· 11 min read
NYC commercial property tax: Class 4 rate, phase-in and appeals
Office buildings, stores, warehouses and factories in New York City are Class 4 property, the city's tax class for commercial and industrial real estate. (The exceptions are mostly residential: a small store or office with one or two apartments attached can be Class 1, and a building that is mainly apartments with shops below is Class 2.) Its tax bill comes from a short formula with a few twists: the Department of Finance sets a market value, taxes 45% of it, phases changes in over five years and then applies the Class 4 rate. Owners pay the bill, buyers inherit it and most commercial tenants pay part of it through their lease.
This guide walks through the formula with a real building, the yearly calendar, the filings that feed the value, how to appeal and why some of the city's largest private towers show no tax at all. It is general information drawn from the Department of Finance and the Tax Commission, not tax or legal advice.
The formula in four steps
The city's tax year runs from July 1 to June 30. For each one, the Department of Finance works out a Class 4 bill like this:
- Market value. Finance estimates what the property is worth. For office buildings, stores, factories, hotels and lofts it uses the property's income earning potential and expenses, based partly on the owner's yearly income and expense filing (RPIE, below) and on statistical models.
- Assessed value. Class 4 property is assessed at 45% of market value.
- Transitional assessed value. Changes in a Class 4 assessment phase in over five years, 20% of each change a year. The bill uses whichever is lower, the actual assessed value or the transitional one. Physical changes, such as an addition or a new building, count in full right away.
- Taxable value and tax. Exemptions are subtracted to get the taxable value, which is multiplied by the Class 4 rate. Abatements then come off the result.
The Class 4 rate is 10.848% for tax year 2025/26, the latest rate the Department of Finance lists (it was 10.762% the year before). With no exemption and no phase-in, the tax works out to 45% x 10.848%, about 4.88% of market value a year. Most buildings pay less because the phase-in holds their taxable value below the full assessment. Across the 2,374 large taxed buildings Leasemark tracks, the median estimate on the 2026/27 roll is about 4.59% of market value.
A worked example: 1460 Broadway
On the 2026/27 roll the city values 1460 Broadway, an office building near Times Square, at $126.9 million, up from $94.9 million a year earlier. Here is its estimated bill:
| Step | 1460 Broadway, 2026/27 roll |
|---|---|
| Market value set by Finance | $126,890,000 |
| Assessed value, 45% of market value | $57,100,500 |
| Taxable value, phased in (no exemptions) | $43,090,380 |
| Class 4 rate | 10.848% |
| Estimated tax before abatements | about $4.67 million a year |
The building is taxed on about 75% of its full assessment. A 34% jump in market value does not hit the bill at once: only part of it has phased in so far. On the full $57.1 million assessment the same rate would come to about $6.19 million, roughly $1.5 million more. Unless the value falls back, that gap keeps closing a step each year as the increase phases in.
The pattern is common. Of the 2,374 taxed buildings we track, 1,992 (84%) are taxed on a transitional value below their full assessment, so most have increases still to come even if their values stop rising.
How the five-year phase-in works
Take a simple case: a building whose actual assessed value rises from $10 million to $15 million and then holds steady, with the rate unchanged. The $5 million increase phases in at $1 million a year:
| Year | Transitional assessed value | Tax at 10.848% |
|---|---|---|
| 1 | $11,000,000 | $1,193,280 |
| 2 | $12,000,000 | $1,301,760 |
| 3 | $13,000,000 | $1,410,240 |
| 4 | $14,000,000 | $1,518,720 |
| 5 | $15,000,000 | $1,627,200 |
In practice several transitions run at once, one for each of the last five years' changes, so the transitional value rarely moves in clean steps. Decreases phase in the same way, but because the bill uses the lower of the two values, a drop in the actual assessment below the transitional one counts right away.
