Homes are taxed as a function of their market value across much of the nation, but New York City’s process is more complicated and problematic than most.

The 40-year-old state law that created the system was built to favor single-family homeowners over renters or commercial buildings. And it often hurts the owners of low- and moderate-income condos and co-ops, whose properties are compared to high-rise, luxury buildings.

Hundreds of residents last year implored a special city commission to change the law, as spiraling home prices magnified inequities, forcing some longtime city dwellers into debt, and others to consider leaving. Eric Adams, the new mayor, has vowed to prioritize the issue.

Bloomberg Tax journalists obtained homeowners’ appeals through a public records request, and followed up with on-the-ground interviews. The New York City Department of Finance declined to comment on the individual taxpayers who submitted statements. Here are some of their stories:

The taxes on Kathryn Donnelly’s 1939 Cape Cod-style house have tripled as she’s watched similar homes in her Queens neighborhood razed and replaced by ‘McMansions.’

“They just don’t have a lot of comps for houses like mine,” says the single mother of five. “So they end up being compared against other houses that are sold for $1.5 million, $2 million, and it drives up the price of people’s houses like mine.”

Donnelly hasn’t upgraded the house she bought in 2001 with her then-husband, but yearly taxes have grown from less than $4,000 to nearly $15,000. “A lot of people seem to have much more money than I do,” says Donnelly, an attorney with the New York state Unified Court System. “I still have the same kitchen, which is 40 years old.”

During divorce proceedings in 2016, a court-appointed appraiser valued the home at $975,000. But in 2019 the city assessed it at $1.41 million — a $435,000 increase. Donnelly used the appraisal to appeal, and won. But that hasn’t stopped her tax bill from climbing. Her home’s market value rose to $1.48 million last year — and it’s expected to go up even further. She could commission another third-party audit to fight the taxes, but notes, “I don’t have money to constantly get appraisals.”

Donnelly’s tax bill comes out of a government salary that helps pay for one child’s college and covers round-the-clock nursing care for an adult son.

“I make a decent living but not to the point where I don’t have to worry about money,” she says. “I just find that living here is getting more and more difficult. I am going to have to work until I die.”

Since 1890, Erik Frankel’s family has supplied boots and clothes to longshoremen working the city’s piers. In the 1950s, the Frankels sold their original clothing store to make way for the Brooklyn Queens Expressway, and moved their shop across the street in their Sunset Park neighborhood.

But that move included a hidden price tag that’s come due for the fourth-generation small business owner: The upstairs apartment Frankel shares with his son is a few feet smaller than his downstairs store. And the city seized upon that difference to classify the owner-occupied building as “commercial.” That means there’s no cap on how high Frankel’s property taxes can go, even in an economically depressed block of Brooklyn, which houses two porn shops and two churches.

“They didn’t want to hear what I had to say, or they weren’t there to help. It just seems like, ‘Just pay. You gotta pay,’” he says. “I thought they wanted small, family-owned businesses to stay in Brooklyn, but apparently they don’t.”

Frankel got a loan to cover his tax bill — and ran for city council. He lost, but is eyeing a bid for Congress.

“I love my community,” says Frankel. “We’ve been here 130 years. We want to stay here, but our tax burden is too great. I don’t want to move, but if they keep raising our taxes, we’re gonna have no choice.”

Two weeks after Marlena and Jesse Gage settled on their beachfront dream home, the tax bill arrived: $28,000.

“There was no warning,” says Jesse, a lawyer for NTT America, the U.S. subsidiary of the Japanese telecom company. “Financially we weren’t prepared for this.”

The couple, who have an 11-year-old son, sold their Crown Heights brownstone townhouse in northern Brooklyn for $2.3 million to buy a semi-attached home for about the same price in a gated community a few miles from Coney Island.

At the January 2018 closing, they were told taxes would be about $12,000 a year — nearly twice what they paid in Crown Heights. “It was going to be a stretch financially for us, but we love the house,” says Jesse. “We love being by the beach. So, we decided to do our best to skimp and cut back on expenses so we can afford the place.”

The $28,000 tax bill was a shock, but legal. Unlike single-, two-, or three-family homes that were built before 1981, newer homes — at least initially — are not covered by the strict limit on year-to-year tax increases that protects older homes across the city. It’s a real estate quirk that even seasoned experts aren’t necessarily aware of, and why those who renovate desperately try to avoid being labeled “new construction” by assessors.

“No one advised us of this through the whole process,” says Marlena, chief operating officer of a business management company based in Los Angeles. “Someone could have advised us, and you could calculate what the taxes would have been.”

The city sends out bills for property taxes once a year, in mid-January. So new buyers can wait months before learning how much they owe. As the Gages learned, one year’s assessment can have little semblance to the next.

The $28,000 assessment was also just the start of their troubles. It meant their association dues (tied to a home’s perceived worth) shot up from $7,000 to $18,000 in a single year. The Gages now owed $46,000 a year in taxes and dues.

“We would not have bought the house had we known the financial implications and obligations,” says Jesse.

The couple appealed their tax assessment, and joined a class-action against the city led by Martha Stark, former finance commissioner and director of policy for the Tax Equity Now New York coalition. Neither worked.

“I got nowhere with any of them,” says Jesse. “I was basically told, ‘Pay up.’”

Today the Gages are trying to sell the dream home they could afford to buy, but can’t afford to keep.

Kathleen Cox was at risk of losing the three-bedroom home she’s owned since 1998.

“This is it,” says Cox, a bus driver for the Metropolitan Transit Authority, who spent most of her adulthood self-employed and doesn’t have 401(k) retirement savings. “This was my thing. I have nothing.”

For more than a decade after moving into her home, Cox paid the monthly mortgage, property taxes and insurance without fail while raising sons Andre and Christopher as a single parent.

