New Jersey Real Estate Tax Appeals – Frequently Asked Questions pt. 1

As we enter the 2015 tax appeal season, we have fielded hundreds of phone calls from property owners who are interested in filing appeals. Since the determination of whether a property has been over-assessed is not always apparent without an appraisal, we have taken the time to discuss the questions presented by each caller before determining whether we would accept the matter, or reject the matter, or whether we would immediately assign the matter to one of our appraisers for a more definitive opinion as to whether the tax appeal is worthwhile for both our office and the taxpayer. During this process, the taxpayers have asked us many recurring questions. The following is a list of three frequently asked questions, along with our answers:

1. What is a revaluation or re-assessment?
Sometimes, due to changes in real estate values, the assessments in a town may be significantly lower than the actual values of real estate in the town. Alternatively, in the recent deflationary real estate market from 2007 through 2013, some towns actually had assessments that greatly exceeded the values of their real estate. Historically, towns did not often conduct revaluations due to the time and expense of doing so. Instead, the assessors left old assessments in place, and compensated by adjusting tax rates to make the budgets work. However, Monmouth County recently ordered all municipalities to conduct annual revaluations or re-assessments to ensure that each town remains assessed at 100% of true value. Notwithstanding the fact that a town may conduct a revaluation, assessments are still excessive on occasion, and that is when the taxpayer should file a tax appeal.

2. What causes errors in assessments?
When conducting a re-assessment, municipal tax assessors cannot individually appraise every house, since that process would take too long and cost too much money. Instead, the assessors rely on a “model” to predict real estate values within the framework of the location of the property and quality of the improvement (i.e.; the house) on the property. However, the models are often flawed and sometimes fail to take into account internal and external factors that may de-value one particular property in a neighborhood. Additionally, it should be noted that appraising is not an exact science. While it is an appraiser’s job to predict what a “ready, willing and able” purchaser might pay for a property, there are a myriad of factors for an appraiser to consider, and it is very possible that two appraisers could reach an entirely different conclusion as to value, especially in cases where there is a shortage of comparable sales upon which the appraiser can base his or her findings.

3. Why is my assessment higher than my neighbor’s assessment, when his house is nicer than mine?
Answer -You can only appeal if your assessment (or equalized assessment) exceeds the actual value of your property. This is generally determined by sales of comparable homes. It is not determined based upon the assessments of other homes. Furthermore, you may not appeal your assessment based on the assessments of other homes. If you believe that other homes in your neighborhood are under-assessed, you have the right to file a tax appeal on the other homes to request that their assessments are raised; however, that action will not affect your assessment, and it probably will not make you very popular among your neighbors.

In our next installment, we address three additional questions regarding Tax Appeals. As always, if you feel that your property has been over-assessed, please feel free to contact our office for a consultation.