New Jersey Tax Appeals
I handle Property Tax Appeals on behalf of Real Estate owners
of both residential and commercial properties.
FREQUENTLY ASKED QUESTIONS NJ PROPERTY TAX ASSESMENTS
AND APPEALS
- Should I appeal
my property tax assessment?
- What
if my neighbor’s assessment is much lower
than mine?
- How much can I save, and why is “ten years
out” important?
- What is the last day to file an appeal?
- Will my taxes
increase because of the revaluation?
- Is
there a fee for an initial consultation?
- Where
do I file my appeal?
- Do I have to prove my
house is over-assessed by 15%?
1. SHOULD I APPEAL MY TAX ASSESSMENT?
In order to decide if you should file an appeal:
- Ask: What
was the value of your home as of October 1, 2007, and is
this amount less than the amount at which the town has
assessed your property?
- If the value of your home is LESS THAN the assessed value,
you should consider an appeal. “VALUE” means
- the sales price of your home after being listed on the
open market, and purchased by a buyer in an arms length
transaction.
- If
the value of your home is THE SAME AS the assessed value,
then your home is fairly assessed. There is nor reason
to appeal
- If
the value of your home is MORE than the assessed value,
then you have been under assessed, and an appeal is not
advised.
[ back to top ]
2. WHAT IF MY NEIGHBOR’S ASSESSMENT IS MUCH
LOWER THAN MINE?
Even if your next door neighbor’s assessment is “low” or
lower than your assessment, this is not a valid basis for
an appeal. An appeal is recommended when the property
is assessed in excess of its true value, as stated above. To
paraphrase a Tax Court Judge: a homeowner is entitled to
a fair assessment, not necessarily an assessment that is more fair
than that of his neighbor.
[ back to top ]
3. HOW MUCH CAN I SAVE, AND WHY IS “TEN YEARS
OUT” IMPORTANT?
TEN
YEARS OUT - why we must look at property taxes using a long
term lens. As towns and counties increase their budgets,
our taxes increase at a geometric rate. Therefore,
a homeowner should consider potential savings as a result
of a successful appeal over TEN years or longer, and factor
in the likely budget (tax) increases. Using the example
below, an assessment which is only 5% above true value can
create huge overpayments in property taxes over the long
term.
EXAMPLE
-
New
Assessment $830,000.00
(for tax year 2007)
(minus)
True value $789,000.00
(as of 10/1/06)
Equals the amount the home is “over assessed” $
41,000.00 (approx. 5%)
Assume
new tax rate is .0120.
Yearly
taxes for 2007 will be $9,960.00 (.012 x $830,000.00 = $9,960.00)
Assume,
like most of New Jersey, county and Municipal budgets are
rising 6% each year.
IF THIS HYPOTHETICAL HOMEOWNER DOES NOT FILE AN APPEAL,
THE HOMEOWNERS WILL PAY AN EXTRA $6,484.95 OVER
10 YEARS, UNTIL THE TOWN UNDERGOES ANOTHER REASSESSMENT.
First year
overpayment (5% of yearly taxes) - 5% x $9,960.00 =
$492.00
Second
year overpayment (town raises taxes by 6%) =
$521.52
Yearly
taxes are now $10,557.60
Total
of 1st and second year overpayment =
$1,013.52
Third
year (town raises taxes by 6%) =
$552.81
Yearly
taxes are now $11,191.06 Total
1st, 2nd, and 3rd year overpayment =
$1,566.33
And
so on, until
After the tenth year - the total amount
the homeowner has OVERPAYED is $6,484.95
As this example shows, the effect of a small over-assessment
can create much larger losses over time.
In a second example with a more expensive home ($1,425,000.00),
where the owner is paying $18,000.00 per year in property
taxes, the effect of a 5% over-assessment creates a total overpayment over
ten years of $11,862.72!
[ back to top ]
4. WHAT IS THE LAST DAY TO FILE AN APPEAL?
The
general deadline for filing appeals is APRIL 1, 2008**. This
deadline applies to appeals with the County Tax Board and
direct appeals with the Tax Court. The appeal must
be RECEIVED (not mailed) on or before this date.
