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Volume 9 - Opinions of Counsel SBEA No. 45

Opinions of Counsel index

Approved assessing units (homestead class) (parcels with two or more dwelling structures); Assessments, generally (parcel) (definition of) - Real Property Tax Law, §§ 102(11), 502, 1901:

Where a parcel consists of two or more structures, each of which is a one-, two- or three-family dwelling, the entire parcel may be included within the homestead class, even though the structures on the parcel may contain a total of four or more dwelling units.

We have received an inquiry regarding the classification of real property as homestead or non-homestead for purposes of the dual tax rate system authorized by Article 19 of the Real Property Tax Law. The inquiry describes two different parcels and poses the question of whether either is entitled to homestead classification. The first parcel includes four structures, three of which are single family homes and one of which is a two-family home. The second parcel includes two structures, one of which is a three-family home and the other of which is a two-family home. None of the homes is owner-occupied.

Section 1901(13)(a) of the Real Property Tax Law (RPTL) defines the “homestead class,” in pertinent part, as “all one, two or three family dwelling residential real property, including such dwellings used in part for nonresidential purposes but which are used primarily for residential purposes, and farm dwellings” and “all other residential real property consisting of more than three dwelling units held in condominium form of ownership. . . .” The “non-homestead class” is defined in subdivision (22) of section 1901 as “all real property not included in the homestead class.”

In our opinion, the phrase “one, two, or three family dwelling residential real property” as used in section 1901(13)(a) is intended to refer, not to parcels, but to structures (see, 7 Op.Counsel SBEA No. 85). The definitions of the homestead and non-homestead classes make no reference to the term “parcel,” and the criteria applicable to the establishment of parcels are not directly relevant to the classification process.

The legal definition of a “parcel” is, in pertinent part, “a separately assessed lot, parcel, piece or portion of real property . . .” (RPTL, § 102(11); 9 NYCRR 190-1.1(g)). Designating real property as a parcel serves to identify that property for purposes of assessment and taxation. The decision as to what property constitutes a parcel is generally a determination to be made by the assessor on a case-by-case basis (see, 7 Op.Counsel SBEA No. 14). The law does not specify what a parcel may or may not include, except in a few instances where separate assessment of property is specifically mandated (see, e.g., Real Property Law, § 339-y [condominium units]; RPTL, §§ 102(12)(g) [mobile homes and the land thereunder when one or the other is exempt from taxation] and 564 [a privately-owned improvement located on State owned land]). Furthermore, except in Nassau County, a parcel may not straddle municipal boundaries, including those of villages and school districts (9 NYCRR 189.1(i), 190-1.1(d)).

The assessor must also be mindful when determining the classification of parcels that each parcel must be described on the assessment roll in a manner sufficient to identify the real property (RPTL, § 502(2)). An adequate description is essential to the enforcement of a delinquent tax lien against the property (RPTL, §§ 557, 1002; 5 Op.Counsel SBEA No. 31). Zoning restrictions are not binding upon the assessor when designating parcels, but it is appropriate for the assessor to take such restrictions into consideration. If a parcel that did not conform to zoning restrictions had to be acquired by the tax district for delinquent taxes, it could be difficult for the tax district to sell the parcel to a private purchaser.

Thus, deciding what real property to include in a parcel is largely within the assessor’s discretion. Deciding whether real property should be classified in the homestead or non-homestead class for purposes of Article 19, however, is not controlled by how the assessor has chosen to exercise this discretion.

Article 19 authorizes preferential tax treatment for one-, two- or three-family homes in approved assessing units. Nothing in the text of Article 19 requires that each such home be assessed separately, and, in our judgment, it would be contrary to the policy of Article 19 to infer such a requirement. We do not believe there is a reason why a one, two or three-family home that would be included in the homestead class, if separately assessed, should be excluded from the homestead class simply because it is part of a parcel consisting of more than one residential structure. “It is a fundamental rule of statutory construction that of two constructions which might be placed upon an ambiguous statute, [a construction] which would cause objectionable consequences is to be avoided” (McKinney’s Statutes, § 141). Accordingly, section 1901 of the RPTL must be construed to require that classification be based upon the attributes of the structure rather than of the parcel.

The State Board’s Rules relating to Approved Assessing Units (9 NYCRR Subpart 190-4) expressly recognizes that the classification of real property is not dependent upon where the parcel boundaries have been drawn. Section 190-4.1(g) defines the “homestead class” as “all separately assessed real property parcels or parts thereof used as one, two or three family residential dwellings including so much of the abutting land as is reasonably necessary for residential purposes, not exceeding 10 acres . . .” (emphasis added). Thus, a parcel may include both homestead and non-homestead property, in which case each part is to be separately classified, and the assessed value of the parcel is to be allocated between the homestead and non-homestead parts (9 NYCRR §§ 190-4.2(a), (c); see also RPTL, §§ 522(6)(c), 701(5)(c); cf., 7 Op.Counsel SBEA No. 65). Conversely, if all of the parts of the parcel are individually eligible for homestead classification, the entire parcel should be so classified.

Thus, where a parcel consists of two or more structures, each of which is a one, two or three family dwelling, the entire parcel may be included within the homestead class, even though all of the structures on the parcel, taken together, may contain a total of four or more dwelling units. {*}

A concluding note is that the statute does not require that any of the dwelling units be owner-occupied. Therefore, residential real property which is otherwise eligible to be included in the homestead class should be so classified even if some or all of the premises are occupied by tenants.

March 10, 1989
Revised April 10, 1991

{*}  As would be the case with a parcel containing only one such structure, only so much of the land as is reasonably necessary for residential purposes, not exceeding 10 acres, may be included in the homestead class (9 NYCRR 190-4.1(g)).

NOTE:  The repeal of 9 NYCRR § 190-4.1(g) in 1998 effectively negated the statements in this opinion to the effect that an assessor may not include more than 10 acres of a parcel’s land in the homestead class.  The law imposes no such limit (except for certain residentially-zoned vacant land; see RPTL, § 1901(13)(a)(3)), implicitly giving the assessor the discretion to determine how much of the land abutting a residence may properly be classified in the homestead class.  In keeping with the spirit of former 9 NYCRR § 190-4.1(g), we recommend that assessors make such determinations based upon how much land they consider to be “reasonably necessary for residential purposes”.