About

Commercial real estate taxation differs fundamentally from residential models, often relying on the Income Approach to value. Assessors capitalize the Net Operating Income (NOI) to derive a market value, which then serves as the basis for taxation. For investors, high tax liabilities in major hubs like New York or London can significantly erode the effective Capitalization Rate.

This tool empowers investors to reverse-engineer the likely tax assessment based on the property's income potential. By inputting NOI and a market Cap Rate, the tool estimates the Assessable Value and applies jurisdiction-specific commercial rates. It includes benchmarks for global financial centers where commercial multipliers typically exceed residential rates by a wide margin.

Formulas

When using the Income Approach, the Assessed Value is derived from the property's ability to generate revenue:

MarketValue = NOICapRate

The Tax Calculation then applies the jurisdiction's specific ratio and rate:

Tax = (MarketValue × Ratio) × Rate

For rental-value systems (like London/Singapore), the tax is applied directly to the Annual Rental Value (approx NOI).

Reference Data

Jurisdiction	Tax Type	Approx Rate / Multiplier	Basis
New York City (Class 4)	Property Tax	10.6% (Effective)	45% of Market Val
London (UK)	Business Rates	51.2p (~51%)	Rateable Value (Rental)
Singapore	Property Tax	10%	Annual Value (Rental)
Hong Kong	Rates & Rent	5%	Rateable Value
Chicago (Cook Co)	Property Tax	6.5% - 8.0%	25% of Market Val
Toronto (Canada)	Commercial Tax	2.3% - 2.8%	CVA (Current Val)
Sydney (Australia)	Land Tax	1.6% + Base	Land Value Only

Frequently Asked Questions

The Income Approach values a property based on the income it generates. Assessors divide the Net Operating Income (NOI) by a Capitalization Rate (Cap Rate) to determine what a typical investor would pay for that income stream.

Commercial properties are income-generating assets. Municipalities often tax them at higher rates or assessment ratios to subsidize services for residential areas, operating under the assumption that businesses can pass these costs to tenants or customers.

A lower Cap Rate implies a higher property value for the same income (Value = Income / Rate). Therefore, in a low Cap Rate environment (expensive market), your assessed value and subsequent tax bill will be higher for the same amount of rental income.

Net Operating Income (NOI) is the total revenue from the property minus all necessary operating expenses. It excludes debt service (mortgage payments) and income taxes. Assessors use stabilized NOI, which assumes standard vacancy rates.