The yearly calendar
| When | What happens |
|---|---|
| January 5 | The year's assessment reflects the property's physical condition on this date |
| About January 15 | The tentative roll and the Notice of Property Value (NOPV) come out; the NOPV is not a bill |
| March 1 | Deadline to appeal a Class 2, 3 or 4 assessment to the Tax Commission |
| April 1 | Deadline for a Request for Review with Finance (Class 1: March 15) |
| May | The final assessment roll; a Revised NOPV goes out if a value changed |
| June 1 | The yearly income and expense statement (RPIE) is due |
| July 1 | The tax year starts and the first bill is due |
| October 25 | A court case over the assessment, after a Tax Commission appeal, must be started before this date |
| January 1 | The second half of a semiannual bill is due |
Your Notice of Property Value
Finance mails the NOPV in January. It shows the property's description (square footage, residential and nonresidential units, floors), the estimated market value, the tentative assessed value, the tax class and any exemptions. Check the description first. You can ask Finance itself to fix a wrong floor area or unit count, or to reconsider the market value, with a Request for Review, due April 1 for Class 4 property. It is not a substitute for a Tax Commission appeal, which has the earlier March 1 deadline.
RPIE: the filing that feeds your value
Because Class 4 values rest on income, the city asks owners for the numbers. Owners of income-producing property with an actual assessed value above $40,000 on the tentative roll must file a Real Property Income and Expense (RPIE) statement, or a claim of exclusion, by June 1. Properties assessed at $750,000 or more also file a rent roll. Owners of buildings with ground or second floor storefronts must also register them with the city, which is where Leasemark's storefront vacancy figures come from.
Skipping the filing is expensive. Penalties are set by the final assessed value:
| Final assessed value | Penalty for not filing |
|---|---|
| $40,001 to $99,999 | $300 |
| $100,000 to $249,999 | $750 |
| $250,000 to $499,999 | $1,500 |
| $500,000 to $999,999 | $3,000 |
| $1,000,000 to $4,999,999 | $5,000 |
| $5,000,000 to $9,999,999 | $20,000 |
| $10,000,000 to $14,999,999 | $40,000 |
| $15,000,000 to $24,999,999 | $60,000 |
| $25,000,000 and up | $100,000 |
An owner who fails to file for three years in a row can face a penalty of 5% of the property's final actual assessed value. Worse, the RPIE law bars the Tax Commission from reviewing an assessment if the owner did not comply with the filing requirement the year before, so a missed RPIE can cost you next year's appeal.
How to appeal an assessment
Appeals go to the New York City Tax Commission, an agency independent of the Department of Finance. It can lower an assessment, change the tax class and adjust exemptions. It cannot change the tax rate, which the City Council sets.
- Deadline: the Commission must receive a Class 4 application by March 1. Late applications are not accepted and the deadline cannot be extended. If a Revised NOPV dated after February 1 raises the assessment or cuts an exemption, you have 20 calendar days from the date of the notice instead.
- Forms: TC101 for a Class 2 or Class 4 property other than a condo unit, TC109 for condo units, and TC106 when the claim is about the tax class or an exemption.
- Income evidence: a property that earned rental income must include an income and expense schedule. When the actual assessment is $5.4 million or more and the rent exceeds $100,000, the figures need a certified public accountant's review.
- Fee: $175 when the assessed value on the NOPV is $2 million or more. It is added to the property tax bill rather than paid up front.
- RPIE: the Commission will not review the assessment if the property's RPIE filing for the year before was not made.
- Outcome: if the Commission offers a reduction, you generally have about 45 days to accept it.
If you filed a timely, valid application and did not get an offer, or did not accept it, you can take the assessment to New York State court, a tax certiorari case under Article 7 of the Real Property Tax Law. The petition must be started before October 25. For the 2026/27 roll, the Tax Commission puts the last day at October 23, 2026. Owners of large buildings typically work with a lawyer who specializes in these appeals.
Bills, due dates and discounts
How often you pay depends on the assessed value:
- $250,000 or less: quarterly, due July 1, October 1, January 1 and April 1, with a grace period to the 15th.
- More than $250,000: semiannually, due July 1 and January 1. All of the large buildings Leasemark tracks are in this group; a small store or a single condo unit may not be.
Paying the whole year by the July due date earns a 0.5% discount. Late payments are charged interest from the due date, compounded daily, whether or not a bill arrived.
Exemptions, abatements and PILOTs: why some towers pay nothing
An exemption lowers the taxable value before the rate applies. An abatement comes off the tax after it is worked out. Of the 2,577 large buildings Leasemark tracks, 203 are fully exempt on the 2026/27 roll and 246 more have a partial exemption. Most full exemptions fall into three groups:
- Public owners. City, state and federal buildings, such as the city's David N. Dinkins Municipal Building and the Foley Square Federal Building.
