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Department of Taxation and Finance

Volume 7 - Opinions of Counsel SBEA No. 101

Opinions of Counsel index

Base proportions (generally) - Real Property Tax Law, § 1903:

There is no general provision of law which grants exemptions from taxation to “homesteads”. However, “approved assessing units” may elect a homestead base proportion in order to preserve the homestead class tax share after a revaluation.

We have been asked if New York provides exemptions from real property taxation to homestead property in assessing units which have completed revaluation programs.

Article 19 of the Real Property Tax Law (RPTL) provides certain options to assessing units which have completed, or are in the process of completing, revaluations for the purpose of conforming their assessment practices to the standard of assessment (RPTL, § 305(2)). One of these options is the right to elect a “homestead base proportion”, for the purpose of dividing tax levies between the “homestead” and “non-homestead” classes (§ 1903). There is, however, no provision for homestead “exemptions”, as such (cf., RPTL, §§ 467, 458).

In order to adopt the “homestead base proportion”, the governing body of an assessing unit must first make application to the State Board for certification as an “approved assessing unit”. In order to be certified, an assessing unit must have “completed a revaluation program implementing a system of real property tax administration which was or would be eligible for state assistance pursuant to article fifteen-B of this chapter” after January 1, 1971 (§ 1902(2)).

Once certified, the approved assessing unit, through a local law adopted by its governing body, may elect a “homestead base proportion” (§ 1903(1)(a)). This local law must be adopted no later than 30 days before the completion of the assessment roll of the approved assessing unit. {*}

The homestead base proportion is “equal to the proportion which the taxable assessed value of real property in the homestead class constituted of the total taxable assessed value of real property on the base assessment roll of such approved assessing unit” (§ 1903(2)(a)). A “base assessment roll” is, essentially, the last assessment roll filed prior to the revaluation (see definitions, § 1901(1)(b) and (a)).

Thus, if the taxable assessed value of homesteads on the “base assessment roll” is $200,000, and total taxable assessed value on that roll is $1,000,000, the homestead base proportion is 20 percent. (Accordingly, the non-homestead base proportion would be 80 percent). That base proportion would determine the homestead class’ share of the tax levy in succeeding years, subject to the exceptions discussed below. Thus, the homesteads-as a class-would bear 20 percent of each tax levied in this town, and the non-homestead property would be required to produce the remainder (80 percent). There are, however, important exceptions and limitations which need to be noted.

First, the governing body of the assessing unit which elects the provisions of section 1903 must establish these base proportions for each “portion” lying within the town or city. A “portion” is defined (§ 1901(g)) to include:

(1) the part of an assessing unit within the boundaries of a school district which levies taxes on the assessment roll of such assessing unit;

(2) a town excluding all villages therein;

(3) that part of an assessing unit which is a special district which encompasses the entire assessing unit with the exception of one or more entire villages.

Assume that the town in the example includes parts of five school districts and one village. This means that the town would be required to establish separate base proportions for: (1) the town as a whole; (2) the five parts of the town as divided among the various school districts; and (3) the town-outside-village area. In short, there would be 14 base proportions (7 each for the homestead and non-homestead class). As was true of the town-wide base proportions, these additional “portion” base proportions would be derived from each class’ share of taxable assessed value on the appropriate parts of the assessment roll filed immediately before the revaluation.

Second, there are certain optional changes which the governing body may make to the base proportions, which may increase or decrease what either class might otherwise pay (see, 7 Op. Counsel No. 77). These changes are tied to each class’ share of the estimated market value as compared to its share of assessed value prior to revaluation.

For example, if the town’s first revalued roll showed the homestead class as constituting 30 percent of the total market value, that share would be the “base percentage” for the homestead class in that town. The State Board would certify this number to the governing body of the assessing unit which could then elect to alter the base proportions in accordance with a formula set forth in the statute (§ 1903(2)(b)(i); see, 7 Op. Counsel SBEA No. 77). That formula permits the governing body to add to the homestead base proportion (20% in the example) a certain percent (either 25, 50 or 75) of the difference between the base proportion and the base percentage. The difference between the two in the example is 10 percent. Assume that the assessing unit elects to add 50 percent of that difference to the homestead base proportion. This would mean the “locally adjusted base proportion” for the homestead class would be 25 percent (20% + [50% x (30% -20%)]). Similar adjustments could be made for each portion, although the percentage to be applied to the difference between the base proportion and base percentage need not be the same for each portion {see, 7 Op. Counsel SBEA No. 77).

Finally, there are adjustments to be made when the State Board certifies an “adjusted homestead base proportion” as required by subdivision 5 of section 1905. Suffice it to say that these adjustments are based upon changes in each class’ share of the market value and that they may be further altered locally by a formula similar to the one just discussed (see, § 1903(2)(b)(ii)).

March 11, 1982

{*}  NOTE: Chapter 624 of the Laws of 1983 amended section 1903(1)(a) to provide that a local law adopting the provisions of that section must be enacted no later than thirty days prior to the completion of the tentative assessment roll. The statute had previously simply referred to “the assessment roll”, without specifying whether the tentative or final roll was the point of measurement.