Nassau tax break for new homes shifts $66 million in taxes onto other residents
A tax break for 22,000 owners of new or substantially renovated homes in Nassau County this year has shifted nearly $66 million in school, town and county property taxes onto other county homeowners, according to county data obtained by Newsday.
New data from the Nassau Assessment Department shows the 22,000 homeowners’ school tax obligation dropped by a total of $49.8 million in the 2021-22 tax year, while their county and town property taxes declined by $15.9 million.
That meant other homeowners had to pick up the $65.7 million shift in tax burden in order to fund the $6.7 billion county tax levy for 2021-22.
In March, Newsday reported the tax break for new construction shifted a total of $2 billion in assessed value from the 22,000 homes onto county taxpayers who did not get the exemption.
The new county data show the exemption for new construction brought dramatic reductions in tax bills in school districts in communities such as:
- Plainview-Old Bethpage, where homeowners’ school taxes were reduced by a total of $8.6 million in 2021-22, and their town and county taxes reduced by $3.7 million.
- Roslyn, where school tax bills were reduced by a total of $4.3 million this year, and town and county taxes dropped by $500,000.
- Great Neck, where the exemption reduced school taxes by $2.5 million, and cut town and county bills by $740,000.
The Home Improvement Exemption, approved by the State Legislature in April 2021, allows owners of new homes or substantially renovated properties to exempt up to $750,000 in assessed value from taxation in the 2021-22 tax year.
The value of the tax break declines by 12.5% each year until it expires for the homeowners after eight years.
There are 385,000 residential properties in Nassau County.
The state law came in reaction to complaints by owners of new construction that they were being taxed unfairly under former Nassau County Executive Laura Curran’s countywide reassessment.
In an effort to blunt the impact of big initial assessment increases, Curran allowed nearly all of owners of existing homes to phase in changes to their assessments over a five-year period.
Owners of new construction didn’t qualify for the exemption. That was because their homes essentially were being assessed for the first time, so there was no reassessment-related increase to spread over time.
Some of those homeowners said they had received tax bills for thousands of dollars more than they had expected when they purchased their new homes or performed major renovations.
The tax break has defenders and critics.
Assemb. Charles Lavine (D-Glen Cove), co-sponsor of the tax break with State Sen. Kevin Thomas (D-Levittown), told Newsday: “Anyone substantially renovating or moving into new construction ended up getting the full amount of assessment, as opposed to everyone else who was being slowly, under the previous county executive’s system, brought up to full scale.
“… Had this not been corrected … it would have substantially inhibited new construction in Nassau County. And responsible new construction is something that is economically important to Nassau County’s ability to sustain itself.”
In a letter in January, the board of the Plainview-Old Bethpage School District complained about the exemption to Gov. Kathy Hochul, asking her “to revisit” the issue.
Board members cited the new Country Pointe development in Plainview, where condominiums cost from more than $700,000 to more than $1 million, in arguing the tax break primarily benefits the wealthy.
“When this new exemption came to light and the amounts applied to Country Pointe homes became public information, many existing homeowners in our community expressed outrage over the situation,” the board wrote.
“This is understandable, as many of the homeowners in Country Pointe are seeing their taxes reduced to under $5,000 a year for a home valued at $1 million dollars or more,” the board said.
“The remainder of the community is obligated to make up the missing revenue, with community members essentially financing the savings through their payments of additional taxes,” the letter said.
Asked about the letter, Michael Dubb, founder and chief executive of the Beechwood Organization, which runs Country Pointe, told Newsday in a statement that the Home Improvement Exemption “put new construction homes on a more level playing field with existing homes of the same price. Country Pointe receives no special treatment. It is taxed the same way as all new construction homes across Nassau County.”
School board member Susan Stewart told Newsday she wanted to “roll back the Home Improvement Exemption, so that the rest of the school district households … do not pay an unfair amount of taxes.”
The “$750,000 threshold is very generous, way too generous … ,” Stewart said.
Jodi Keller, 50, a Plainview resident and former school board member, said, “This feels very much like robbing from the middle class to give to the rich.”
“You do want to encourage home improvement,” Keller said. But she suggested that people with the money for significant renovations or upscale new homes ought not to be surprised by high tax bills.
“The people who are walking into a piece of million dollar new construction, when you do that, you know there is a very high tax burden associated with it,” Keller said.
School board officials said Hochul has not responded to their letter.
Hochul’s office did not respond to a request for comment from Newsday.
Mark Sunderman, a professor at the University of Memphis in Tennessee who specializes in real estate and property tax issues, said for the owner of a new home “who ended up paying the high tax bill [in 2020-21], and is paying basically nothing this year, it may be appropriate, because when you average the two years, it may be fair.”
But, “for the person who steps in this year and buys and pays zero taxes, is that appropriate?” Sunderman asked.
Adam Langley, an expert in property valuation and public finance for the Lincoln Institute of Land Policy, a Cambridge, Massachusetts, nonprofit that studies tax policy, questioned the size of Nassau’s exemption for new construction.
“ … You’re giving a tax cut to one group of homeowners that’s paid for by another group of homeowners,” Langley told Newsday. “So you ideally only want to do that when it’s necessary,” such as in “really distressed markets where tax bills are very high, and insurance bills are high, and there’s not much demand to live there.”
Langley and other experts stressed that the Home Improvement Exemption is another patch Nassau has added to deal with the consequences of failing to keep the tax roll current.
In 2011, former County Executive Edward Mangano, a Republican, ordered the county tax roll frozen.
It stayed frozen for nearly a decade, and home values became massively undervalued until Curran implemented a reassessment.
“Trying to offer targeted relief to winners and losers” after the reassessment, Langley said, “is really a political question of whether that’s fair or adequate or necessary. But I don’t think it’s fostering an equitable tax system.”