The Magic Wand of Equalization

Today is "tax grievance day" in Sullivan County, and from the barrage of calls and emails I've gotten over the past couple of weeks from homeowners looking for data to support their grievance claims, it's going to be a busy day in township halls across the county.

A lot of folks seem be be looking to grieve their taxes based on a decline in the market value of their house, rather than an assessment that's unequal to other similar houses in the township. But that approach has a "gotcha" — the township equalization rate. In New York state, very few townships set assessments at 100% of market value. Most townships assess at a percentage of "fair market value". That percentage is known as the "equalization rate." (In Sullivan County, only one township — Lumberland — assesses at 100% of market value.)

So for example, if your house has a "Full Market Value" of $300,000, and your township assesses at 60% of market value (a 60% equalization rate), your assessment would be $180,000. Or to go the other way, to translate an assessed value into "full market value", you divide the assessed value by the equalization rate.

Here's the magic wand. Consider the above example. In 2009, with an equalization rate of 60%, that $180,000 assessed value translates into a market value of $300,000. In 2010, you think the value of your house has dropped by 10%, so you want to grieve your assessment down to reflect the lower market value. But the township's equalization rate may have changed in 2010, reflecting a lower market value without lowering your assessed value. Say the equalization rate in your township went from 60% in 2009 to 67% in 2010. Voila, that makes the FMV (full market value) of your house in 2010 $268,656, down from the 2009 FMV of $300,000 — without changing your assessed value for tax purposes one iota.

Here's how a change in the equalization rate plays out in a few townships here. (ER= Equalization Rate, FMV = "Full Market Value")

Relationship of Assessment to "Full Market Value" With Equalization Rate Calculation
Township	Assessed Value	2009 ER	2009 FMV	2010 ER**	2010 FMV
Thompson	$200,000	64.75%	$308,880	71.60%	$279,329
Callicoon	$200,000	51.25%	$390,243	54%	$370,370
Cochecton	$200,000	64%	$312,500	73%	$273,972

** 2010 Equalization Rates are tentative.

Every township in Sullivan County increased their equalization rates this year, with the exception of Fremont and Tusten (who kept 2010 ER's the same as 2009), and Lumberland, that assesses a full market value. Some adjustments from 2009 were larger than others. But the impact of higher equalization rates is to effectively cut full market values without cutting assessed values.

This whole assessment and equalization rate system is quite complicated, and this is a fairly simple explanation. But if you go to make the argument that your property value has declined, don't be surprised if the response from the assessor that it's already been taken into account, that your Full Market Value has been reduced, even though your assessed value stayed the same.

Comments

[Garmento Fashionista]

Dave,

Mea culpa. Off topic.

However, "Uncle Vito" wrote in another thread below this one about the old Catskill adage:

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"Once you buy upstate, you are buying forever"
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{Posted by: Uncle Vito | May 25, 2010 at 11:52 AM}

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Dave. is there any way somebody can have a few silkscreened T-Shirts made up in time for the Callicoon Tractor Parade?

I think they'd be a big hit.

And it they don't sell out, you always have the Farmer's Market.

Regards...and love your blog!

Garmento Fashionista