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Department of Taxation and Finance



1.1  STANDARD OF ASSESSMENT:  All real property is assessed at its current full value.

Guidance: The real property tax is an ad valorem tax, meaning it is imposed against the value of property. Real Property Tax Law (RPTL)  305(2) only provides that all parcels within an assessing unit are assessed at a uniform percentage of current value (Level of Assessment, or LOA). When the Level of Assessment is not at 100% of full value, the administration of the property tax becomes less transparent. In particular, an LOA of other than 100% of full value is much more difficult for property taxpayers to determine whether they are being assessed equitably. It also becomes much more difficult for the assessor to manage the valuation process. This full value standard goes beyond the statutory requirements of  305(2), as well as  701(8)(b), which allows fractional assessment within classes of special assessing units, i.e., New York City and Nassau County. In doing so, this standard provides the fundamental and prerequisite underpinning of a transparent and equitable assessment process.

Assistance: Compliance with  305 is discussed in Valuation Standard 1.6. Valuation approaches are discussed in Valuation Standard 1.4.

1.2  USE STANDARD FOR VALUATION:  Improved property is assessed for its current use. Property that is put to no current use is assessed for its highest and best use.

Guidance: Generally, for purposes other than real property taxation, property is appraised at its highest and best use to determine its value. New York courts contrast eminent domain taking, where the owner had only one chance to be compensated for present value and potential future uses, from value for assessment purposes, where the value is determined annually. The one exception to "current use" valuation is vacant land that has no current use. In that situation, the standard is highest and best use. Agricultural land is distinguished from vacant land that has no current existing use. Agricultural land is valued according to its use for agricultural purposes, irrespective of whether farming is the highest and best use of such property. Thus, property is to be assessed based on its current use, not its highest and best use (although in a vast majority of cases they are one and the same), except in the case of vacant land which is idle and put to no use whatsoever. In that case, the value is based on its highest and best use.

Assistance: The current use standard is discussed in 10 Op. Counsel SBRPS No.45. Unimproved land is discussed in 8 Op. Counsel SBEA No.19.

1.3  DEFINITION OF VALUE:  Value means market value - the price a willing buyer would pay a willing seller in an arm's-length transaction.

Guidance: Calculation of the market value of a parcel is the foundation of a fair and transparent system of assessment administration. RPTL Article 3 requires an annual assessment roll that reflects market value as of the municipal valuation date, which may vary from the valuation date of the previous July 1 in RPTL  301. RPTL  305(2) requires that those values be entered at a uniform percentage. Individual assessments reflect market value as determined through application of the approaches to value discussed in Valuation Standards 1.4, 1.4.1, 1.4.2 and 1.4.3. The Procedural Standards assure that these value determinations are based upon adequate data.

Assistance: The Procedural Standards in this document contain standards and guidance for the collection and maintenance of valuation data. For example, in order to value property, all real property sale transfers are entered on the computerized software RPS V-4 or the equivalent. Each sale entry indicates whether the sale is a valid arms length sale or, alternatively, whether the sale is not considered for valuation purposes and/or ratio studies. The inventory for each sale should be located on the same file. The assessor should maintain reliable income and expense data, when available, along with well-supported income multipliers, overall rates and required rates of return on investment. A guide to compiling market value data and valuation techniques is contained in an ORPTS publication entitled Guidelines for Effective Assessment Administration in New York State – A Self-Review Guide for Assessing Units. This publication may also be useful in complying with other Standards.

1.4  APPROACHES TO VALUE:  There are three accepted approaches for determining market value: Comparable Sales, Income, and Cost.

Guidance: The application of appraisal techniques using the three approaches to value (i.e., cost approach, direct sales comparison approach, and income capitalization approach) may develop separate indications of value for the property. The results should be reconciled to determine market value. Consideration should be given to the relevance of the approach and the reliability of the value indication based on the quantity and quality of data available and analyzed within the approaches used. All three approaches to value, for which adequate, reliable data is available, should be considered. Therefore, where appropriate, the valuation process must collect, verify, analyze, and reconcile the information necessary to estimate: for the cost approach, the land value, reproduction cost of the improvements, the accrued depreciation; for the sales approach, the value by the sales of comparable properties; and for the income capitalization approach, the rentals, expenses, interest rates, capitalization rates, vacancy rates and terms and conditions of available leases.

Assistance: The ORPTS website contains a document Valuation Standards that provides an overview of the valuation process.

