Understanding Property Tax Avoidance in New York City
Many homeowners and real estate investors are constantly searching for ways to reduce or avoid property taxes. However, one common misconception is that buying an empty building and constructing a home on top of it automatically exempts an individual from paying property taxes. This article delves into the legal and practical aspects of this strategy, highlighting why it is not a viable method for avoiding property taxes in New York City.
Legal and Practical Challenges of Building on an Empty Building
Firstly, turning an empty building into a habitable structure is a complex process that involves numerous legal and logistical hurdles. Building on an empty structure requires obtaining the necessary permits and approvals from local authorities. These permits ensure that the construction complies with zoning laws and building codes, which are enforced to maintain public safety and preserve the character of the neighborhood.
In addition to getting permits, constructing a home on top of an empty building can result in the property being subject to increased property taxes. The tax authority in New York City assesses the newly built structure as it is considered an improvement to the existing property. Even if the original building was unoccupied and exempt from property taxes, the completed structure may be taxed as a residential property.
Diving into the Details of Property Taxes in New York City
Understanding the intricacies of property taxes in New York City is crucial for anyone interested in real estate investment. Property tax exemptions, while available, are typically reserved for specific categories of property, such as religious institutions, educational institutions, and governmental bodies. An empty building without a defined use does not fall into any of these exempt categories.
Take, for instance, the FMG Church example mentioned in this article. The church displayed a sign indicating their desire to “avoid” paying property taxes, but upon closer inspection, it was found that the organization had already found a creative way to comply with tax laws. However, if the building were empty and remained ill-defined, it would still be subject to property taxes.
The Bottom Line: A Clear Answer to the Question
Unfortunately, the proposed method of avoiding property taxes by purchasing an empty building and building a home on top of it is not feasible in New York City. Unless the structure is floating in mid-air, unconnected to any land or property, and situated high enough to not encroach on airspace rights, it will remain subject to property taxes.
The local government carefully monitors and assesses all properties, ensuring compliance with tax laws. Therefore, any construction project on existing property will result in the reassessment of the tax base. While there are strategies that can help minimize property taxes, such as utilizing tax-exempt organizations or understanding the eligibility criteria for property tax exemptions, buying an empty building and building on top of it is not among them.
By understanding the legal and practical implications of property taxes in New York City, individuals can make informed decisions and find legitimate ways to manage their financial obligations without resorting to unfeasible methods.