Split-Rate Property Tax

The split-rate property tax takes the value of a piece of property and splits it into two parts: the value of the land and the value of the buildings/improvements on the land. It reduces the tax on the buildings and improvements and increases the tax on the land. The split-rate property tax, also known as the land value or two-tiered real estate tax, is used to encourage historic renovation, building rehabilitation, and development of vacant land in existing neighborhoods.

Under a split-rate tax system, land is taxed at a higher level than buildings in areas where the community wishes to encourage investment and land development. The lower rate for buildings provides an incentive for owners to maintain and improve their properties. The higher land rate discourages real estate speculation, which often leaves potentially productive urban space vacant; the disincentive for speculation in turn encourages infill development. By helping to prolong the life of existing buildings, the split-rate system has the potential to promote more efficient use of land and public infrastructure to direct growth toward downtown and inner city areas.

Use of a split-rate property tax in New York State may require a special act of the New York State Legislature.