A Guide to New York City, NY Apartment Property Taxes

New York City apartment property taxes are calculated in three steps: the Department of Finance (DOF) estimates a building’s market value from its income, sets assessed value at 45% of that figure subject to caps or phase-ins, and multiplies the taxable assessed value by the Class 2 tax rate, which was 12.439% for fiscal year 2026. Rental buildings with four or more units all fall into Class 2, but how quickly their tax bills can rise depends heavily on whether they have more or fewer than 11 units.

This guide explains each step, the annual calendar, the filings DOF expects from owners, how to challenge a value, and the tax incentive programs that matter for apartment buildings. Figures are tied to the fiscal year they apply to, because rates and roll statistics change every year.

Where rental buildings sit in the four tax classes

New York City divides real property into four tax classes. According to DOF’s definitions of property assessment terms:

Class 1 covers most residential property with up to three units, plus most condominiums of three stories or fewer.
Class 2 covers all other property that is primarily residential: rental buildings, cooperatives and condominiums.
Class 3 covers certain utility property, and Class 4 covers other commercial and industrial property.

Within Class 2, DOF uses subclasses that matter for apartment owners:

Class 2a: rental buildings with 4 to 6 units.
Class 2b: rental buildings with 7 to 10 units.
Class 2c: cooperatives and condominiums with 2 to 10 units.

Larger rental buildings, with 11 or more units, are Class 2 without a subclass. That dividing line between 10 and 11 units shows up again and again in how the city values and taxes apartments. DOF assesses property in all five boroughs, so the same rules apply whether a building is in Manhattan, Brooklyn, Queens, the Bronx or Staten Island.

How DOF estimates market value for an apartment building

DOF does not value apartment buildings by comparing sale prices. State law requires the city to value all Class 2 property as income-producing, based on income and expenses. DOF’s explanation of how it determines market value says it uses a statistical model to estimate typical income and expenses for similar buildings, considering factors such as size, location, number of units and age. Cooperatives and condominiums are valued as if they were rental buildings.

The method differs by building size, according to DOF’s Class 2 property guide for tax year 2026-27:

Buildings with 11 or more units: DOF starts from income and expense data reported on the owner’s Real Property Income and Expense (RPIE) filing, adjusts it with its models, and divides estimated net operating income by a capitalization rate, which the guide describes as “the expected rate of return based on the income.”
Buildings with 10 or fewer units: DOF uses a gross income multiplier. The guide’s example multiplies $100,000 of income by a multiplier of 10 to reach a market value of $1 million.

The practical consequence is that DOF’s value moves with the income DOF believes a building can produce. Rising rents, higher reported income or a lower capitalization rate will raise market value; higher expenses or vacancy, if documented, can lower it. Owners who want to see how sensitive value is to those inputs can run their own numbers through our apartment building value calculator, which uses the same income-and-cap-rate logic.

From market value to taxable value

Market value is only the starting point. DOF’s page on determining assessed value explains the next two steps.

The 45% assessment ratio

Class 2 property is assessed at 45% of market value. (Class 1 property is assessed at 6%.) A building DOF values at $10 million therefore has an actual assessed value of $4.5 million before any cap, phase-in or exemption.

Caps for buildings with 10 or fewer units

For Class 2a, 2b and 2c properties, and for any Class 2 building with 10 or fewer units, assessed value cannot rise by more than 8% in one year or 30% over five years. The assessed value used for taxes is the lower of 45% of market value or the capped amount. In a period of rising values, the cap can leave a small building’s taxable value well below 45% of its market value for years.

Five-year phase-ins for buildings with 11 or more units

Larger rental buildings have no cap. Instead, DOF phases in each year’s change in assessed value at 20% a year over five years, and each new year’s change starts its own five-year phase-in. The taxable figure is the lower of the actual assessed value and this “transitional” assessed value.

