Nearly 100 mixed-use borough buildings have been improperly assessed by the Department of Finance and therefore taxed at an incorrect, lower rate, according to an audit released this week by City Comptroller Scott Stringer.
Prompted by the report’s findings, Finance has already begun to correct the tax status of the 97 buildings in Queens that auditors determined were misclassified.
According to Stringer, properties in New York City are given one of four tax classes: Class 1 are one- to three-unit buildings, primarily used for residential purposes; Class 2 are all other residential properties; Class 3 are properties owned by utilities and special franchises; and Class 4 are all other properties not in Class 1, 2, or 3. The audit examined whether Class 1 mixed-use buildings in Queens were properly assessed and taxed by the Department of Finance as of May 2015.
Auditors identified 97 buildings that were misclassified as Tax Class 1 mixed-use buildings, and taxed at a lower rate than they should have been. DOF agreed that 78 properties should be taxed at 45 percent of market value, instead of the residential rate of six percent at which they had been taxed, and that 19 properties required additional interior inspection, Stringer noted.
In total, Stringer’s office estimated that, after the changes are made, the City will bring in an additional $1.28 million in taxes over the next five years.
Auditors also found that 33 of the misclassified buildings in Queens had been inspected by DOF assessors within the last three years – raising questions about the agency’s training and inspection process.