The Proposed Tax Raise

With a deficit of over $5 billion to make up for, the new mayor has been looking for ways to fill the gap. Fixing the previous administration’s mess has been a tradition for countless new mayors over the decades, with some seeing even larger gaps. The mayor wants to raise income taxes on millionaires and major corporations to make up the difference, but this needs to be approved by the governor, who is currently opposed to the idea. A property tax increase of 9.5% has been proposed as a measure of last resort. This would raise taxes on all people and businesses, affecting 3 million homeowners and around 100,000 businesses. This would cost homeowners around $700 a year, while businesses could lose millions, depending on their size.

Commercial Real Estate Acts as NYC’s Piggy Bank

If you own a business or operate commercial properties in New York City, you already know how high taxes can be on your buildings and land. Thanks to the small amount of room available inside the five boroughs, real estate is at a premium, with commercial properties even more so. Due to things like zoning laws and the unique construction that many businesses need, new construction is often difficult or impossible, not to mention the astronomical cost. This makes competition for existing properties fierce, which then substantially drives up the market value. The city then assesses this hot property market , often several years out of date. This forms the basis for the rising tax bills seen in New York City.

In order to protect homeowners, it is commercial properties that bear the brunt of taxes. Nearly 80% of all tax revenue in the city comes from Class 2 and 4 properties, which represent a massive burden. This has made businesses the favorite target of new taxes, as it is easy to generate a great amount of revenue from relatively few entities. In theory, this protects homeowners, but in reality, this mostly raises prices on renters, as Class 2 properties are mostly apartment buildings. These taxes usually translate into larger rents, passing the buck on to the average New Yorker. A proposed property tax increase would raise costs for both owners and renters.

The Taxable Value of Businesses is Already Climbing

Due to standard economic factors, the value of business real estate across New York City has already seen strong gains on the tentative tax roll, which forecasts massive gains for both apartments and standard commercial properties. Thanks to businesses returning to offices after the pandemic, the demand for office space is driving a new boom in that sector, which has brought the total value of commercial real estate in the city to around $135 billion. Retail spaces are likewise seeing a huge bounce back, fueled by more people working in the city. Class 2 properties added 6.7% to their value in one year alone, signaling higher rents and taxes for tenants and apartment owners respectively.

Commercial Property Owners can Lower Their Taxes and Values with Appeals

This latest crisis, along with the underlying budget issues, demonstrates why business owners of all sizes should always stay on top of their assessments and taxes. While you cannot control the market or the government, you can do your part to protect your business from outside forces. This starts with property tax appeals. Called grievances in the rest of the state, New York City commercial appeals are the best way to lower your property tax burden. The protests allow you to challenge your assessed value, updating it to today’s market conditions rather than being stuck in a past boom period. While New York City values are going up, it is best to ensure that you are only paying what you owe. With tax rates up in the air, lowering your value could save you millions.

New York City is notorious for arcane tax laws and an outdated assessment system, so using an appeal can fix some blatant errors. With the tentative assessment roll available, you can preview any basic issues that your assessment might have. The biggest one is to ensure that your property is properly classified. The next step is to ensure that the property size is correct. If that basic information is accurate, then look at your market and assessed values. If they seem high, then an appeal is probably necessary. Gather photographs of your property and its condition, gather financial documents and ensure their accuracy. Your Real Property and Income Expense Statement (RPIE) is a good start, but you need to demonstrate your business’ income and expenses accurately. This means removing things from the equation that are not taxed, including intangible assets like software, contracts, and warranties. Once the evidence is collected, you can file an appeal with the New York City Tax Commission.

Cost Segregation Handles Other Tax Issues for Businesses

Property taxes can be unpredictable and a huge expense, but federal income taxes can be just as mercurial and costly. However, you can use your real tangible property to offset or even eliminate federal taxes. Using accelerated depreciation on qualifying components of tangible assets like fixtures, furniture, machinery, fencing, and buildings, you can shield yourself from taxes. Thanks to new legislation, bonus depreciation is once again at 100%, returning from a long stint of sunsetting. This means you could eliminate federal taxes entirely in the first year through bonus depreciation. Cost segregation studies do take a strong investment, but they can easily pay for themselves. With bonus depreciation added in, they often pay for themselves several times over.

New York City Appeal Deadline is March 1, 2026

While appeals can take months in the system to bring results, you must file by a set time. Many counties offer extensions, but NYC always sticks to its deadline. In 2026, this is March 1. That means you are pressed for time. Getting your appeal done is fantastic for your business, not only now, but for years to come. Appeals help set a baseline for your property’s value, which makes later appeals easier to prove. With uncertainty and unreliability in tax rates or rent freezes in the near future, getting your true value established should be your top priority when it comes to handling your finances. With time being so short, you might want to use professionals to make your appeal go smoothly. That is where we at O’Connor come in.

O’Connor Helps with Commercial Tax Reduction in NYC

With over 50 years of experience, we at O’Connor know how to navigate the labyrinthine world of New York taxes. As one of the nation’s largest property tax firms, we can leverage both local and national resources and talent to maximize your savings. We will gather evidence for you, analyze your assessment, offer advice, and represent you in hearings for all of your appeals. We can also use our proprietary databases to find comparisons that other firms cannot, helping prove that you are being overvalued when compared to your competitors and neighbors. A well-executed appeal can help greatly with your cash flow, while also giving you a leg up in the market, especially one as competitive and volatile as New York City. There is no upfront cost for our appeal services, as you will only be charged a contingency fee if we are able to lower your taxes. While appeals with O’Connor are free from risk, we also offer cost segregation services at competitive rates and will back our studies against the IRS in any legal venue. We support commercial appeals in NYC and both residential and business grievances in Nassau, Westchester, and Suffolk counties.