For many, the start of a new year signals a time to make some kind of change in their lives and become more like their ideal self. For others, January marks the time to make a different kind of change, one that’s much easier to do: cut your property tax bill. The tax appeal process in New Jersey involves a number of steps and using an experienced property tax attorney to guide you through the process will make your New Year’s resolution much easier to follow.
Since New Jersey’s tax appeal season is toward the beginning of the year, lowering your property taxes is a perfect New Year’s resolution. By the end of January each year, all New Jersey homeowners are supposed to receive their annual assessment. That’s the little green card that comes from the tax assessor’s office. Since all properties within a particular municipality in New Jersey are taxed at the same rate, it is the assessment that differentiates one homeowner’s tax bill from another and is the true measure of whether a property is being taxed equally. fair or not The period in which an evaluation can generally be appealed in New Jersey is from the time the evaluation is received through April 1 (May 1 if there was a reevaluation or reevaluation).
The first step in understanding if you’re paying too much tax is understanding how your property is valued.
In New Jersey, your appraisal is the value your property was appraised for at the time of the last appraisal. Although the amount at which the municipality values your property changes from year to year, your appraisal generally remains the same. Each year, each municipality in New Jersey is assigned an “equalization rate,” which is intended to reflect the current value of properties in a particular municipality relative to their value in the year of assessment.
You can find your municipality’s compensation ration by calling your city tax assessor or county tax board. It can also be found on the New Jersey Division of Taxation website. The “average ratio” is the percentage of the “true value” that is considered to be your assessment. In other words, divide your appraisal by the compensation rate to get the actual value of your property. This is the number your assessor is actually using to calculate your property tax, not your assessment.
For many people, the decision of whether to appeal their appraisal is easy once they realize the actual value of their property. For others, especially people who have owned property for a long time and haven’t been thinking about buying or selling, the question of whether to appeal an assessment is less clear.
Here are several general rules to keep in mind when deciding whether to appeal your assessment:
- As your appraisal ages and your match ratio gets lower, there is a greater chance that your appraisal has drifted from the actual value of your property.
- Conversely, when a leveling index rises above 100% because property values have fallen (as they have in recent years), that means that, on average, properties are overvalued in those municipalities. The property owner still has the burden of proving that their particular property is overvalued, but an average ratio of more than 100% is a good indicator of overvaluation.
- When you live in a development or neighborhood where properties are very similar and prices have dropped significantly, your individual property value may have dropped and your appraisal and equalization rate may not have kept pace.
- Whenever a property has unique characteristics that make it very different from those nearby, lowering the appraisal is often warranted. For example, a very large older home in a neighborhood of smaller newer homes will often be assessed as a larger home with the characteristics of the surrounding areas. In fact, such houses tend to be more difficult to sell and often warrant lower appraisals.
The next step in the process for individuals is to decide if they want to work with an attorney in this process. While corporations and other legal entities must be represented by an attorney under New Jersey law, a sole proprietor may represent themselves. However, there are very good reasons to consider retaining one:
- Many attorneys work on a contingency basis, so there are no legal fees unless your taxes are reduced. There are certain fixed out-of-pocket costs paid by the property owner, but the attorney receives a percentage of the tax savings if, and only if, the appeal is successful.
- An attorney working on a contingency basis must provide a free consultation and do their own independent investigation to determine whether an appeal is likely to be successful. If an attorney doesn’t return your calls and take the time to tell you why you think your appraisal should be lowered, that’s a sign to look elsewhere.
- Above all, there is the convenience of having an experienced professional handle your case. You don’t have to worry about any of the rules that can be burdensome and, frankly, arbitrary. (For example, property tax appeals may be dismissed if the petition is not on legal paper.) You do not have to testify at a hearing, which is often unfamiliar and uncomfortable for the landlord.
- Many people believe that they will get a better result when they are represented by an attorney. This added savings year after year more than offsets the attorney’s fees.
Take, for example, the case of Stephen and Rachel Pineles, who decided to appeal the appraisal of their home in Essex County, New Jersey, in 2010. “My town hadn’t had an appraisal in over twenty years and my appraisal was outrageously high compared to the actual rate. value of my home,” Stephen Pineles said. “Hiring an attorney to handle the property tax appeal was definitely the right decision for me. I didn’t have to worry about anything. Initially, the tax assessor offered a reduction that was quite low. In the end, my attorney negotiated a much better settlement and my property taxes were reduced by over $3,700 or almost 30% of my tax bill.”
As with anything else, there is some risk of appealing your assessment. In New Jersey, if your case is unsuccessful, you will not get your out-of-pocket costs back. Also, under New Jersey law, your appraiser has the right to argue that your appraisal is too low. However, this right is limited to cases where your property is undervalued by 15%. If your property’s appraisal divided by the equalization rate is $100,000, the appraiser can only argue that the appraisal should be increased if he or she can prove that your property is actually worth at least $115,000. If your attorney has done their research well and has determined that there is a good case for lowering your appraisal, it is unlikely to happen.
As the new year begins, in addition to some of the tougher goals and changes people contemplate, it may be worth considering trying to lower your tax bill. It could be one of the easiest and most profitable resolutions you make.