Frequently Asked
Questions About New Jersey Property Tax Law.
How is my assessment determined?
The New Jersey Constitution
requires all property to be assessed according to the same rules
at true value. Most New Jersey municipalities attempt to comply
with this mandate by conducting periodic revaluations conducted
by the local assessor with the assistance of well qualified
appraisal firms. The assessment may be based on any of the three
recognized appraisal methods but because of the requirement for
uniform rules, assessments tend to be based on the cost
approach.
Not all municipalities even try
to comply with the constitutional requirement for assessment at
true value. As time has passed values have gone up even in our
older cities. Newark, Paterson, Elizabeth, East Orange, Orange,
Irvington have not had a revaluation in more than twenty years
and now assess at levels far less than required by the
constitution.
It really doesn't matter. But
even if the assessor used a completely inappropriate method, the
law places the burden on the taxpayer to prove that the
assessment is wrong.
What is a property tax appeal?
A tax appeal is a process in
which the government allows a property owner determine whether
he is being assessed fairly.
When is the filing deadline?
The filing deadline is April 1 of
the year in question.
How does the process work?
A tax appeal is your opportunity
to prove that your assessment is excessive or discriminatory.
All assessments are based on market value. An assessment is
excessive or discriminatory if it violates either of two
standards:
1. An assessment may not exceed
market value.
An assessment may not exceed the
market value of the property as of the assessment date. The
assessment date is October 1 of the pretax year. Thus for 1998
assessments the assessment date is October 1, 1997.
2. An assessment may not exceed
the common level range.
Recall that not all
municipalities even attempt to assess property at its market
value. The legislature has recognized that if most property is
assessed at 50% of market value (the common level) your property
may be over assessed even if it is assessed at less than market
value. But an assessment need not be perfect to be fair (or at
least fair enough) as far as the law is concerned. The test for
fairness is found in New Jersey Statutes 54:3-22 and 54:51A-6
commonly known as Chapter 123. Each year the State Division of
Taxation conducts a sale survey to determine the average ratio
of assessed value to true value. Chapter 123 establishes a
concept known as the "common level range" which is15%
more (the upper limit) to 15% less (the lower limit) of the
average ratio. After the county board of taxation determines the
market value of the property they compare the market value to
the assessment. If the ratio of assessment to true value exceeds
the average ratio by 15% then the assessment is reduced to the
common level. If the assessment falls within the common level
range, 15% plus or minus of the average ratio, no adjustment
will be made. If the ratio of assessment to true value falls
below the common level range the assessment will be increased to
the average ratio.
|
|
Example
One
|
Example
Two
|
|
Average Ratio
|
50%. |
50%. |
|
Upper
Limit
|
57.5 % |
57.5 % |
|
Lower
Limit
|
42.5% |
42.5% |
|
Common
Level Range
|
42.5%
to 57.5 % |
42.5%
to 57.5 % |
|
Assessed
Value
|
$500,000 |
$500,000 |
|
Market Value
|
$800,00 |
900,00 |
|
Ratio
|
62.5% |
55.55% |
|
Result
|
The ratio exceeds the
upper limit of the common level range. The assessed
value is reduced to the $400,000.
|
Although the ratio exceeds
the average ratio, it is within the common level range.
The assessment remains $500,000.
|
I'm confused. Is it important that
I understand that?
That is one of the reasons you
hire a lawyer. All you have to know is that your assessment is
based on the market value of your property as of October 1 of
last year. But you can see how important it is to hire a lawyer
who understands property tax procedure and valuation.
Can my my assessment be raised if
I appeal?
Yes. Although it rarely happens
and has never (knock on wood) happened to a Blau & Blau
client. If a municipality proves that the property is under
assessed the county board of taxation or New Jersey Tax Court
can raise the assessment. That is why Blau & Blau carefully
analyzes each case to make sure that the property is over
assessed before filing an appeal.
Will my case be heard by the
county board of taxation or by the New Jersey Tax Court?
If your assessment is less than
$750,000, your case must be filed first with the County Board of
Taxation. County Boards of Taxation hear cases in a summary
manner and often affirm the assessments even when a property is
over assessed. A taxpayer who is not satisfied with the result
of a County Board of Taxation hearing may appeal to the New
Jersey Tax Court within 45 days of the entry of the County Board
judgment. New Jersey Tax Court hearings are more formal trials
than County Board of Taxation hearings.
Because of the summary nature of
county board of taxation hearings, Blau & Blau often uses
the county board process as an effort to negotiate a settlement
with the assessor. If a settlement can not be negotiated, Blau
& Blau often has the assessment "affirmed without
prejudice" and appeals to the New Jersey Tax Court.
Do I have to pay my taxes in order
to appeal them?
In general the answer is yes.
Failure to keep your taxes current may result in the dismissal
of your appeal. If you are unable to keep your taxes current,
please notify Blau & Blau immediately.
Will my case be tried in court or
will it be settled?
About 95% of the cases filed in
the New Jersey Tax Court are settled without a trial.
Will I need an appraisal?
Not necessarily. You will almost
certainly need an appraisal if your case is tried. However, we
settle a significant number of cases without a formal appraisal.
Can Blau Appraisal Company do my
appraisal if I need one?
Yes, but not for Blau &
Blau's tax appeal clients.
Blau Appraisal Company often
works behind the scenes to provide Blau & Blau comparable
sales and leases which may convince the assessor to settle the
case without a formal appraisal. Blau Appraisal Company does not
charge for this informal assistance to Blau & Blau's
clients.
What percentage of your cases do
you win?
We attempt to carefully analyze
each case to make sure it has merit before filing an appeal. We
reduce the assessment on about 75% of the properties that we
appeal. If we win more than that, we worry that we are turning
down good cases. If we lose more than that, we are concerned
that we are wasting too much of our time.
Will I win?
We can't say for sure, but if we
don't think that we have a good case, we won't take it.
What does it cost?
Most of our clients prefer a
contingent fee agreement. That means that you don't pay unless
we are successful in reducing your assessment.
