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NJ Residential Tax Appeal Process

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Did you miss the residential tax appeal workshop? Here are slides prepared and presented by Jeff Gradone, Esq. The presentation walks you through the process of the residential tax appeal in New Jersey.

Publié dans : Immobilier
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NJ Residential Tax Appeal Process

  1. 1. Presented by: Jeffrey M. Gradone, Esq. Understanding the Residential Tax Appeal Process
  2. 2. Revaluation Basics Site Inspection • Letters sent to property owners advising of inspection. • If no one is home, exterior inspections made. • Follow-up appointments are scheduled. • If no one is home for the second visit, the property owner is asked to schedule a time for inspection, otherwise the interior will be estimated.
  3. 3. Revaluation Basics Data Collected During Inspection • Building measurements • Number of bedrooms, bathrooms, finished basements, porches, etc. • Type, quality and age of construction
  4. 4. Revaluation Basics Delineation of Neighborhoods • The revaluation company, with the assistance of the municipal tax assessor, determines neighborhoods for purposes of valuation. • Neighborhoods are delineated based on similarities.
  5. 5. Revaluation Basics Use of Comparable Sales • Sales are analyzed to determine whether sale prices are indicative of fair market value. • Sale properties are inspected using the same guidelines as inspections for all properties in the municipality.
  6. 6. Revaluation Basics Land Value Extraction • Value of site improvements is determined through calculation of reproduction costs, minus depreciation. • Value of site improvements is subtracted from sale price to determine land value.
  7. 7. Revaluation Basics Land Value Extraction • Land value is time-adjusted for applicable valuation date. • Land value is also adjusted for site specific characteristics (location, slope, etc.). • Land formula is derived for each neighborhood.
  8. 8. Revaluation Basics Calculation of Assessment • Land Value − Land formula is applied to subject property. − Adjustments are made for size, location and other site specific attributes.
  9. 9. Revaluation Basics Calculation of Assessment • Improvement Value − Reproduction cost is calculated based on building class and improvement square footage. − Effective age of the improvement is determined and corresponding depreciation is applied to reproduction cost. • Total Value = Land Value + Improvement Value
  10. 10. Tax Appeal Basics Market Value x Ratio Assessment x Tax Rate Property Taxes  Challenge this  Don’t directly challenge this  Cannot challenge this
  11. 11. Should I File? • Assessed value ≠ Market value • Convert assessment using “average ratio” Assessment ÷ Ratio = Assessed fmv
  12. 12. East Orange, NJ Assessed Value Ratio Market Value 2013 10,000,000 2014 10,000,000 2015 10,000,000 2016 10,000,000 91.95% 10,875,476 2017 10,000,000 91.56% 10,921,800 100% 86.77%% 89.90% 10,000,000 11,524,720 11,123,470
  13. 13. Should I File? • Example − Assessment = $2,000,000 − Appraiser’s fmv estimate = $10,000,000 − Good Case? • City of Elizabeth’s ratio – 12.10% $2,000,000 AV ÷ .1210 = $16,528,926 AFMV
  14. 14. Should I File? Other Considerations • Chapter 123 − 15% statutory “leeway” for the assessor • Increased assessments − 15% protection for taxpayer
  15. 15. Should I File? Ratio Lower Limit Upper Limit (For Increase) (For Reduction) Assessment 38.84% 33.01% 44.67% $500,000 $ 1,287,333 $1,514,693 $1,119,319
  16. 16. Should I File? Other Considerations • Cost/Benefit Analysis − Example • Madison – 1.908% tax rate • 1.908% tax rate - $1,908 savings for $100,000 reduction
  17. 17. Where & When •Total assessment $1,000,000 or less  County Board of Taxation •Total assessment greater than $1,000,000  CBT or Tax Court Unless Monmouth County, then January 15, or 45 days from mailing of assessment Regular Annual Assessment April 1, or 45 days from mailing of assessment Unless a revaluation or reassessment then May 1 Unless an added, omitted or roll-back assessment, then December 1, WITH EXCEPTIONS!!! or 30 days from the mailing of assessment
  18. 18. Other Concerns • Standing − Owner − Other aggrieved “taxpayers” – tenants • Payment of taxes − Appeal dismissed for non-payment − Two statutes with technical differences • Direct appeals – “cure” opportunity at Board of Court • Appeal to Tax Court from Board – no “cure” • Lack of Prosecution at the County Board − Cases – mostly for unexcused failure to appear − Small efforts typically deemed sufficient by Tax Court • Chapter 91 Requests
  19. 19. Other Concerns • Spot Assessment – Reassessment upon sale – Assessment maintenance • “Reverse” Appeals – Seek to increase assessments! – Increasingly more common!

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