No, you’re NOT appealing you real estate taxes, your appealing your assessment.
It’s that time of the year when my office starts getting phone calls from homeowners and attorneys looking to file tax appeals. In most municipalities in New Jersey, the filing date is April 1st. This may vary in some towns where there was a recent revaluation. The number one reason for wanting to file an appeal, “My taxes are too high.” Welcome to New Jersey.
What I have to explain to these callers is that they are appealing the assessed value of their home, not the taxes. I recently received a call from a homeowner who recently purchased a home and wanted to file an appeal because of the high taxes. I asked what he paid for the house, $720,000. The assessed value was $680,000. I had to inform the owner that there was no appeal.
How The Process Works.
Each property is assessed in New Jersey. The assessment reflects the market value of the property, however, this is only true in the first year of a reassessment. The date of value is always October 1 of the preceding year. For example, if your municipality just had a reassessment done and your house is assessed at $300,000, it is most likely that your house is worth $300,000. The ratio of true value to assessed value is 100% .
Most towns do not do reassessments every year. In fact some towns haven’t done a reassessment in over 20 years. As years pass, and no reassessment is done, the ratio of assessed value to true value changes. For example, that $300,000 home 5 years later may be worth $368,000, put still assessed at $300,000. The ratio now is 82%. To find the ratio in your town, go to: http://www.state.nj.us/treasury/taxation/lpt/chapter123.shtml
Do I Have An Appeal?
You need to know several items to make this decision. What is the current assessment on your property, what is the current ratio and upper limit (more on that in a moment); and what is the property worth?
To find out what your current assessments are, you can look at your tax bill, call the assessor, or go to the following web site and look up your property. http://njactb.org/
To find the ratio’s go to the state site listed above. There are two ratios you need to know. The Average Ratio (which gives you the current value), and the Upper Limit Ratio. Why the Upper Limit? Assessor are allowed to be off on their value by 15%, which is commonly referred to as the corridor. You have to be outside the corridor for a successful appeal.
To find out what your home is worth, you may need an appraisal, or you can check sales in your neighborhood over the past year.
An Example.
So lets look at a real world example. My office is in Woodbridge, NJ. My current assessment is $99,400. The average ratio is 29.30% which equates to a value of $339,250 ($99,400 / .2930). I think the property is worth $310,000. Looks like I have an appeal. However, The Upper Limit Ratio is 33.70% which reflects a value of $294,955. The value of my property would have to be less than $294,955. I am within the 15% corridor. Sorry, no appeal.
I hope this article helps. If you have more questions, give us a call.
If you do have an appeal, my next blog will cover the do’s and don’ts of filling a successful appeal and whether it is worth it.