When Caren Chesler, a freelance writer from New Jersey, moved to Manhattan less than four years ago, she sunk her life savings into converting a battered boarding house into a four family building, helping to rejuvenate her Harlem neighborhood.

But now Ms. Chesler may be forced to pay $18,000 in property taxes for raising the value of her home – a 1,000% increase that, she said, would surely force her into foreclosure.

Ms. Chesler is one of about 4,000 property owners throughout the city who have seen huge spikes in their property taxes because of a law that levies high taxes on properties reassessed after major renovations. Critics say the law penalizes entrepreneurs who renovate dilapidated buildings.

At a hearing held yesterday by the state Assembly’s Committee on Real Property Taxation, members highlighted the plight of several individuals who have been hard-hit by property taxes this year. An especially large number of property owners renovated their homes because recent low interest rates made loans more attractive, the assistant commissioner of the city’s Department of Finance, Sam Miller, said yesterday.

The tax code governing the almost 1 million properties in the city is labyrinthine. At issue is a 1981 law that allows unlimited increases in the assessed value of a property if the building becomes more valuable because of renovations. In contrast, if a property’s value rises because market demand drives the price up, the increase in its assessment is capped at 6%.

For homeowners who convert buildings into four-family homes, 45% of the value of the renovation can be added to the assessment value, increasing property taxes the following year exponentially.

This combination, in the words of property assessor David Moog, created “the perfect storm” for certain property owners, including Ms. Chesler, who received an incentive from her bank to convert her property into a four-unit building.

While it remained unclear why property owners did not face such problems in years past, some speculated that the Department of Finance had not been enforcing the law until a scandal three years ago forced an overhaul of the department.

City Council and Assembly members agreed that property owners were being taxed unfairly, but finding a long-term solution may prove to be difficult.

Mr. Moog, who is also the president of District Council 37, which is part of the AFL-CIO, yesterday urged legislators to find a temporary solution for the homeowners before making changes to tax law that would have unintended consequences.

One bill, proposed by the chairman of the Assembly committee, Brian McLaughlin, would cap all assessment values at the same level.

Such solutions will have to come before the end of the fiscal year on June 30 in order to affect property owners.

For Ms. Chesler, buying her home and renovating it was “a nightmare” that induced her to smoke two packs of cigarettes a day as she dealt with unscrupulous contractors and countless trips to the hardware store.

Measured in cigarettes, the stress of an exorbitant tax burden is taking its toll.

“I actually quit, but I’m thinking of starting again,” she said.