Tax Opinion Letters and 25-Year Tax Projections: What Do the Condo Book and the Lender Need?

Updated September 17, 2026. The City Council has not yet set the 2026-27 property tax rates, so the 2026-27 bills are charged at the 2025-26 rates quoted below.

Developers and their lenders request three documents from MGNY more than any other. The first is the tax opinion letter for a condominium offering plan. The second is the property tax projection a construction lender requires before closing on a rental project, and the third is the projection letter a financial institution requests to analyze a building’s cash flow over the next 25 years. Each must answer the same two questions about New York City property tax: the amount the building will pay each year, and the reason that amount changes when the building does not.

What does the condo book have to say about taxes?

The Attorney General’s regulations set the minimum disclosure (13 NYCRR 20.3). An offering plan must state the projected monthly and annual real estate taxes for the first year of operation. In addition, a footnote to Schedule A must state the projected assessed valuation after completion of construction, the approximate date of completion and reassessment, and the tax rate used. Once the condominium is apportioned, each unit is taxed as a separate tax lot, so a unit owner is not liable for another unit’s taxes.

A plan may show the lower tax alone only after the certificate of eligibility for an expected benefit is issued. Until then, Schedule A must contain two tax columns, one with the benefit and one without, and the special risks must advise purchasers that there is no guarantee of obtaining tax benefits. The Attorney General’s memorandum of January 24, 2020 added a requirement for a first-year projection based on a pre-completion assessment: the model warning that taxes may increase materially when the building is reassessed after completion. A tax opinion letter that omits any of these items receives comments from the Department of Law.

Why does the tax move when the building does not?

The tax changes because the assessed value that is billed is not always the value the assessor set. The Department of Finance phases in a change in the assessed value of Class 2 buildings with more than ten units and all Class 4 properties over five years, at 20 percent of the change each year. As a result, the same property has an actual assessed value and a transitional assessed value, and the law requires the bill to use the lower figure. One caveat: a physical change is not phased in, and the full value of a completed or enlarged building is applied at once.

For a new building, this sequence covers the first six tax years. The completed building is added to the assessment roll at full value, the later market-driven changes are phased in over five years, and the transitional value lags the actual value until the phase-in is complete. A projection that shows only one of the two values will be incorrect in most of those years, and the lender will see it on the first actual tax bill.

Land and building: the split that decides an exempt project’s bill

The second reason is the division of the assessment between land and building. Exemptions including 485-x and 421-a are measured from a baseline: the owner continues to pay tax on the assessed valuation of the land and any improvements in effect in the tax year before construction began. The exemption applies to the value added by the construction, at the percentage the statute sets for each year of the term. However, the ICAP abatement applies differently: it abates the post-completion tax on the building, and the post-completion tax on the land is not abated.

Consequently, a project with a benefit has two tax components that change for different reasons. The taxable base and the land follow the assessment roll and the statute’s baseline rule, and the building follows the benefit schedule, the phase-out and the renewal filings that keep the benefit in effect. A lender’s cash flow analysis must project both for each year, or the tax in the phase-out years will not be anticipated.

What does a 25-year lender projection contain?

For every tax year of the term, each signed projection for a lender or an institution states the following:

1. Market value: The assumption and the trending method are stated.
2. Assessed value: The 45 percent ratio for Classes 2 and 4 is used.
3. Transitional assessed value: The phase-in is shown for each year.
4. Benefit schedule: The phase-out is included.
5. Renewal obligations: The Certificate of Continuing Use (CCU) for ICAP and the annual filings for other programs are listed.
6. Tax rate: The current figure is held or trended. The 2026-27 bills are charged at the 2025-26 rates until the City Council sets new ones: 12.439 percent for Class 2 and 10.848 percent for Class 4.
7. Resulting tax: The amount is shown with the benefit and without it.

The lender underwrites the column without the benefit if the benefit is denied, lost or allowed to lapse, and the offering plan must show that column until the certificate is issued.

Our projection tool covers 35 years, the full term of a 485-x benefit and the phase-out that follows it, and most lenders request 25.

How does MGNY prepare one?

We first agree on the scope: the document, its recipient, the term, and the benefits assumed and excluded. We then work from the records rather than from assumptions, beginning with the property’s address and lot, the latest Notice of Property Value and tax bills, and the exemption or abatement certificates on file. They also include the construction budget and schedule, the unit schedule for a condominium, and the lender’s term sheet.

The signed letter states its assumptions on its face, with the tax rate and the assessment ratio applied, and presents the tax with the benefit and without it side by side. Because every number in it can be traced to a public record, most of our clients tell us afterward that it was the simplest document in the closing binder to defend.

For a condominium offering plan, a construction loan closing on a rental project, or a lender’s request for a projection over the life of the loan, call (212) 343-1111. We are ready to take on complicated tax projections, with or without exemptions and abatements.

Frequently asked questions

Does a condominium offering plan need a property tax projection?

A condominium offering plan must include one. The Attorney General’s regulations require Schedule A to state the projected real estate taxes for the first year of operation, monthly and annual, and a footnote to give the projected assessed valuation after completion, the date of completion and reassessment, and the tax rate used. Two tax columns are required until an applied-for benefit is certified.

What is the difference between actual and transitional assessed value?

The actual assessed value is the value the assessor sets for the year. For Class 2 buildings with more than ten units and Class 4 properties, the transitional assessed value is the phased figure: a change in the actual value is phased in over five years at 20 percent a year. The tax bill uses the lower value, and physical improvements are applied in full and are not phased in.

Is the land taxed during a 421-a or 485-x exemption?

The land remains taxable, in the manner the statute sets. During the exemption the owner pays tax on the assessed valuation of the land and any improvements in effect in the tax year before construction began, and the exemption applies to the value added by the construction. For that reason an exempt building’s tax bill is never zero.

How many years can a tax projection cover?

A projection covers as many years as the loan or the offering plan requires. Lenders typically request 25 years, and MGNY’s projection tool covers 35, enough for the full term and phase-out of a 485-x benefit.

Will MGNY sign the letter a lender requires?

MGNY signs the letter a lender requires. It states its assumptions and sources and shows the tax with the benefit and without it. To agree on the scope, call (212) 343-1111.

What does it cost to ask MGNY?

Nothing. A real person answers at (212) 343-1111, right away, and the consultation is free. You engage us only if you want the work handled for you. MGNY has worked NYC property tax since 2008, with nearly $300M in tax savings secured for owners, 900+ developments with tax abatements secured and $30B+ represented in appeals.

Sources, all read September 17, 2026: the NYC Department of Finance pages Determining your transitional assessed value, Determining your assessed value and Property tax rates, and its Class 2 Property Tax Guide; the Attorney General’s regulations for condominium offering plans, 13 NYCRR 20.3; the Department of Law’s Real Estate Finance Bureau memorandum of January 24, 2020, Disclosure Requirements Regarding Projected Real Estate Taxes After the First Year of Operation; and RPTL 485-x and RPTL 421-a on the New York State Senate site. MGNY Consulting is a private consulting firm and is not affiliated with the NYC Department of Finance or the New York State Department of Law.

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