Is It Time to Appeal Your Property Tax Assessment and Start Saving Money?

February 12, 2010

If you are like most property owners, one of the biggest complaints you have with regard to your property is that your property taxes are too high. This is why it is of vital importance that you review the assessment of your property each and every year to ensure that you are not paying more taxes than you should be. Every year all real property in the State of New Jersey is valued for the purposes of taxation. The value placed on the property is known as the “assessment”. Your tax assessor is required to notify you of the current assessment on your property and of the proceeding year’s taxes by mail prior to February 1st of each year. In order to determine if your property is assessed properly, it is necessary to verify that the assessment satisfies one of two standards. In a revaluation or reassessment year, the True Market Value Standard applies to your property. In this case, your property must be assessed at 100% of true market value. In other words, the assessment must be 100% accurate. If the assessment exceeds the true value of the property, you are entitled to a reduction of the assessment and a tax appeal is warranted. A reduction in the assessment will, in turn, reduce the taxes that you will ultimately pay on the property. In a non revaluation or non reassessment year, when property values are not reassessed, the Common Level Range Standard applies to your property. Here, in order to take into consideration factors such as inflation, recession, appreciation or depreciation that may cause property assessments to deviate from 100% of true value, the Director of the Division of Taxation determines a ratio that applies to each municipality. The ratio is derived from an analysis of all arm’s length property sales within the municipality to determine the level of assessed value to true value of property. If your property assessment exceeds the ratio by more than 15% of your property assessment it will be considered unfair and you will be entitled to a reduction in your assessment that will reduce the taxes you will ultimately pay on your property. Not knowing your municipality’s assessment/true value ratio may be causing you to lose valuable tax dollars. You may feel that the assessed value of your property represents the true value of the property but unless you know what your municipality’s ratio is and how it is applied to your property, you will not know if your property has been assessed fairly. The following is an example of how your municipality’s assessment/true value ratio is applied to property assessments:
Your municipal assessment/true value ratio 70%
Common level range 59.50% - 80.5% ($595,000 – $805,000)
True value $1,000,000
Municipal assessment $850,000
Ratio actually applied to your property 85% ($850,000 $1,000,000)
New assessment $700,000
Total reduction in your assessed property value $150,000
If you feel that you may be a prime candidate for a tax appeal, we encourage you to seek professional assistance. By law it is assumed that your current assessment is correct and it will be your burden to overcome this presumption in order to obtain an assessment change. If you are successful in securing a tax appeal judgment to reduce your property assessment, the Freeze Act will apply to your property at your option. This means that your municipality will be bound by the new assessment and cannot increase your property assessment for the year covered by the tax appeal plus two additional years, subject to two exceptions. The first exception is if your municipality conducts a complete revaluation of all properties in the municipality. The second exception is if the municipality proves that there has been a substantial increase in your property value, such as if you construct an addition to your home. THE FILING DEADLINE FOR TAX APPEALS EACH YEAR IS APRIL 1, 2010. For additional information, please contact Jeffrey R. Rich or Lisa A. John.