But in 2011 she received notice from her former mortgage servicer that she hadn’t paid taxes for five years. “I swore it was just like an error — and that they would say it was fixed,” says Cox. “I kept saying, ‘How did this happen? How could this happen?’”

For the Jamaican immigrant, it was a multitude of errors.

When Cox bought the home her driveway was on a separate lot from her house, according to her deed. She never had an issue until she applied for a loan modification to launch a tailoring business. Unbeknownst to her, property tax payments on her driveway stopped.

Then, the city mistakenly classified the driveway as a “commercial garage” — with a much higher tax burden — after spotting a tin roof covering. She didn’t know about the classification change. Tax bills on the driveway were sent to a previous address where Cox had lived, and she never received — or paid — them. Later attempts to pay off an initial $11,000 arrear with a loan got misapplied to her mortgage, rather than her taxes.

Cox then fell further behind as late fees and interest accumulated. The missteps led to a nearly decade-long lawsuit with Cox owing more than $412,000 as of August 2021.

“Are you trying to wait for me to die?” she asks. “This doesn’t make any sense. You have a person, who is trying to talk to you, begging, pleading: Can we settle this? And it’s not going anywhere. It’s like talking to a wall.”

“I’m just hoping for a miracle,” Cox said, wiping away tears during an interview at her home days before Thanksgiving. “I just want it to go away.”

In early January, Cox entered into a confidential settlement with her mortgage servicer in a legal battle that started in 2014. The court case is now in the process of being discontinued as part of her settlement.

Elena Imperato has tried to get an explanation of why taxes on the Staten Island co-op her grandfather built, and which she now manages, continue to escalate. She’s tried for nearly 20 years.

“They’ve increased so much over the past several years that you can’t keep track of it anymore,” she says.

The 72-unit, all-electric family-oriented building — home to seniors, teachers, firemen, doctors and accountants — has a first-come, first-served parking lot in the back for tenants, and that’s about the extent of its amenities. But taxes have gone from $81,000 a year in 2006 to $327,000 a year now, excluding any co-op abatements or special senior or disabled exemptions.

“No one can answer,” says Imperato, who has repeatedly gone to the local finance department. “No one can answer our questions.”

Among her questions: Why do one-bedroom units in her building pay more taxes than some single-family ranch homes in the area? Why is her 72-unit co-op compared to co-ops elsewhere on Staten Island with 140 units, or 300 units, or 400 units? And what’s the logic in comparing it with a 58-unit apartment building a few blocks away? “I don’t know, I don’t know how they come up with that,” says Imperato. “It’s so diverse.”

Co-ops with more than 10 units are usually compared with nearby rentals. But Imperato’s building on Staten Island’s North Shore is surrounded by single-, two-, or three-family homes. There are probably only a handful of other closely resembling elevator buildings anywhere in the borough.

“I just think it’s so unfair,” says Imperato. “And it’s coming out of people’s pockets. It’s not something you could just bypass. It’s something you have to pay regardless because everyone has to pay their real estate taxes.”

Irwin Arieff was paying almost $300-a-year as his cut for hiring a real estate attorney to appeal assessments on his six-unit co-op. But with the lawyer getting nowhere, Arieff, a retired journalist, decided to strike out on his own, even after attending a Department of Finance taxpayer seminar “not presented in a way that normal people could understand.”

Arieff determined that his building didn’t meet any of the statutory requirements for tax relief. “These are all things that are defined by them in ways that never hit the reality of our building,” he says. “None of them. They had precalculated all these numbers but in a way that didn’t relate at all to the reality of our building.”

He’s yet to get a clear explanation of how the city determines “rent comparables” for co-op assessments. “You’re comparing us to a neighborhood with really fancy buildings, where people have swimming pools and libraries and parking lots and roof gardens and whatever, and we don’t have any of those things.”

So Arieff went to work compiling his own market analysis to appeal to the finance department and the Tax Commission. “I literally used rents from StreetEasy,” he says.

And it worked: The city removed one full year of a property tax increase, took off an increase from a prior tax year, and gave Arieff a tax reduction. “I think out of the four appeals maybe we won some money off in three out of the four,” says Arieff. “I was doing much better than the lawyer.”

But Arieff still can’t explain how or why it worked. He theorizes city officials felt sorry for him as he argued his case.

In 2018, Teresa McCarthy turned 69, and applied for the city’s senior citizen property tax exemption. She was turned down, even after officials at a taxpayer education event assured her she was eligible.

“Oh, guaranteed you’re getting this,” McCarthy was told. “If you have any issues email me and put a red flag next to what you send so I will look into it.”

“I came home a couple of days later, I had no response,” McCarthy says. “So, I sent her an email with a red flag. She never responded. Ever.”

McCarthy was later told she earned too much money — that her income was above the eligibility threshold of $58,399 — which was inaccurate, according to McCarthy’s own accounting.

“I was just angry,” says McCarthy. “Here I am a single widow trying to make it on my own and they are giving me full taxation.”

She pressed the city to explain how they calculated her income.

A Bloomberg Tax review of email correspondence shows how the Department of Finance miscalculated McCarthy’s total combined income to be $59,220, which included the taxable amount of Social Security.

In March 2020, the finance department conceded that McCarthy did qualify for the exemption. The city applied a retroactive credit for two years and cut her taxes by half. She now pays roughly $2,600 a year.

“They backed off,” she says. “Because I wasn’t backing off at that point.”

Bloomberg Tax used a New York Freedom of Information Law request to obtain written testimony submitted by residents last spring and summer to the New York City Advisory Commission on Property Tax Reform. Those more than 200 statements and appeals for change, and dozens of follow-up interviews, helped to create this project.