As the overall economy continues in a downward spiral, one of the only bits of good news involving property owners is they might possibly be qualified to receive savings in their property taxes. Individuals that invested in dwellings going through the summit of the financial bubble or who live in neighborhoods that conducted the latest revaluations, could possibly be shelling out even more property tax liability in comparison to what their living spaces are valued at. Working out if your dwelling assessment is realistic, and when you are an excellent nominee for a NJ property tax appeal in 2011 or further out is going to involve a certain amount of additional effort, and you should commence the method noticing a lot of appeals are unsuccessful. That was not meant to discourage anybody from trying this, but you should know what you’re getting into. It’s very helpful to do the small amount of work that it takes to know where you stand as you want to know this going into the process, not have it told to you by an assessment board panel.
New Jersey homeowners already pay property tax rates that border on usurious, about six thousand dollars every year, nearly double the average for the U.S. New Jersey’s immediate fiscal future is not looking any brighter with a deficit in the range of one to two billion dollars and property tax reform not even on the state legislature’s radar screen.
Finding errors in your property tax assessment could save you some money if you know how to uncover them. The economy’s erratic behavior has had a negative affect on housing prices over the last few years or so. One bit of good news is that a down market also means lower property values, which means a New Jersey property owner can achieve a reduced assessment by filing and winning an appeal.
To let the county you live in know that you think you are unjustly assessed, you will need to submit your application for appeal by April 1st. To determine if you are a solid prospect for a NJ property tax appeal, you’ll want to in the beginning get some familiarity with the way in which property is assessed in New Jersey and how the appeal progression functions.
The process really begins with the assessment notice, sent out in late January or early February, which gives each property owner a tax assessment on the property(ies) that they own. It’s typically printed on a small green card, and it simply states your home’s assessed value for both the land and any improvements. If the dates look confusing, it’s because the valuation is calculated as of October 1st of the pre-tax year. So for the sake of argument, the date for 2009 was October 1, 2008. That number, however, is virtually meaningless unless you know what your town’s average tax ratio currently is.
Each year, assessors figure out these ratios by looking at comparable sales of properties over the previous twenty-four months. A compendium of the ratios is put together yearly and published on the State Division of Taxation’s web portal generally right after Christmas.
See whether You Should File a NJ Property Tax Appeal by Running the Numbers
Time to find out the truth about your property, and yes, it will involve math.
Right out of the gate, we’ll need to get some concepts down, so have those calculators at the ready. Every township also gives itself a margin of error which is equal to plus and minus 15 percent of the average ratio. Because of this, your house does not have to be overassessed, it has to be grossly overassessed by as much as 15% or more, to be considered having a chance of winning an appeal. Do assessors make mistakes in assessing real estate? Definitely. Are most homeowners ever looking at an overassessment of a 15% order of magnitude? It’s not an everyday thing.
For purposes of an illustration, the average tax ratio for Locality XYZ in 2010 is 88.54 percent. At the lower end of the selection range, the rate is 75.26 percent, whilst on the upper tip of the array the ratio is 101.82 percent All these ratios are meaningful to working out if your home is assessed fairly. If a dwelling in Township XYZ is assessed at $500,000, the property owner will want to divide his or her home’s assessment by our test municipality’s average ratio — 88.54 percent — to clarify the fair marketplace valuation of their property, in reality, precisely what the municipality thinks the home and property is genuinely worth. Did the answer on your calculator come out to $564,717? Good. Then let’s move on.
Here is where that sneaky margin of error rears its ugly head. By simply repeating the same mathematical operation, but using the low and high end ratios, a homeowner can see if they fall within or outside of that 15% plus or minus curve, and knowing this makes all the difference. Using the previous example, dividing their home’s assessed value of $500,000 by 75.26 percent gives you $664,364 and dividing it by 101.82 gives you around $491,063.
If the comparable sales on your street have been moving for under $491,063 and your assessed value is $500,000, Congratulations! You’re a great nominee for a tax appeal.A reduction in your assessment is a guarantee if you should succeed. However, if the majority of the houses on your neighborhood are selling for much more than $664,364, you could wish to keep it to yourself and start hoping that all the others keeps their mouths shut as well. Your real estate is most likely under-assessed. If it is neither too high or too low, you should not appeal. You will lose in your appeal and maybe trigger a revaluation when the board recognizes underassessed properties. The only plus side to this scenario is that this is how school districts are funded, so if you have kids, they will at least see some of your lost money down the road in better textbooks.
Comps are Your Friend, and All You Have to Do is Find Them
You should always remember that most appeals that are filed will not win. We at present talked about 1 issue… the margin of error. The second justification is that the burden of proof is the responsibility of the home owner, and a lot of taxpayers do not provide the most appropriate proof to help with their particular case, and taxing jurisdictions usually do not offer appeals out of the goodness of their heart. They’ve got interests they are obligated to guard like everyone else.
The very best substantiation a taxpayer can provide in a NJ property tax appeal is a set of recent comparable sales of between 3 and five other properties of a comparable sort inside your neighborhood. This brings us to reason number three that an NJ property tax appeal is denied: the shortage of recent sales data.
Why are good comparable sales so hard to come across? The answer reveals itself in that note stuck to the doorway. Welcome to reason number 4 that a NJ property tax appeal is dismissed: sales of properties owned by estates, house foreclosures, short sales, sherriff’s sales, and so forth are not thought to be "arm’s length transactions" in New Jersey and consequently you’re stopped from offering those variations of transactions as comp figures while in an appeal. The board will dismiss these because of the transactons being considered "under duress" and are typically aren’t regarded as valid comparable sales.
In spite of these challenges, there will likely be conditions developing in which the home owner, after compiling the available evidence and doing the correct due diligence, will have a fair shot at winning a NJ property tax appeal. The good news is you can get a crystal clear view of your odds of success before you set foot in front of the board, and that will save you embarassment, give you confidence in your position, and allow you to more effectively defend your assertions. Best of luck in your efforts.
