Ewing Township’s revaluation has been a long time coming and appears to be done. Property owners in Ewing Township will be receiving their new real estate tax assessment notices in the next few weeks and will have a small window to meet with the revaluation company to discuss the new tax assessment or file a tax appeal.
Each year select municipalities appraise all properties within their borders in order to have all tax assessments reflect the current full and fair value of each property within the taxing district. The process, known as a revaluation, is alarming to property owners since they do not know whether their taxes will increase, decrease, or stay the same.
In 2017, revaluations were completed in Trenton, New Brunswick, Milburn, and many other municipalities in New Jersey. This article will address frequently asked questions that we have received over the years.
Trenton’s revaluation has been a long time coming. Originally slated for 2016, it’s official for 2017. Property owners are now receiving notices of the new assessments proposed by the revaluation company hired by Trenton and the Trenton’s assessor. If the new assessment is not scrutinized, the Taxpayer, whether the property owner or triple net tenant, will be stuck with the new assessment.
Trenton is a City in transition. Properties range from abandoned buildings and vacant lots to thriving offices, residential, retail, industrial, and other uses. Because of the vast range in the condition of properties in Trenton and their utility, sales and other data establish values that range all over the place. Simply put, the real estate market has not established a well-defined and clear guide to a property’s market value so the potential exists for a wide range of opinions as to the value of a particular property.
In the fall and early winter, as we approach the final days of the calendar year, the farthest thing from the mind of New Jersey taxpayers is their property tax bill. Months ago, the new tax bills were mailed and then filed away to be pulled out when quarterly payments are due. However, an astute taxpayer should make a note on the calendar for the last quarter of the year to look at the total assessment that appears on the tax bill and consider whether it reflects a fair or true value for the property. Acting proactively at this time of year can potentially shave significant dollars from a property owner’s tax bill, depending on the size of the assessment and the tax burden imposed by the municipality. Here’s why.
What Landlords and Tenants Should Do Before and After the December 1st Appeal Deadline
If the commercial property you own or rent has had recent construction and the Certificate of Occupancy (CO) was issued, it is likely the municipal assessor tacked on an added assessment to its regular assessment. It is also possible you may have received a tax bill for an omitted assessment, which has a similar deadline of December 1st.
While you may be already reeling from paying the non-residential development fee at the time of CO, as a taxpaying landlord or tenant, you should not shrug off the additional tax burden without giving thought to whether a formal or informal appeal of the added or omitted assessment should be made. As the December 1st deadline is rapidly approaching, now is a very apt time to consider whether the property is over-assessed and if you are paying too much in taxes.
Under New Jersey law, an “aggrieved taxpayer” has the right to file a real estate tax appeal in protest of a tax assessment. Tenants are eligible for this right in certain circumstances. As a general rule, a tenant under a triple net lease, one that requires the tenant to reimburse the landlord for real estate taxes, is an aggrieved taxpayer with the right to appeal.
Some leases prohibit smaller tenants from filing a tax appeal under contract law, but many leases are silent on whether a tenant must hold a threshold limit of leasable space in order to qualify. In such circumstances, the New Jersey Tax Court will generally utilize an “economic reality test” to determine not only if and when the tenant can file a tax appeal, but also who has the right to control and settle it.
In a recent New Jersey Tax Court decision, ACP Partnership v. Garwood Borough, the court ruled that it will permit consideration of a property’s environmental contamination in deciding its true market value even though the property possesses a “value in use” to the tax payer. The case is significant because it rebuts the notion that a commercial property “in use” by the tax payer may only be assessed using “normal assessment techniques,” with no consideration given to environmental contamination in establishing its true market value. The subject property in ACP Partnership is a multi-tenanted and multi-structured industrial and warehouse complex containing approximately 230,000 square feet of improvements. The tax payer leases the property to tenants for warehouse and industrial uses. The tax payer also occupies a small portion of the property for self-storage. Continue Reading Court May Consider Environmental Contamination of Property in Assessing True Market Value Even When Property Generates Income and is Used by Tax Payer
Hamilton Township (Mercer County) is completing the revaluation of all properties in the Township and expects to advise property owners of their new assessments in January 2016. By now, each property owner should have been contacted by Professional Property Appraisals, which is the revaluation company hired by Hamilton Township to perform the revaluation. Once each property is inspected and appraised, the revaluation company will send a written notice to each property owner advising him or her of the new tax assessment. As mentioned, you should expect your notice in January 2016.
