Significant Property Tax Savings Possible Via Professional Review and Appeal

02.01.2012

Commercial and residential property owners will receive their property assessment cards prior to February 1, 2012, and they will have until April 1, 2012 to file a tax appeal. During this short time frame, it is of vital importance to review your property assessment to ensure that you are not paying more than your fair share of property taxes. Last year Genova Burns filed a tax appeal on behalf of a commercial real estate client, for whom we secured a $3 million dollar property assessment reduction that resulted in a yearly tax savings of approximately $99,000 for the property owner. In 2010, this firm secured a reduced property assessment for a cooperative housing complex located in East Orange from over $40 million to approximately $35 million, resulting in a yearly tax savings of over $130,000.00. Another example of our success was securing a reduced property assessment for commercial property located in Little Egg Harbor from $14 million to approximately $7 million, resulting in a yearly tax savings of over $108,000.00. All real property in the State of New Jersey is valued on a yearly basis for the purposes of taxation, which is known as the property assessment. The assessment of property is an analysis of what your property would sell for during an arm’s length transaction. This analysis may have been performed recently, where the municipality has performed a municipal wide revaluation of property, or it may have been performed years ago when the market was in a significantly different place. In a revaluation year, the municipality will hire an expert to perform an appraisal of all real property within the municipality, and, based on the recent appraisal, the municipality is required to assess your property at 100% of its true market value. In other words, the assessment must be 100% accurate. If the assessment exceeds the true value of the property, in any way, you are entitled to a reduction of the assessment and a tax appeal is warranted. In a non-revaluation year, an equalization rate will be applied to your property assessment in order to take into consideration factors such as inflation, recession, appreciation or depreciation that may have occurred since the last municipal appraisal of your property causing the property assessment value to deviate from 100% of true value. Not knowing your municipality’s equalization rate 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 equalization rate is and how it is applied to your property, you will not know if your property has been assessed fairly. For example, an equalization rate of 60% means that your property should be assessed at 60% of its true market value - if the true market value of your property is $1,000,000.00, the current assessment should be $600,000.00. If your property assessment exceeds 15% of its true market value, following application of the equalization rate, a tax appeal is warranted for a reduction in the assessment. By operation of 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, which is why professional assistance is strongly advised. If you feel that you may be a prime candidate for a tax appeal, we encourage you to seek professional assistance as reductions in assessments may lend to large tax savings. 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. Your municipal tax assessor is required to notify you of the current assessment of your property by mail prior to February 1, 2011 and the deadline for filing a tax appeal is April 1, 2011. For more information, please contact Genova Burns LLC at taxappeal@genovaburns.com or (973) 646-3269.