Examining Property Tax Reforms to Address Disparities Impacting Multifamily Buildings

Despite property taxes serving as the largest source of local revenue for New York City, elected officials, city finance experts, and small landlords agree: the current tax system favors certain types of property over others while placing a higher tax burden on multifamily rental apartment buildings. 

One of the drivers of these disparities is the system’s decades-old “class share” structure, which, over time, has redistributed the tax one- to three-family homes would have paid based on the amount their values have increased over to other property types, including utilities, commercial, and large multifamily rental properties. Another driver of disparities is the use of different assessment methodologies to value different types of property. For some property types, the valuation methodology used further weakens the connection between actual market value and tax liability, generating greater disparities in effective tax rates. 

“How do we allocate that burden among the classes, among the different types of properties,” said Ana Champeny, Vice President for Research at the Citizens Budget Commission, during a panel discussion on the impact of property taxes on multifamily buildings at the NYU Furman Center’s State of New York City’s Housing and Neighborhoods in 2025 launch event on June 9.  “Who pays more? Who pays less? Should everyone pay the same? You can make policy choices in many different ways.” 

Large Rental Properties Tax Disparity

In our focus report, the NYU Furman Center found that large rental properties with 11+ units pay a disproportionate share of the property tax levy relative to their value.  These disparities translate into higher operating expenses for property owners of rental buildings, who often pass at least some of these costs to their tenants. Separately, the most expensive coops and condos have the lowest relative tax burden in our current property tax system. 

“This disparity has real implications,” said Rohun Iyer, NYU Furman Center’s Director of Data Strategy and Operations during the research presentation. “Higher tax burdens on rental housing may discourage new development of rentals, and it adds financial pressure to existing rent-stabilized buildings facing tighter operating margins.” 

Historically, elected officials have been more responsive to homeowner complaints about tax bills for one- to three-family homes and condos than to owners of large multifamily properties.

Separately, the NYC Advisory Commission on Property Tax Reform did not address tax inequities of rental properties in its final report in 2021 due in part to the mandate that proposed reforms be “revenue-neutral.”

“We would have had to redistribute a lot of tax rates in order to bring debt to equalize effective tax rates across owner-occupied buildings and rentals, and that would have led to tremendous increases [for homeowners],” said James Parrott, a former member of the Advisory Commission and a Senior Advisor and Fellow at the New School’s Center for New York City Affairs. 

But the status quo has had a severe impact on multifamily rental buildings, particularly rent-stabilized buildings who are struggling to break-even, according to Sharon Redhead, a small owner of rent-stabilized buildings in East Flatbush, Brooklyn.

“Our taxes have just steadily increased, so we’ve had to prioritize which bills we paid,” said Redhead. “We’ve had to start financing bills we used to pay outright, like our insurance premiums. We obviously had to cut back on maintenance.” 

Moving to a Sales-based Model

Panelists agreed that moving toward a sales-based model would be a strong approach in addressing the disparity.

In the NYU Furman Center’s report, researchers modeled four potential approaches to explore the outer edges of different versions of reform. In each model, coops and condos would transition away from the current income-based assessment methodology (which tends to underestimate the market value of co-ops and condos) and would instead use sales-based market values.

“The current system is distortionary, it’s opaque, and it really fosters distrust in the system, because people’s values have nothing to do with what they bought their home for, or what their neighbor paid for, or anything else,” said Champeny. “Going from the current system to sales-based values would be an incredible step forward.”

Creating a New Class for Rent-Stabilized Properties

Rent-stabilized buildings in particular have struggled under the existing property tax system. Indeed, Mayor Mamdani’s housing plan includes a set of commitments to evaluate how property taxes are calculated for predominantly rent-stabilized buildings.  

The NYU Furman Center examined how the Department of Finance could refine the valuation of older 90%+ rent-stabilized properties to right-size their values and tax burdens. Researchers found that these properties saw real per-unit tax obligations rise slightly faster than inflation between 2019 and 2025, despite real declines in net operating income during that same period.

“There’s been a lot of attention to the tax burden on individual homeowners, on coops and condos to some extent, but much less on the rent stabilized stock,” said New York State Senator Brian Kavanaugh. “The income capacity of these properties has been diminished. We really do need to pay more attention to the expense side, and that is about insurance and utilities and other costs.”

The NYU Furman Center recommended creating a new category of buildings for 90%+ rent-stabilized buildings in the City’s assessment guidelines to ensure that DOF has the ability to generate more appropriate market values for this critical stock of affordable housing. Under this new category, DOF could use higher expense ratio caps and allow for higher capitalization rates consistent with the recent declines in the market for these buildings. 

But that alone is not enough to fully address the financial challenges facing this stock of housing, panelists said.

“Fixing the valuations to ease up some of that pressure, and to allow owners like Sharon to spend more money on the maintenance and operations is very, very important, but property taxes are maybe 25% of operating costs, they are a significant expense, but they are not the only expense,” said Champeny. “We do need to think more broadly about how we address regulated housing, how we address insurance in New York State, and other reforms that we can do to address the costs more broadly that affect not just regulated housing.” 

Next Steps

Panelists also talked about recent events impacting New York City property tax system. For example, panelists discussed the passage of the Pied-à-Terre tax and its inclusion in the state budget, which may hint at a path forward for property tax reform, especially given that the new tax will eventually use sales-based market values for higher-end second homes.

“Success breeds success, maybe if we can actually do that, we can also get together and do some of the other things that we’re talking about today,” said Kavanagh.  

Panelists also discussed recent developments in the lawsuit filed by a coalition, Tax Equity Now NY (TENNY), against the City of New York challenging the system. TENNY argues that the current structure favors owners of wealthy Brooklyn brownstones and high-end Manhattan condos over renters and owners in lower-income neighborhoods. 

At a June 5, 2026 conference, the parties agreed to enter into a court-mediated settlement process, which would be structured and supervised by Justice Lebovits. The parties did not reach a settlement and have not agreed on terms, so the litigation remains active. “The current negotiations concern the City’s implementation of existing law, which TENNY maintains the City has authority to correct administratively,” said Martha Stark,  TENNY’s policy director and a former finance commissioner under Mayor Michael R. Bloomberg, in a statement.