Additionally, you should expect sticker shock, too – but do not assume your taxes will increase. As a general rule, when a revaluation is completed, about one-third of owners see an increase in their tax bill, one-third a decrease, and one third almost no change at all. Also, do not apply the 2015 tax rate to your new assessment, because the tax rate will decrease as a result of the revaluation.
However, the new tax rate will not be final until the 2016 budget is finalized in the spring or summer of 2016, so any tax change will have to be based upon certain assumptions of what the new budget will look like.
Commercial property owners should take this time to assemble the information necessary to evaluate their new tax assessment, including:
- Current rent roll;
- Profit and loss statement for the subject property;
- Vacancy rate for the past five years;
- Any appraisals that may have been done for bank financing;
- If the property was recently purchased, the contract, deed, closing statement, and listing agreement; and,
- Survey or building plans to confirm the size of the property.
While this is not an exhaustive list, it should be able to get you well on your way.
Stark & Stark’s Tax Appeal Group can assist you in analyzing your new tax assessment, negotiating with the revaluation company and, if necessary, filing a tax appeal. For more information on Hamilton Township’s revaluation or tax appeals in general, please contact Stark & Stark or visit www.NJLawBlog.com.
This past week, Timothy P. Duggan, Chair of Stark & Stark’s Bankruptcy & Creditors’ Rights, Tax Appeals, and Eminent Domain Groups, held two presentations for the Mercer County Bar Association and the New Jersey State Bar Association.
Mr. Duggan’s first presentation was collaborated with fellow Shareholder Jeffrey M. Hall, member of the Eminent Domain Group, called Public Utilities and Condemnation, which was done alongside the Mercer County Bar Association. This seminar, held on November 17, 2015, discussed how public utilities are regarded when condemnation becomes necessary. Additionally, Mr. Duggan and Mr. Hall shared their in-depth knowledge of state and federal law to provide tips and strategies for protecting property owners who have been confronted with pipeline projects, including the PennEast Pipeline.
Mr. Duggan’s second presentation, Taxing Issues for Condominium Associations and HOAs: Real Estate Tax Assessments of Common Elements and Real Estate Tax Liens, for the 2015 Community Association Law Summit and was on November 18, 2015. This was a seminar for CLE credits alongside the NJICLE, the branch of the New Jersey Bar Association which handles CLE accreditation. This presentation provided tactics and solutions for a variety of tax issues that are currently impacting condominium and homeowners’ associations.
The purpose of this alert is to give an overview of a revaluation program in New Jersey, and also provide the taxpayer with information that should help mitigate potentially adverse affects of a new assessment.
A revaluation is a program conducted by an outside appraisal firm that is designed to adjust and update property values throughout a municipality. However, it is essential to understand that a revaluation is not a reassessment, even though both can result in the reapportionment of the tax burden among property owners. Both are intended to adjust and update property values, however, a revaluation is performed by a pre-qualified appraisal firm, while a reassessment is conducted by the in-house municipal assessor and staff.
In New Jersey, a municipal-wide revaluation is a process that a taxpayer should not take lightly or ignore. By being proactive, a taxpayer can lay the groundwork for a successful appeal, or even avoid an appeal entirely. A revaluation can occur for a single reason or a number of reasons, but ultimately the driving force behind one is the conclusion by the State Director of Taxation that assessed values of properties in a municipality are exceedingly inaccurate. Therefore, a revaluation’s stated purpose is to reset assessments and spread the municipal tax burden fairly so that, in theory, every taxpayer is paying their fair share. By the very nature of the process, however, a property’s taxes can be significantly changed, and not necessarily for the better.