A simple illustration: if a 40-unit building’s actual assessed value rises by $500,000 in one year, about $100,000 of that increase reaches the taxable value in the first year, another $100,000 the next, and so on. Several years of increases stack on top of one another, which is why a building’s tax bill can keep climbing even in a year when its market value is flat.

Physical changes are treated differently. Alterations and new construction are not phased in; the Class 2 guide notes that physical alterations are assessed at 15% of the increase in value and new construction at 45%.

RPIE: the filing behind New York City apartment property taxes

For larger buildings, the income figures DOF uses come largely from owners. Owners of income-producing properties with an actual assessed value above $40,000 must file a Real Property Income and Expense statement or a claim of exclusion, according to DOF’s RPIE filing page. RPIE-2025, covering calendar year 2025, was due June 1, 2026.

Some owners do not need to file anything for RPIE-2025, including:

Properties with an assessed value of $40,000 or less on the 2026-27 tentative roll.
Residential properties with 10 or fewer dwelling units.
Class 1 or Class 2 properties with six or fewer dwelling units and no more than one commercial unit.

Cooperatives with no more than 2,500 square feet of commercial space file a claim of exclusion instead of a full statement.

Penalties for not filing

The penalties are significant. For RPIE-2025, DOF states that a missing income and expense statement can draw a penalty of up to 5% of the property’s actual assessed value, and a missing claim of exclusion costs $100. DOF’s non-compliance guidance adds that failing to file a claim of exclusion for three or more consecutive years brings a $1,000 fine. Late filers also lose the right to a hearing at the NYC Tax Commission, which is a costly consequence in a year when the owner wants to contest a value.

The annual assessment calendar

The city’s property tax year runs from July 1 to June 30, and the assessment cycle runs well ahead of it. For fiscal year 2027, DOF’s tentative assessment roll announcement and the Class 2 guide lay out the sequence:

January 5: taxable status date. Property is valued as of its condition on this date.
January 15, 2026: tentative roll published and Notices of Property Value issued.
March 2, 2026: deadline to challenge a Class 2, 3 or 4 assessment (March 16 for Class 1).
May: final roll.
June: bills generated.
July 1: fiscal year begins.

Challenging a value at the Tax Commission

The NYC Tax Commission is the city’s independent administrative body for reviewing assessments. For the 2026-27 roll, Class 2 applications on Form TC106 had to arrive by 5:00 p.m. on March 2, 2026. The Tax Commission also requires:

An income and expense schedule (Form TC201) for properties that earned rental income in 2025. Residential properties with six or fewer units and no nonresidential space are exempt.
An accountant’s certification (Form TC309) for properties assessed at $5,400,000 or more.

For 2026, filings had to be made in person or by mail rather than by email. Because the deadline arrives only about six weeks after the Notice of Property Value, owners who intend to appeal need their income and expense records ready early in the year.

Tax rates and how bills are paid

DOF’s published property tax rate table shows a Class 2 rate of 12.439% for fiscal year 2026, down slightly from 12.500% in fiscal year 2025. For comparison, the FY2026 rates for the other classes were 19.843% (Class 1), 11.108% (Class 3) and 10.848% (Class 4).

Fiscal year 2027 rates were set by the City Council in June 2026, but they may not be final. A state law signed on September 25, 2026 (Chapter 302 of the Laws of 2026) amends Real Property Tax Law section 1803-a so the Council can set a cap of up to 5% on the change in each class’s share of the levy by December 1, 2026. If bills have already been issued, rates must be revised and amended bills sent. Owners should watch for an amended bill this fiscal year.

Billing frequency depends on assessed value:

Assessed value of $250,000 or less: billed quarterly, with payments due July 1, October 1, January 1 and April 1.
Assessed value above $250,000: billed semiannually, with payments due July 1 and January 1.

Because assessed value is 45% of market value, a Class 2 building crosses the $250,000 threshold at a market value of roughly $556,000 before caps or phase-ins, so most apartment buildings are billed twice a year.

