One obvious reason for filing real estate property tax appeals is to obtain a lower assessment on your real property and thereby save significant tax dollars. Another important reason to lower your assessment and taxes is to help maintain the value of the property by making it more marketable to potential buyers. COVID-19 has been particularly impactful on commercial property values, whose assessments were set prior to COVID.
Property owners often believe that their property is worth an amount equal to the assessment on the property. This misconception leads owners to overlook the different ratios of assessed value to true value applicable in each of the assessing districts of New Jersey and the fact that these ratios generally decline each year. For example, if a property worth one million dollars this year is located in a municipality with a 60% ratio, it should be assessed at $600,000 this year. If that ratio drops to 54% next year, its assessment should be $540,000. If the ratio drops, but the assessment remains high, it may be time for an appeal. The revaluation of all property within a municipality may increase the possibility of over-assessment on larger commercial and industrial parcels.
If the taxpayer prevails in securing a tax appeal judgment reducing its assessment, the “Freeze Act” binds the municipality for the years covered by the tax appeal plus two additional years, subject to two exceptions. The first is a complete revaluation of all real property in the municipality, and the second is proof by the municipality of a substantial increase in the property’s value. These exceptions aside, the assessment is frozen at the reduced level, at the taxpayer’s sole option. Thus, if a taxpayer wishes to appeal for a further reduction during the freeze period, he or she is free to do so.
These points are intended to merely scratch the surface of this area of the law. This should also help to explain why property owners should have their tax assessments reviewed by legal counsel each year to determine whether a tax appeal is warranted. The experienced attorneys at Norris McLaughlin can help you review and analyze your real property valuations to determine if an appeal makes sense.
For all counties, other than Monmouth, Gloucester, and Burlington, the deadline to file a tax appeal in 2021 is April 1st. For all towns subject to a revaluation or reassessment (other than those towns in Monmouth County), the deadline is extended to May 1, 2021.
This Real Property Tax Appeals Alert provides information to our clients and friends about current legal developments of general interest in the area of real property tax appeals law. The information contained in this Alert should not be construed as legal advice, and readers should not act upon such without professional counsel. Copyright © 2021 Norris McLaughlin, P.A.