An
appeal can also be filed within 45 days from the date the
township MAILS the assessment. Generally
towns mail the assessment on or before February 15th, so the April 1 deadline
remains the applicable date. However, if the assessor is late in mailing
the assessment, you may have additional time. Again, please contact my
office or another attorney immediately if you have questions regarding a filing
deadline.
** Note - these are generally applicable deadlines,
however exceptions may apply to
your case. Please contact my office or another attorney
immediately if you have questions regarding a filing deadline. Also
note, there are special deadlines for added or omitted
assessments.
[ back to top ]
5. WILL MY TAXES INCREASE BECAUSE OF THE REVALUATION?
That
depends upon whether the increase from your old assessment
to your new assessment is more than the average increase
in assessments in town. This is one of the rare instances
where your old assessment is relevant.
Example: If
the average home in your town was assessed
at $400,000.00, and after the revaluation, the average home
is now assessed at $800,000.00, then the average assessment
increased by a factor of 2. If in this typical town,
your home was assessed at $405,000.00 before the revaluation,
and it is now assessed at $845,000.00, then your taxes will
INCREASE, because your home’s assessment has increased
by a factor of more than 2x. (Higher than the average increase). On
the other hand, if your old assessment was $405,000.00 and
the new assessment is $795,000.00 then your taxes will likely
decrease. A tax neutral revaluation for a home that
used to be assessed at $405,000.00 would be $810,000.00 (old
assessment multiplied by 2 = new assessment). In this
instance the homeowner will pay exactly the same taxes after
the revaluation, as long as the town does not increase its
budget. (chances of this are slim to none in the Garden State)
As
stated above, an increase or decrease in the municipal budget
will also affect your yearly taxes. Any increase (or
a rare decrease) in the municipal budget will of course affect
the total amount you pay, but this is UNRELATED to the revaluation. For
example, if your assessment increases at the same rate as
the average home in town, but if the municipal budget increases
by 6% your taxes will rise by 6% due to the increased municipal
budget, just as they would have grown in the absence of the
revaluation.
DO NOT confuse “should I appeal?” with “will
my taxes increase?” - In the second example above,
even though the home’s assessment increased less than
the average, if the home is worth only $750,000.00, not $795,000.00
(thus the home is “over-assessed”) then the owner
should consider an appeal, and if the appeal is successful,
that homeowner would pay even lower taxes.
[ back to top ]
6. IS THERE A FEE FOR AN INITIAL CONSULTATION?
I
do not charge clients for an initial consultation. Usually
I can offer an opinion as to whether an appeal is advisable. Please
do not hesitate to contact me with questions.
Please
understand, I only want to accept clients whose property
is unfairly assessed. Frankly, if I were to recommend
a client file an appeal in every case, even in cases where
a home is fairly assessed, I would create a trail of unhappy
clients. By accepting only those clients who should
appeal, I build a long term relationship with the community,
and create happy clients who recommend my services to others.
[ back to top ]
7. WHERE DO I FILE MY APPEAL?
There are two possible venues for an appeal.
- The County Board
of Tax Appeals. In this venue a Tax Board Commissioner
hears the evidence and decides the case. This venue is a bit less formal
than the Tax Court. If you are successful, the commissioner will decide
the new assessment. If you are unsuccessful, you
have the right to a further appeal with the Tax Court of
New Jersey.
- The Tax Court of New Jersey. In order to file an appeal
in the Tax Court, and have a Tax Court Judge decide your
appeal, your home must be assessed at $750,000.00 or more
(this is called a “direct appeal”) - OR - if
you previously appealed to the County Board, and are unhappy
with the Commissioner’s decision, you can file a
further appeal in the Tax Court.
[ back to top ]
8. DO
I HAVE TO PROVE MY HOUSE IS OVER ASSESSED BY 15%?
In a revaluation year, the town’s legal advantage,
which requires a homeowner to prove an over-assessment by
a particular percentage (as much as 15%) does not apply.
The above information is not intended
as a substitute for legal advice.
Most attorneys
who are knowledgeable in this area are happy to spend a
few minutes answering questions.
[ back to top ]
|