Putting the steps together

A hypothetical example shows how the pieces combine. Suppose DOF values a 30-unit rental building at $8 million. Its actual assessed value is 45% of that, or $3.6 million. If earlier increases are still phasing in, the transitional assessed value might be lower, say $3.3 million, and the taxable figure is the lower of the two. At the FY2026 Class 2 rate of 12.439%, a $3.3 million taxable assessed value produces an annual tax of about $410,500 before any exemption or abatement. The same arithmetic explains why a modest change in DOF’s income estimate or capitalization rate can move the bill by tens of thousands of dollars once the phase-in catches up.

What the FY2027 tentative roll showed for Class 2

The January 2026 tentative roll gives a sense of direction. Citywide, total market value rose 5.4% to $1.659 trillion. For Class 2:

Market value rose 6.9% to $422.4 billion, and assessed value rose 6.2% to $126.7 billion.
Rental buildings’ market values rose 6.4% and their assessed values 6.8%; co-ops rose 4.6% and condos 4.0%.
Brooklyn posted the largest Class 2 increase, 11.8%, and Brooklyn rental buildings’ billable assessed values rose 14.2%.

These are tentative-roll figures covering the period from January 6, 2025 to January 5, 2026, and final values can differ after review and appeals.

Abatements and exemptions for apartment owners

Several programs change the tax bill for qualifying buildings. Each has its own rules and agency.

421-a. The former new-construction exemption is closed to new projects; construction had to start on or before June 15, 2022. The state’s fiscal 2025 budget extended the completion deadline for projects started between January 1, 2016 and June 15, 2022 from June 15, 2026 to June 15, 2031. Many existing buildings still carry 421-a benefits that phase out over time, which matters to anyone buying or refinancing them.
485-x. The “Affordable Neighborhoods for New Yorkers” program replaced 421-a in April 2024, with HPD rules adopted in December 2024. It applies to projects starting construction after June 15, 2022 and by June 15, 2034. Options range from 100-plus-unit projects with 25% of units at an average of 80% of area median income (AMI) for 35 years, to an option for 6-to-10-unit buildings with half the units rent-stabilized for 10 years. Details are on HPD’s 485-x page.
467-m. A tax benefit for converting commercial buildings, such as offices, into rental buildings with six or more apartments, if at least 25% of units are affordable at a weighted average of 80% AMI. Construction must start between January 1, 2023 and December 31, 2031.
J-51. HPD relaunched this abatement for essential repairs on February 12, 2025. Eligible rental buildings generally need at least half their units rent-regulated with rents below 80% AMI, or substantial government assistance.

Reform proposals on the table

In December 2021, the city’s Advisory Commission on Property Tax Reform released a final report recommending a new residential class that would combine Class 1 with small rentals, co-ops and condos while keeping large rentals separate, ending fractional assessments and caps in favor of a five-year phase-in, and replacing the class-share system. None of those recommendations has been enacted, so the current rules described above remain in force.

What these rules mean for New York City building owners

The structure of the system leads to a few practical lessons:

Size changes everything. A 10-unit building’s assessed value is capped at 8% a year; an 11-unit building’s is not. Owners and buyers should know exactly which side of that line a property sits on.
Taxes lag value. Five-year phase-ins mean increases from prior years are still working their way into today’s bill. A buyer underwriting a large building should model the transitional assessed value forward, not just the current bill.
RPIE is not optional. A missed filing can cost up to 5% of assessed value and forfeit the right to a Tax Commission hearing in that cycle.
Appeals run on a short clock. With challenges due around the start of March, the income and expense evidence for an appeal needs to be organized right after the Notice of Property Value arrives in mid-January.
Water and sewer are separate. Charges are billed by the Department of Environmental Protection under rates set by the NYC Water Board, which adopted a 6.0% increase effective July 1, 2026. That increase is not part of the property tax bill but affects the same expense budget.