The rise in property revaluations has caused confusion throughout the State of New Jersey. Property owners have been questioning the motives of their governing bodies and appealing assessments, often times without an understanding of the law. This blog is intended to clarify some of the myths surrounding revaluations.
Myth No. 1: Townships perform revaluations in order to increase revenues for the town, county and school board.
As a general rule, a revaluation only impacts the assessed value of properties in a municipality, not the municipal budget. The amount of tax revenue required by a municipality, school board and county are determined through the budgeting process. The overall budget is the numerator in determining the tax rate for a municipality. The denominator is the aggregate assessment of all properties in town which, in a revaluation year, is the total of all assessments in town as determined by the revaluation company. The revaluation may impact the overall tax rate, but it does not impact the budget as adopted by the town.
Myth No. 2: Property taxes always increase when a municipality performs a revaluation.
In a revaluation year, most tax assessments increase. However, the tax rate generally decreases. Some property owners will see an increase in their overall tax burden, while others will see a decrease. For example, if a property was under-assessed before the revaluation, its taxes will most likely increase. However, if a property owner was over-assessed before the revaluation, the property owner may see a decrease in its tax burden.
Myth No. 3: In order to win a tax appeal in a revaluation year, a taxpayer may argue that he or she is entitled to a reduction because other similar properties are assessed at lower values.
As a general rule, assessments of other properties are not relevant to the assessment of the property being appealed. The issue before the Tax Board on an appeal is the value of the property in question, not other assessments in town. As is often said by the Tax Board or Tax Court, a property owner is not entitled to a lower (or bad) assessment merely because a neighbor has a low (or bad) assessment. Rather, the issue is what is the value of the property being appealed as evidenced by comparable sales or other evidence.
Myth No. 4: When a property owner files a tax appeal, her or she is appealing the amount of taxes being paid to the tax collector.
A tax appeal involves a challenge to the assessment (ie. the assessed value of the property), not the amount of taxes that are being paid. The only issue on appeal is the value of the subject property. This is true in revaluation and non-revaluation years. The amount of taxes a property owner pays is not relevant to a real estate tax appeal.
Myth No. 5: If a property owner files an appeal, the tax assessor will haggle and reduce the assessment.
The tax assessor or revaluation company will generally provide property owners with an opportunity to discuss a revaluation assessment before the appeal deadline. However, the property owner should not go to the revaluation company or assessor without proof in hand. Further, the “appeal and haggle” philosophy generally fails. In order to succeed on a tax appeal, property owners must be prepared with competent proof. For commercial properties, this generally involves retaining a competent appraiser.
Tips for Appealing and Revaluation Years:
Before filing a tax appeal, a property owner should obtain his or her property record card from the tax assessor in order to verify that the tax assessor and revaluation company have the correct information on the property. The property record card shows the number of bedrooms, bathrooms, square footage of living space and other important information. In addition, a prudent property owner should assemble comparable sales which often times can be obtained from the township. When selecting comparable sales, the sales must be comparable in terms of size, location and condition, and the closer to the assessment date the better. Avoid the inclination to simply select the three lowest sales in town. An appeal supported by strong evidence generally results in the reduction of an assessment.