April 1 Deadline Looming... Thinking of Appealing Your Property Taxes?

I hear this question asked all the time by clients or on e-loops and various local discussion forums. With home prices below their highs in 2005/2006, homeowners are starting to think twice before shelling out those big bucks for property taxes based on outdated assessments.

If your home's value has come down, you should, as many local residents have done and done successfully, be able to appeal its assessed value. Local governments generally don't reassess homes every year, which means the values they use to calculate property taxes may be outdated or just completely off for some reason or another.

The appeal process varies depending on the township, but here are some general guidelines on the steps to take:

STEP 1: TRACK DOWN THE PAPERWORK
Property taxes are assessed on a local level. Search your township’s web site (Maplewood, South Orange, Summit, Springfield, West Orange, Livingston, Millburn / Short Hills) for the forms needed to file an appeal. There will be a small filing fee. You will need your Lot and Block number – these should be listed on your mortgage documents or property tax bill. Tax appeals must be filed annually on or before April 1st or within 45 days of the bulk mailing of the Assessment Notices; or May 1st where a municipal-wide revaluation or municipal-wide reassessment has been implemented. Once filed, a hearing before the County Tax Board is scheduled. Individuals can represent themselves.

STEP 2: UNDERSTAND THE PROCESS
There are two important technicalities to understand. The first is understanding that local governments allow themselves a 15% margin of error. Therefore, if you feel you are overpaying by 3% - it might not be worth the head ache because your appeal will likely be rejected.

The second is that you are not appealing your property taxes, you are appealing your home's assessed value. This is the basis for your property tax, and is not usually the same as your home's market value. Some local governments assess homes way above or way below their market value. For example, if the assessment rate is 50 percent, the assessed value of a $1 million home would be $500,000. Assessment rates can change from year to year, depending on the towns budget needs for that year. It's also important to know the date the assessments are based on. In New Jersey, homes are assessed on Oct. 1 of the previous tax year. So if you're requesting a new assessment for 2010, you need to research home prices from around Oct. 1, 2009.

STEP 3: COLLECT YOUR EVIDENCE
The bulk of your work will be collecting the evidence to make your case. You can search free websites such as ColdwellBankermoves.com, the Garden State Multiple Listing Service, or Zillow.com. Be sure to use the actual sales price of a particularly property, as opposed to the list price – this will make your argument stronger. The easiest way to get this information is to ask your realtor – after all she probably knows your home better than you do and will be able to navigate these sites easily to find comparable homes.

You should collect data on about three to five properties, making sure they are similar in size, style, age, lot size and upgrades. Be sure to point out why the houses are comparable to yours, and note any significant differences that could affect values, such as proximity to a busy street, nearby highway, electrical tower, or a sloped yard. Also point out if your home is close to any foreclosed or short sale properties, both of which can affect property value. It's important to show that you did your research and to organize it well, but you don’t have to write a novel!

Given all the information online now, most people should be able to put together an appeal on their own. But if you feel as though you just don’t’ have the time to take on another task on your to do list, you can hire a local attorney to process it for you. You may even want to take it a step further and pay for a new appraisal of your home. Be sure the appraiser you hire is licensed and from your area. They need to understand the local market to be able to appraise your home correctly.

STEP 4: FOLLOW-UP ON YOUR APPEAL
Check on the status of your appeal a few weeks after you file. But don't panic if you don't hear back right away – it could take anywhere from two to six months. Local assessor offices are often swamped with appeals and may take months to get back to you.

If your appeal is denied and you are dissatisfied with the judgement of the tax board, you have 45 days from the date of your judgement was mailed to file a further appeal with the tax court.

In the meantime, continue paying your property tax bills!

Please note that this is simply a basic outline to help you better understand the process. For more comprehensive information, you should visit the State of New Jersey’s Division of Taxation website or the New Jersey Association of County Tax Boards.


Good luck and please keep me posted on your success... I always like to hear a tax appeal story with a happy ending!

Best,
Caroline