- Nonprofits using the property for their own exempt purposes, such as universities.
- Private buildings paying a PILOT. Some private towers stand on publicly owned land or have an economic development agreement, and pay a payment in lieu of taxes (PILOT) instead of a regular tax bill. The Battery Park City Authority owns the 92 acres of Battery Park City, where every privately owned building sits on a ground lease and pays the Authority ground rent and PILOTs. That is why the roll shows 200 Vesey Street and 200 Liberty Street at Brookfield Place fully exempt. At Hudson Yards, where new towers such as 50 Hudson Yards also read fully exempt, PILOTs collected in the district help repay the bonds that paid for the area's infrastructure, including the extension of the 7 subway line. Agreements through the city's Industrial Development Agency and Economic Development Corporation work the same way for some industrial and nonprofit properties.
A $0 on the roll therefore does not always mean a building pays nothing. PILOTs, abatements and other charges sit outside the roll's taxable value.
The main abatement for commercial buildings is the Industrial and Commercial Abatement Program (ICAP): up to 25 years of abatement for eligible industrial and commercial buildings that are built, modernized, expanded or otherwise improved. The preliminary application must be filed before the building permit is issued, the work must cost at least 30% of the property's taxable assessed value within four years, and large parts of Manhattan are excluded: new commercial construction between Murray, Frankfort and Dover Streets and 96th Street, and commercial renovations between 59th and 96th Streets. Finance accepts preliminary applications until March 1, 2029.
What tenants pay
The city bills the owner, but most commercial tenants pay part of the tax through the lease:
- In a net lease, the tenant pays its share of the building's taxes on top of base rent.
- In a gross or modified gross lease, the base year's taxes are inside the rent and the tenant pays its share of any increase over that year. Our guide to gross vs net leases covers how these clauses work.
Before you sign, check three things. First, a base year in which the taxable value was held down by a phase-in or a temporary abatement means future increases, as the phase-in finishes or the abatement ends, land on you; a building page's assessed and phased-in taxable values show how far it has to go. Second, whether you get your share of any refund if the landlord wins an appeal for a year you paid escalations on, and what appeal costs come off it. Third, how your proportionate share is measured: your rentable square feet over the building's, and whether that denominator can shrink.
Separately, tenants in Manhattan south of 96th Street with $250,000 or more a year in rent owe the city's Commercial Rent Tax. Our Commercial Rent Tax calculator estimates it.
What buyers should check
The bill on today's roll is a starting point, not a forecast. Before buying a commercial property, read the last few NOPVs and ask:
- How far is the taxable value below the full assessment? That gap phases in over the coming years even if nothing else changes.
- Do any exemptions or abatements end soon? ICAP benefits run on a set schedule, and a PILOT or other agreement may not carry over to a new owner on the same terms, so read the agreement itself.
- Are RPIE filings up to date? A missed filing brings penalties and blocks a Tax Commission appeal the next year.
- Are any Tax Commission or court appeals pending? The Tax Commission requires a sale, or a signed contract of sale, to be disclosed on open applications because it can change who has standing to pursue them. The contract should say who controls those cases and who gets any refunds.
Closing costs come on top: see our guides to the NYC commercial transfer tax, buying a commercial condo and Local Law 97, whose penalties can add a separate yearly charge.
How to look up a building's taxes
The Department of Finance's online property tax records show any property's NOPVs and bills by address or borough, block and lot. The whole assessment roll is also published on NYC Open Data.
For the large office, retail and industrial buildings we track, every building page has a property tax section with the market value, the assessed and phased-in taxable values, an estimated yearly tax, the tax per square foot and five years of market values, along with who owns the building. Our property tax calculator works out a bill from any market value, with the phase-in, exemptions and a tenant's share, and every building page can open it with that building's figures filled in. The NYC commercial property tax by neighborhood page ranks neighborhoods by tax per square foot: across the 2,374 taxed buildings the median is about $10.09 a square foot a year, $13.55 in Manhattan, $6.85 on Staten Island, $6.23 in Brooklyn, $6.03 in the Bronx and $5.52 in Queens, before abatements.
Owners and brokers with space in any of these buildings can list it on Leasemark free.