Comparing Commercial and Residential Tax Grievances: Critical Differences Exist!
Critical differences exist between valuing commercial properties as compared to residential properties. We are often asked about the grievance process by commercial property owners who have received numerous mailings from tax companies. Their questions usually center on the process or methodology used in home valuation. These inquiries highlight important distinctions that exist in reviewing a home as opposed to a commercial property.
Small Claims Assessment Review (SCAR) hearings are outlined in N.Y. Real Property Tax Law § 730. The intent of the law is to allow a quick and inexpensive avenue for review. These hearings allow homeowners to petition the court for review of their property assessment before a specially trained hearing officer for a nominal fee of $30.
SCAR hearings are able to occur quickly and typically dozens of cases are decided in one sitting. Part of the reason prompt SCAR hearings are possible is because the review methodology is less complex. While values may be different among various residential properties, the methodology is the same across the board. Hearing officers agree that in the absence of unique circumstances, homes that have not recently been on the market are analyzed by comparing sales of similarly situated properties and making adjustments to account for differences with the subject home.
However, a notable drawback to SCAR hearings is that a petitioner is limited to a maximum assessment reduction of 25%. Accordingly, if a property owner feels his home is over-assessed by more than 25%, he may want to consider an Article 7 proceeding so as not to limit his potential assessment reduction.