If you are New Jersey property owner, you probably argue that you are paying an astronomical amount for property taxes. If you believe you are currently taxed at a higher than normal rate, then you have the right to appeal your property tax assessment to your county tax board of taxation. But before you file an assessment appeal, there are a few things to understand. First and foremost, the tax assessor has the presumption of correctness regarding the valuation of the property. In other words, you, the property owner, bear the burden of proof to demonstrate that your tax assessment is unfair.
I am sure you are curious about the property assessment appeal process which I would like to briefly explain. Please bear in mind this is only a short explanation and additional information is necessary to complete the process. I am a residential real estate appraiser which means that my job is estimating an opinion of value for residential real estate. Property assessment appeals are easy enough for you to tackle as a homeowner; however, there are just some properties that are too complex, and you may need a professional opinion. But, if you want to perform a property tax assessment appeal on your own, there are a few guideline to follow for a successful outcome.
The county tax assessor will not consider your neighbor’s property assessment as evidence of what you think your assessment should be. So, it all comes down to selecting three to five comparable sales which are located within the neighborhood, sub development, or close proximity to your property that are similar in size, age, condition, and overall property characteristics. You can visit the municipal tax office for a list of closed sales or enlist the help of a real estate professional. The sales should be arm’s length transactions which means there was no distress on the sale. Sales that have a New Jersey non-usable sale code such as estate sales, foreclosures, short sales, bankruptcy, divorce sales, and other types of distressed properties that sold in your neighborhood should be excluded as comparable sales for your property. Distressed sales are not a reliable indicator of fair market value. Comparable sales should reflect current market value which is the most probable price a property will sell for in an open market with a buyer and seller who are typically motivated and acting in his/her own best interest; both parties are well informed about the market in a reasonable period of time. Payments terms should be cash or the cash equivalency with acceptable financing in the market area.
The comparable sales selected must best demonstrate the characteristics of your property under the appeal process. Be sure to include closed sales which went under contract in the previous tax year with a cut off date of October 1. For example, if you are appealing your 2019 tax assessment, the comparable sales should have a contract date between October 1, 2017 through October 1, 2018. Once you have selected your comparable sales to determine an approximate value for your property, decide if your assessed value is over the common level range. Every municipality has a common level range which changes on a yearly basis and can be found on the county website. There is an upper and lower limit to the common level range which varies by 15% each way. For example, if the common level range is 75%, the upper level limit would be 86.25% and the lower level limit would be 65.21%. For New Jersey residents, the property tax assessment should fall in between the upper and lower limits, but when the assessed value exceeds the upper limits, you can file a tax appeal. Now let’s apply this to an example;
Based on the example above, if your estimated current market value is $300,000, you calculate the common level value using the percentages of 65.21% for the lower limit and 86.25% for the upper limit.
The lower limit for your assessment would be $195,000, the upper limit would be $258,000, and the common level would be $225,000. If your assessed value is over $258,000, you would be eligible to appeal your tax assessment. In contrast, if your assessment is below $195,000 the assessor could actually raise your assessed value. When your estimated value falls within the common level range of $195,000 to $258,000, you are not eligible for an appeal.
After determining that you are over the upper limit, you then file a petition of appeal and pay the applicable fee by the filing cutoff date. For most counties in New Jersey, the deadline to file is April 1, but for Monmouth and Gloucester counties, the deadline is January 15. The original petition of appeal, comparable sales data, and any other applicable proof such as pictures and mapping images to demonstrate property conditions or adverse location condition need to be filed to the county assessor. Copies of your appeal packet should be filed with the municipal assessor as well as the municipal clerk. You also should keep a copy for yourself. If you fail to serve the municipal clerk, county assessor, and municipal assessor, you appeal will be denied. I suggest hand delivery, but you can send by mail or file online which automatically sends your petition and supporting documentation to all parties.
The county will notify you with a court date and you must appear in person before the county tax board to prove your case unless you are represented by an attorney. It is important to note that the county does not typically allow any adjournments, so if you cannot make the specified court date, your petition will be dismissed. In some cases, the municipal assessor will offer a stipulation which is an offer to lower your assessment. In this case, you would not have to attend the hearing if you accept the stipulation; however, it is up to the discretion of the property owner to accept it and forgo the hearing, or decline the stipulation and attend the hearing.
If you decide that the appeal process is more than you want to take on, you can hire an appraiser, but the appraiser must appear in court along with you if the assessor does not offer a stipulation prior to the hearing. The appraisal must be submitted to the county tax assessor, municipal assessor, and clerk at least seven days prior to the hearing date or with your original petition of appeal. Appraisal prices vary based on the complexity of the property and the appraiser will also charge a fee for the court appearance, if necessary.
All information for the New Jersey property tax assessment appeal process can be found online at https://www.state.nj.us/treasury/taxation/lpt/lpt-appeal.shtml
This short article is not intended to be professional advice; this is for informational purposes only and any homeowner should seek the advice the county tax assessor, attorney, or real estate professional prior to filing a property tax assessment appeal.