a county desperate for economic activity and a thriving real estate market.
The short-term fix is a bill introduced by Sen. Kevin Thomas and Assemb. Chuck Lavine, because it’s state law that governs property taxes. For the next few years, until Curran’s phase-in ends, it would allow $750,000 in new value created by renovation or new construction to phase into the owner’s tax burden over eight years, currently up from the only $80,000 that can be phased in for renovations. The measure, which is designed to sunset when Nassau’s phase-in ends, was also introduced last year but, without aggrieved homeowners brandishing unexpected $50,000 tax bills, it didn’t get the push it needed.
The bill must pass, but the situation must be a lesson. When governments don’t perform basic functions like assessment regularly, everything gets out of whack. And every patch that’s applied to the problem in place of fundamental good governance creates more victims, needing more fixes.
— The editorial board