Before any new tax on second homes, New York City's property tax already values nearly identical properties by wholly different logics — partly because state law sorts properties into four classes with different rules, but most consequentially because of how the City executes its valuation responsibilities within each class. Step through how the base works — and what it produces — drawn entirely from the City's own data and the governing law.
“Opaque. Arcane. Inequitable.” — the City's own Advisory Commission on Property Tax Reform, 2021
State law sorts all New York City property into four classes. Two properties of the very same market value can be assessed at different fractions of that value, and have their value estimated by entirely different methods, depending only on which class they land in.
| Class | Assessed at | How market value is estimated |
|---|---|---|
| Class 11–3 family homes | 6% of market value |
Comparable sales — a statistical model of similar homes sold nearby in the prior three years. |
| Class 2Co-ops, condos & rentals (3+ units) | 45% of market value |
Income approach (required by RPTL § 581) — co-ops and condos are valued by reference to comparable rental income. The City currently uses rents from regulated buildings, producing values well below sale prices. |
| Class 3Utility property | 45% of market value |
Utility company equipment and special-franchise property in the public right-of-way. |
| Class 4Commercial & all else | 45% of market value |
Offices, factories, stores, hotels and lofts — valued on income or sales. |
On top of the class ratios, state law caps how fast assessments can rise. Caps were meant to protect homeowners from spikes — but because values rise fastest where homes are most expensive, the caps quietly push the most-appreciated homes to a lower share of their true value over time.
Class 1 — 1–3 family homes
Small Class 2 — 2–10 unit co-ops, condos & rentals
Every figure is from the City's own data: class shares from the Department of Finance's FY2025 annual report; the Class 1 assessment ratio from the Comptroller (FY2024); and the co-op and condo comparisons from the Advisory Commission's 2021 study — still the most recent City analysis to value these homes by what they actually sell for. Effective tax rates are medians per $100 of sales-based market value.
Where it stands legally
In March 2024 the New York Court of Appeals revived Tax Equity Now NY LLC v. City of New York, allowing claims to proceed that the system imposes unequal bills on similarly valued properties — in violation of state Real Property Tax Law § 305(2) and the federal Fair Housing Act, on which the suit alleges a discriminatory disparate impact.
The current class system dates to 1981. The Advisory Commission's 2021 blueprint for reform has not been enacted. So the surcharge arrives on a base the City has known for four decades is uneven — and the courts have now allowed to be challenged.