  • 1.4.1  THE COMPARABLE SALES APPROACH:  The value of a parcel is determined by using recent sales of similar properties.
    • Guidance: The sales comparison approach develops a value for a subject parcel by comparing recent similar property sales (comparables) within the same market area to the subject parcel and adjusting the comparables for dissimilarities. Appropriate market areas may cross municipal boundaries. The sales are adjusted for their dissimilarities to the subject and an indicated value opinion for the subject property is developed. If the sale is superior in a specific attribute, a minus adjustment is indicated; if a sale is inferior in a specific attribute, a plus adjustment is indicated; if the sale and subject are comparable in a specific attribute, no adjustment is indicated. The sales approach is most commonly used for residential property and vacant land. It is the preferred approach for these properties. The sales approach should be used whenever sufficient sales are available.
    • Assistance: The collection and maintenance of sales data is discussed in Standard 2.2.
  • 1.4.2  THE INCOME APPROACH:  The value of a parcel is determined by capitalizing rental income potential.
    • Guidance: The income approach is the preferred approach for income-producing property. The income approach converts income into value by the application of a rate or a multiplier. The income approach measures the value of the real estate based on the net rental capacity of the real estate, not the value of the business being conducted.
    • Assistance: Sufficient market income information, such as recent income and expense statements or current market lease data, is essential to the income approach. When available, ORPTS and County Real Property Tax Services agencies may provide local assessors with reliable income and expense data, along with well-supported income multipliers, overall rates and required rates of return on investment. In smaller communities, assessors from several assessing units should share this information in order to establish a larger data base of income and expense for different types of properties.  Investment Set Codes for assessors to use in the income approach are available via RPS Version 4 (more information).  Some assessing units have adopted local laws requiring commercial property owners to provide income and expense data for their properties as a requirement for seeking administrative review of their assessments before the local boards of assessment review.
  • 1.4.3  THE COST APPROACH:  The value of a parcel is determined by using the depreciated current cost to reconstruct improvements, plus land value.
    • Guidance: The cost approach develops a value estimate by taking the cost of reproducing or replacing the improvements on a parcel, reducing that cost by any depreciation (physical, functional or economic), and adding the land value of the parcel. This is often referred to as RCNLD+L (Reproduction or Replacement Cost New Less Depreciation plus Land). The cost approach is particularly appropriate for proposed and new construction, special purpose properties (e.g., religious facilities, museums, schools) and properties with limited sales or income information. The cost approach sets the ceiling for assessments. It can be applicable to all improvements. However it is often difficult to estimate depreciation in older structures and in structures that do not represent the highest and best use of the land. The maximum value that can be placed on an improvement is its reconstruction cost less depreciation. (Lee and LeForestier, Review and Reduction of Real Property Assessments in New York, third edition,  1.07 [Albany, 1988]).
    • Assistance: The ORPTS website includes a Valuation Reference Manual for use in applying the cost approach to residential, farm and commercial structures.

1.5  MASS APPRAISAL:  Computer-Assisted Mass Appraisal is a necessary component for determining market value.

Guidance: Computer-assisted mass appraisal (CAMA) involves the valuing of a group of properties as of a particular date using common data, standardized methods and statistical testing. CAMA is a tool for generating initial value estimates for individual parcels, which can then be reviewed before preparing an assessment roll. The success of CAMA depends on the adequacy of the data used for modeling and effective review and adjustment of modeling output. CAMA modeling should be utilized where sufficient data is available.

Assistance: The IAAO has published Standard on Mass Appraisal of Real Property (January 2008). Reference can also be made with USPAP Advisory Opinion 32, Ad Valorem Property Tax Appraisal and Mass Appraisal Assignments.

1.6  UNIFORMITY:  There is uniformity in value for all parcels on each year's assessment roll.

Guidance: RPTL  305(2) provides that all parcels within an assessing unit are assessed at a uniform percentage of current value. While a roll on average across all properties may be assessed at full market value, assessments may in fact not be uniform between property types or within property types. The uniformity standard requires that each individual property – within reasonable limits – be at the same percentage of full market value. Without such uniformity, there can be no property tax equity.

Assistance: There are published sources of assistance for maintaining uniformity: IAAO Standard on Ratio Studies – 2007; ORPTS Level of Assessment Determination: An Owner's Manual for Maintaining Uniformity; Performance Standard 2.2 regarding sales verification. These sources provide procedures on how to check and verify assessment uniformity, and thereby equity. Ratio studies are an integral component of maintaining uniformity, which use only “arms length” sales. Uniformity in part is measured by the Coefficient of Dispersion (COD) and the Price Related Differential (PRD), as well as other measures of reliability.

1.7  APPRAISAL:  Regularly scheduled appraisal of all parcels - at least once every four years - is necessary to maintain assessment equity.

Guidance: An appraisal of each parcel at full market value is conducted at least once every four years. Such an appraisal includes a new determination of value based upon current data. Clearly, this requires adequate professional and financial resources, not only for the technical work but also for the essential public communication.

Assistance: The Procedural Standards provide structure for both reassessment projects and preparation of assessment rolls in non-reassessment years.