Property Taxes & Appeals
It is no secret that New Jersey citizens pay the highest property taxes in the nation. Property taxes are assessed by local governments and used to pay for local programs and services. Therefore, things that may affect a homeowner’s property taxes include: the local (municipal and county) programs and services, including public schools, local revenues available through other sources, the market value of the homeowner’s property, and the total value of all properties in the municipality. All taxable property is assessed a value by the town tax assessor. “The assessor shall…after examination and inquiry, determine the full and fair value of each parcel situated in the taxing district at such price as, in his judgment, it would sell for at a fair and bona fide sale by private contract on October 1 next preceding the date on which the assessor shall complete his assessments…” N.J.S.A §54:4-23.
Therefore market value should correlate closely with the assessed value. However, it is too labor intensive to have tax assessors reassess every individual property each year. Indeed, New Jersey has 565 municipalities. Nearly every one has its own local tax assessor.
Therefore, generally the tax for each property is simply adjusted slightly each year to meet budget requirements. In that case, the municipality may only do town-wide reassessments once every several years depending on changes to and needs of the municipality, policies, and property sales. This is done to insure “equalization” – insuring that each property is carrying its fair share of the tax burden. For instance, if assessors see that properties are being sold for values that significantly differ from assessed values, then that might be an indicator that a reassessment needs to be done to ensure equalization. This is sometimes referred to as an assessment-sales ratio comparison.
Many people, particularly in New Jersey, believe that their property taxes may be incorrect. In order to determine this, the homeowner first needs to have a basis for what the accurate market price would be. If the home was recently sold – that may be a good indicator. Also, the recent sales prices of other similar properties in the municipality may also be good indicators. (In any case, if a homeowner is looking to challenge her tax assessment, an expert appraisal will most likely be required.)
Then, the homeowner needs to review the assessed value of the property and calculate the “equalized assessment.” Every municipality’s assessment “equalization” ratio is listed on the New Jersey Department of the Treasury, Division of Taxation website. http://www.state.nj.us/treasury/taxation/lpt/chapter123.shtml A homeowner can calculate the correct equalized assessment by multiplying the Chapter 123 Ratio by the market value.
For instance, Roselle Park Boro’s 2014 average ratio is: 27.97%. A house selling for $235,000 therefore should receive an equalized assessment of approximately $65,729.50. If the town actually assessed that property as $71,200.00, the value that is being assessed, and thus taxed upon, is actually $254,558.45. (71,200 divided by 0.2797 = $254,558.45.)
However, as long as that assessed value ($254,558.45) is within the 15 percent range of the “true” value ($235,000), it is deemed close enough and will likely stand. In other words, as long as the “true” value is between than $216,374.68 (85% of the assessed value) ,the assessment will stand and the tax will not be decreased.
Homeowners who disagree with their assessments have the right to appeal to their local (county) tax board on or before April 1st of the year or 45 days from the date of mailing of the Assessment Notification (whichever is later) or by May 1st if there is a municipal-wide revaluation/reassessment. (The due date for added or omitted assessments is December 1 and Monmouth County residents’ due date is January 15th.) An appeal must be filed within the required time periods. http://www.state.nj.us/treasury/taxation/pdf/other_forms/lpt/petappl.pdf An appealing homeowner will likely need an expert – generally a real estate appraiser – to support her appeal. Then the homeowner must present all her evidence in support of the appeal and, if not settled or resolved between the homeowner, the assessor, and municipal attorney, the homeowner must present her case at a hearing.
McLaughlin & Nardi, LLC’s tax attorneys are experienced with property taxes and local property tax appeals throughout the State of New Jersey and can assist with all of the steps involved in property tax appeals. To learn more about what we may be able to do to help, please visit our website, or contact one of our New Jersey lawyers by e-mail or telephone at (973) 890-0004.