HIEX (Home Improvement Exemption) Limits Property Tax Sticker Shock for Newly Constructed/Improved Homes

Back in March of 2020, the Nassau County Legislature passed the Reassessment Phase-In Act of 2020 (RPIA) formerly known as the Taxpayer Protection Plan. The RPIA provided a five-year phase-in for changes to a homeowner’s assessed value for the 2020/21 tax year, caused by the countywide reassessment. Without it, about half of Nassau County homeowners whose properties’ assessed values increased would have faced a significantly increased tax liability.

As initially written, the RPIA did not cover newly constructed homes, exposing buyers and owners in many instances to profound “sticker shock” when confronting their tax bills. That’s all changed.

New exemption on the block: HIEX

A new exemption has been instituted for some homeowners for the 2021/22 tax year: the Home Improvement Exemption (HIEX).  The exemption applies to any homeowner whose property increases in value up to $750,000 (previously capped at $80,000) as a direct result of improvements/construction.

The exemption will be phased in over an 8-year period (with the 9th year having no exemption), and does not require the homeowner to file an application. But all improvements need to be completed by January 2023. Take note that the HIEX only applies to construction/improvements made to a single structure (adding another structure to the property or yard improvements will not qualify the homeowner for the HIEX).

How will Nassau County apply the HIEX?

The HIEX will be automatically applied to the property based on permits filed with the County and County verification of the completion of the work. All homeowners filing permits are advised to make the Department of Assessment aware of these permits to make sure that the exemption will be implemented.

Below is a chart showing how the HIEX phase-in will be implemented, assuming an increase in market value of $600,000 due to new construction/improvements.

Tax Year Market Value Increase Applicable Percentage Exemption Amount
2021/22 $600,000 – 600 AV 100% 600
2022/23 $600,000 – 600 AV 87.5% 525
2023/24 $600,000 – 600 AV 75% 450
2024/25 $600,000 – 600 AV 62.5% 375
2025/26 $600,000 – 600 AV 50% 300
2026/27 $600,000 – 600 AV 37.5% 225
2027/28 $600,000 – 600 AV 25% 150
2028/29 $600,000 – 600 AV 12.5% 75
2029/30 $600,000 – 600 AV 0% 0      (No exemption)

(Note that the above example assumes that there is no drastic change in the level of assessment.  Otherwise, the amounts may change.)

Maidenbaum’s Take on the HIEX

The HIEX is a beneficial exemption that Nassau County homeowners can use to limit the tax bite on their home improvement projects. This will encourage homeowners to make necessary improvements without fear of property tax “sticker shock.” Any meaningful step to lower property impacts on Nassau County homeowners is welcome news in our book. High and continuously rising property taxes make home ownership unaffordable for many, and discourage new residential construction projects that might alleviate Nassau County’s current housing shortage.

If you want to take advantage of the HIEX exemption, you may want to consider advancing your construction/improvement projects so that they conclude in time. The HIEX expires with the 2024/25 roll, which comes out January 2, 2023.  As such, all work must be completed and filed for by that date.  Our advice to you is to strive to have all new construction/renovations done by Summer 2022, so all the proper paperwork can be filed timely.  This task may be difficult, given current disruptions in the global supply chain that have interfered with the delivery of necessary building materials. So, it’s best to start planning now to secure financing and contractors/suppliers so that the job is completed in a timely manner.

Again – this is important – make every effort to get the Department of Assessment to confirm that they have everything they need so that the new valuations will be reflected no later than the 2024/25 assessment roll. You can reach their office by calling (516) 571-1500 or via the website at: http://www.nassaucountyny.gov/agencies/assessor/

As always, Maidenbaum is here to answer any questions you might have about your Nassau County property tax bills and about how we might be able to help you reduce them. We believe that filing a property tax grievance in Nassau County is a prudent first step to take in the process of reducing these bills, and we hope that you’ll choose Maidenbaum to represent you for the 2023/24 tax year.